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Research & Commentary: Direct Primary Care, A Viable Solution to Pennsylvania’s Primary Care Shortage

May 30, 2018

In this Research & Commentary, Matthew Glans examines new legislation in Pennsylvania that would help open the door for direct primary care providers.

A lesser-known factor behind skyrocketing health care costs is the shrinking number of primary care physicians relative to the size of the population. Like most states, Pennsylvania faces a severe shortage of primary care physicians. To maintain current rates of primary care utilization, Pennsylvania will need “an additional 1,039 primary care physicians by 2030, an 11% increase compared to the state’s current (as of 2010) 9,096 PCP workforce,” the Robert Graham Center estimates.

Direct primary care (DPC), also known as “retainer medicine,” is an increasingly popular health care provider model for doctors and patients alike and could revitalize the U.S. primary health care system. Currently, primary care doctors face myriad regulations and a slow and costly reimbursement system and overhead that can eat up to 60 percent of a typical primary care practice’s revenue. According to the Direct Primary Care Coalition, the number of direct primary care practices nationally has grown from a few in the early 2000s to more than 700 today.

A new bill was introduced in August of 2017 that defines what classifies as direct primary care in Pennsylvania. To simplify the regulatory process and remove ambiguity, the bill clearly states that “direct primary care based on a medical service agreement shall not be considered an insurer or health maintenance organization under the laws of this Commonwealth, and the physician shall be not subject to regulation by the department for direct primary care.”

By clarifying that DPC practices do not constitute insurance, doctors and patients are relieved from requirements and regulations under the state’s insurance code. The bill also stipulates that neither a DPC provider nor an agent of a DPC provider is required to obtain a certificate of authority or license to market, sell, or offer to sell a direct primary care agreement. The bill passed out of the Pennsylvania House with a 189-0 vote in September and currently sits in the Senate Banking and Insurance Committee.

Under a direct primary care agreement, patients pay a monthly membership fee, typically ranging from around $50 to $80. As part of the membership, patients receive a more generous allocation of appointments than they would under most traditional plans. Some agreements even include same-day appointments and house calls. The model removes the layers of regulation and bureaucracy created by the traditional insurance system and allows physicians to spend more time on each patient.

Routine tests and procedures are included in most DPC plans, and lower membership fees are typically charged for programs that do not provide these additional services. Under a DPC model, medical practice overhead can be reduced by as much as 40 percent, according to the Docs4Patient Care Foundation. DPC reduces costs across the board. A study in the American Journal of Managed Care found that individuals receiving direct primary care are 52 percent less likely to use expensive hospital services than those in a traditional private practice. The authors found “increased physician interaction is the reason for the lower hospital utilization and ultimately lower healthcare costs.”

Pennsylvania legislators should also follow Nebraska’s lead and implement a Direct Primary Care Pilot Program within their state employee health care program. Nebraska’s recently approved pilot program will run through 2022 and offer two DPC plans, a high-deductible option and a low-deductible option, and the program will include wellness incentives as part of the direct primary care health plans. A similar program in Pennsylvania would be a substantial step forward for the state and could prove to be an important test case for determining whether additional expansion should be considered.

Direct primary care empowers patients and doctors, giving them greater freedom to establish and participate in models that work best for their unique needs. Pennsylvania should remove unnecessary regulatory barriers to direct primary care, thereby revitalizing the state’s floundering health care system.

The following documents examine direct primary care in greater detail.
 

Policy Diagnosis: Seize the Moment to Reform State Health Care Laws
https://www.heartland.org/news-opinion/news/policy-diagnosis-seize-the-moment-to-reform-state-health-care-laws?source=policybot  
In this interview, Michael Hamilton asked Dr. Hal Scherz, board secretary for the Docs4PatientCare Foundation, how the Trump administration is changing the health care regulatory environment and what actions lawmakers should take to improve health care.

Free-Market Physicians Look to Save America’s Broken Health Care System – Directly
http://www.maciverinstitute.com/2017/10/free-market-physicians-look-to-save-americas-broken-health-care-system-directly/
Matt Kittle of the MacIver Institute examines the potential for direct primary care in Wisconsin and the new bill that could make rapid expansion possible. “Direct care is empowering consumers and the free market to drive down the cost of health care and, as has been abundantly documented, improve outcomes. It offers the return of the true doctor-patient relationship because it shifts control from far away bureaucrats to health care consumers,” wrote Kittle.

Don’t Wait for Congress to Fix Health Care
https://www.heartland.org/publications.../dont-wait-for-congress-to-fix-health-care
Heartland Institute Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs, or submit even more ambitious requests for waivers to the Department of Health and Human Services, a suggestion the Trump administration has encouraged.

Research & Commentary: Ten Health Care Reform Options for States
https://www.heartland.org/publications-resources/publications/research--commentary-10-health-care-reform-options-for-states  
Heartland Institute Senior Policy Analyst Matthew Glans outlines 10 steps state legislators should take to improve the cost and availability of health care in their states.

Direct Primary Care: An Innovative Alternative to Conventional Health Insurance
https://www.heartland.org/publications-resources/publications/direct-primary-care-an-innovative-alternative-to-conventional-health-insurance?source=policybot
Insurance-based primary care has grown increasingly complex, inefficient, and restrictive, driving frustrated physicians and patients to seek alternatives. Direct primary care is a rapidly growing form of health care which alleviates such frustrations and offers increased access and improved care at an affordable cost. State and federal policymakers can improve access to direct primary care by removing prohibitive laws and enacting laws encouraging this innovative model to flourish. As restrictions are lifted and awareness expands, direct primary care will likely continue to proliferate as a valuable and viable component of the health care system.

Restoring the Doctor-Patient Relationship: How Entrepreneurship Is Revolutionizing Health Care in Maine
https://www.heartland.org/publications-resources/publications/restoring-the-doctor-patient-relationship-how-entrepreneurship-is-revolutionizing-health-care-in-maine
Liam Sigaud of the Maine Heritage Policy Center analyzes the current direct primary care (DPC) landscape in Maine, evaluates how DPC is benefiting patients, highlights some of the challenges DPC practices face, and offers policy recommendations to promote this type of practice in the future.

Where Obamacare Leaves Questions, Direct Primary Care May Offer Answers
https://www.heartland.org/publications-resources/publications/where-obamacare-leaves-questions-direct-primary-care-may-offer-answers?source=policybot
Proponents of the Affordable Care Act (ACA) set out to remake American health care in 2010, but in many respects the ACA didn’t change the health care paradigm at all; it simply doubled down on a broken, decades-old status quo making health insurance “coverage” a national priority, rather than focusing on limiting health care costs and enhancing health care access. Patrick Ishmael of the Show-Me Institute explores in this essay a promising medical practice model, direct primary care, which he says could deliver on the promises made by proponents of the ACA to lower costs and improve access to quality health care.

Direct Primary Care: Practice Distribution and Cost Across the Nation
https://www.heartland.org/publications-resources/publications/direct-primary-care-practice-distribution-and-cost-across-the-nation?source=policybot
Philip M. Eskew and Kathleen Klink describe the direct primary care (DPC) model; identify DPC practices across the United States; distinguish it from other practice arrangements, such as the “concierge” practice; and evaluate data compiled from existing DPC practices across the United States to determine the cost advantages associated with this model. Eskew and Klink confirmed DPC practices’ lower price points and broad distribution, but data about quality are lacking.

Direct Primary Care: A Legal and Regulatory Review of an Emerging Practice Model
https://www.heartland.org/publications-resources/publications/direct-primary-care-a-legal-and-regulatory-review-of-an-emerging-practice-model?source=policybot
Philip M. Eskew examines concerns related to the “business of insurance” (BOI) encountered by DPC physicians. He analyzes recommended contractual provisions used to minimize BOI risk; compares state laws written chiefly to address risks related to BOI; considers the DPC provisions in the Affordable Care Act; and briefly considers the tax and scope-of-practice policy implications of the DPC model.

How Direct Primary Care Benefits Patients with Chronic Conditions
http://www.georgiapolicy.org/2017/01/direct-primary-care-benefits-patients-chronic-conditions/
Katherine Restrepo of the John Locke Foundation writes for the Georgia Public Policy Foundation about the effect of direct primary care on patients with chronic illnesses. Restrepo found DPC may allow more patients with chronic illnesses access to health care.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database. 

If you have any questions about this issue or The Heartland Institute’s website, contact Lindsey Stroud, The Heartland Institute’s government relations manager, at lstroud@heartland.org or 312/377-4000.

Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR