Back Button
Menu Button

Direct Primary Care (DPC) – New Iowa Healthcare Law Flies Under the Radar

During the 2018 session, the Iowa legislature and governor passed and signed legislation that affects Iowa law on a number of healthcare-related issues – specifically banning nearly all abortions, changing the state mental health system, developing association health plans and allowing the Iowa Farm Bureau Federation to work with Wellmark Blue Cross and Blue Shield to sell health insurance plans that are exempt from state-regulation scrutiny. All have received a great deal of public interest and varied opinions – both from supporters and detractors.

Direct Primary Care (DPC)

But, there was another Iowa health-related bill (HF 2356) signed into law on March 28 – that has not received the amount of attention that it potentially deserves. This particular law is the Direct Primary Care arrangement, or DPC. To date, 25 states have passed DPC laws, including Iowa. Five other states have introduced DPC into their legislation process. Suffice it to say this ‘movement’ has reached a critical tipping-point in the U.S.

What is DPC, you ask?

At the state level, DPC provides a viable legal arrangement for physicians to provide primary care to patients at a lower cost than traditional practice models typically available through insurance plans. Generally, with DPC, a primary care physician or group practice charges patients a membership fee (also known as a medical retainer) ranging from $30 to $500 a month giving patients most primary care services – including chronic care management – for no additional payment when they need it. Advocates of DPC arrangements suggest that market forces will set the price for services based on demand instead of relying on distant third-party payers and central planners. Patients who use medical services outside the DPC arrangement will still need to purchase high-deductible insurance coverage to cover other non-primary care services, such as hospitalization, specialized care, prescription drugs, etc. NOTE: To provide premium relief to DPC patients, it would be ideal for them to eventually purchase high-deductible plans that EXCLUDE primary care services from its’ premium pricing.

DPC arrangements are not considered insurance contracts. This means that no insurance company is involved between the primary care physician and the patient – reducing the red tape hassles of reimbursement costs that require both time and money. DPC advocates claim there is a dramatic cost reduction using this approach, in addition to allowing the physician to spend more time with patients and improving the quality of care.

DPCs are typically exempt from scrutiny by state insurance regulators, and in return, are restricted from billing insurers for consultations on a traditional fee-for-service basis. Additionally, DPC laws – Iowa included – require a valid written agreement between the provider and patient that outlines the following agreement requirements:

  • Must be in writing
  • Be signed by the direct provider (or provider agent) and the direct patient (or patient representative)
  • Describe scope of primary care health services covered by the provider
  • State the location(s) of the direct provider and any out-of-office primary care services covered by the agreement
  • Specify the direct service charge, frequency and payment terms
  • Specify any additional costs not covered by this arrangement
  • Specify the duration of the agreement, and whether renewal is automatic
  • Terms and conditions under which this agreement can be terminated by the direct provider or the patient
  • Include a notice in bold, twelve-point font that states this agreement is NOT health insurance and is NOT a plan that provides health coverage for purposes of any federal mandates. Recommends the patient obtain health insurance to cover healthcare services not covered under the DPC agreement

One key feature within the Iowa law is that a direct care provider cannot refuse to accept a new direct patient OR “discontinue care of an existing direct patient based solely on the new patient’s or the existing direct patient’s health status.”

DPCs Can Be Funded by Third Parties

Another very interesting portion of this law states that direct providers “may accept payment of a direct service charge for a direct patient either directly or indirectly from a third party.”

Employers can be involved with DPC under the following approach:

“A direct provider may accept all or part of a direct service charge paid by an employer on behalf of an employee who is a direct patient of the direct provider. A direct provider shall not enter directly into an agreement with an employer relating to a direct primary care agreement between the direct provider and employees of the employer, other than an agreement to establish the timing and method of the payment of a direct service charge paid by the employer on behalf of the employee.”

Based on the above language, this arrangement opens up the possibility of third parties being not only employers, but public payers, such as Medicaid and/or Medicare.  In fact, in just the last two weeks, America’s Physician Groups, an association of medical groups, submitted to the Centers for Medicare and Medicaid Services (CMS) a provider contracting model that would allow a provider network to receive Medicare funds upfront to manage their patients’ care – through the DPC method.

It is common knowledge that many physicians and healthcare staff are operating within the current medical environment under great stress – if not burnout conditions. In fact, from the results of our 2017 Iowa Patient Safety Study, patients feel a large reason that medical errors occur are directly linked to overworked (and stressed) medical staff. For many physicians who have adopted DPCs in other states, they praise DPC because it allows them to spend more time with patients and less time dealing with the bureaucracy of filing claims to various insurance vendors that do not provide the value patients are hoping to have when seeking care.

Currently, Iowa does not appear to have many primary care physicians operating on a medical retainer basis. However, this new law will most likely generate more interest from primary care physicians wishing to deliver more affordable care while enhancing a direct relationship with their patients. Not surprisingly, insurance companies and other critics of DPCs claim that direct providers may withhold necessary services to be profitable. However, according to DPC advocates, this concern has been unwarranted in other states with DPC laws.

The implications of this new Iowa law will play out over time. Given that healthcare price transparency is such a hot topic, and rightfully so, this new legislation is intriguing for both patients and payers alike.

To learn more, we invite you to subscribe to our blog.

$3 Trillion Trip to the Moon!

Tower of MoneyTry to imagine one trillion dollars.

The significance of this number is…well, mind-boggling! Just add 12 zeroes after the number one and you quickly get the point. It would be laughable to try to stash this amount in your billfold, purse or any other safe location.

Here’s another perspective. If you stacked one trillion $1 bills on top of each other, it would extend 68,000 miles into the sky – one third of the way to the moon! Or let’s say you won the lottery and received $1 million a day for the next 2,000 years – you would have ‘only’ collected three-quarters of $1 trillion.* What a great incentive to live healthier!

Enjoying the MoonIt was just a matter of time before our nation would reach the $3 trillion milestone in healthcare spending – $3.03 trillion to be exact. Using my quick math, we would now be able to reach the moon.

This milepost was met in 2014, but due to calculation lag, we recently learned this news in December from Health Affairs, authored by the Office of the Actuary, an independent arm of the Centers for Medicare and Medicaid Services (CMS). Three trillion translates into about $9,525 per person spent for healthcare in our country.

In 2014, healthcare represented 17.5 percent of our nation’s gross domestic product (GDP), up from 17.3 percent in 2013. Healthcare spending most likely will reach one-fifth of our GDP during the next decade.

So what’s next – Mars? After all, when the earth and Mars are on the same side of the Sun, we are within spitting distance of 34 million miles – or just a mere $500 trillion!

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

* According to a noted Temple University math professor, John Allen Paulos.

Forgive My Skepticism

Skeptic on Health Care CostsA year or two ago, I heard an ‘expert’ being interviewed on a national news network regarding a very complicated subject matter (I don’t remember the topic). When asked his view about an extremely convoluted issue, his response struck me with unusual interest:

I’m a skeptic. But one of two positive things can happen while being a skeptic:

  1. I am proven right, or
  2. I am pleasantly surprised.

Either way, however, I win!”

I find myself using this phrase a lot, especially while discussing health care reform provisions that continue to evolve almost daily. When you think about it, a skeptic will eventually be proven to be right…or wrong. The phrase, ‘pleasantly surprised’ is a comical way of admitting being wrong. Very clever, by the way!

For the most part, no one really knows what will happen as the Affordable Care Act (ACA) morphs in 2014 and beyond. Frankly, it is a crap shoot. The so-called ACA ‘experts’ are individuals (or organizations) with a scholarly (or powerful) background willing to share their thoughts with the public. In the final analysis, what they share is an educated ‘opinion,’ perhaps with an embedded bias. As with most issues, arguments can be made either way regarding the effectiveness of the ACA. We should be cautious about accepting their opinion as gospel – at least for now.

This leads me to the latest report released this past Monday by the Centers for Medicaid and Medicare Services (CMS). The report touts slow growth in healthcare spending in the past four years (2009-12), with CMS economists acknowledging that ACA had a limited effect on 2012 spending. However, according to The Hill, the Council of Economic Advisors (CEA) released a report in November 2013 that showed healthcare spending has grown at the slowest rate since 1965 and credited the ACA for impacting this good news. The White House also credits this slowdown as evidence that the ACA provisions are, in fact, reducing health care costs.

Regardless of which side you may fall, in a never-ending, politically-charged debate about the strengths and shortcomings of the ACA, I find the ‘ACA impact’ argument to be premature – and frankly, speculative with a political bias. 

Jason Furman, the chairman of the CEA speculated the following:
“The fact that the health cost slowdown has persisted so long even as the economy is recovering, the fact that it is reflected in health care prices — not just utilization or coverage, and the fact that it has also shown up in Medicare — which is more insulated from economic trends, all imply that the current slowdown is the result of more than just the recession and its aftermath…the slowdown appears to reflect ‘structural’ changes in the United States health care system.”

Is the health care cost slowdown a causation of ACA or, perhaps, merely a correlation tied to speculation? In fairness, some health care delivery provisions of the ACA have been implemented during 2010-13. However, very little concrete evidence exists that can either prove or disprove any impact made to health costs by these provisions. That is my speculation.

I must admit to being a skeptic on this seemingly good news, at least for the time being. If I am not proven to be right, I will be pleasantly surprised if and when the eventual truth is revealed. Either way, I win!

To learn more, we invite you to subscribe to our blog.