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MacIver News Service | July 25, 2018
By Chris Rochester
MADISON — The value of direct primary care can be seen in Dr. Josh Umbehr’s clinics, particularly in the story of a young woman battling a brain tumor.
The 21-year-old patient faced a $24,000 chemotherapy bill through her traditional insurance. Umbehr and his Witchita, Kan. clinic can provide the same treatments for $1,900. The young woman and her family could handle $1,900 over six months, they couldn’t cover a health care bill 12 times that amount.
No wonder so many people are leaving the broken traditional third-party health insurance system and opting for a direct, personal, and much more cost-effective relationship with their doctor.
Yet so many consumers remain caught in what Umbehr describes as the “shell game” of health insurance.
“We are predictably irrational when it comes to purchasing health insurance,” the physician told MacIver News Service Wednesday on the Dan Conry Show, on NewsTalk 1310 WIBA.
On Tuesday, Umbehr and other direct primary care providers testified before a Wisconsin legislative committee tasked with studying this transparent form of health care that is codified in law in 25 states. Wisconsin is not one of these states, but it could be – if special interests don’t stand in the way.
Red Tape Debate
To regulate, or not to regulate? That’s the question facing the committee.
Direct primary care, a method of delivering health care in which patients pay their primary care doctors directly via a monthly fee, bypasses health insurance and the morass of red tape, inflated costs, and financial uncertainty that plague the traditional system of financing health care.
Doctors at the leading edge of DPC say piling more regulations on doctors simply because they don’t operate within the traditional health insurance structure is unnecessary.
But the scope of the state Legislature’s direct primary care study committee includes the potential for a new morass of red tape that could strangle the budding DPC industry. The committee is directed to, “Recommend legislation regarding requirements for DPC practices in the private market,” according to a Legislative Council staff brief.
Doctors at the leading edge of DPC say piling more regulations on doctors simply because they don’t operate within the traditional health insurance structure is unnecessary.
For one, physicians are already heavily regulated – regardless of how they’re paid. DPC doctors are “normal, board-certified, state licensed physicians, with all the oversight that includes – which is already fairly substantial,” Umbehr said.
States like Kansas have accurately defined DPC as a health care delivery model and not a form of insurance. A similar bill in Wisconsin last session passed the Assembly but stalled in the Senate.
Concerns that freeing DPC practices from the thicket of health insurance regs are also unfounded, Umbehr said.
“The oversight [of physicians] never came from insurance companies, they were just a billing tool,” he said.
While legislators have their hearts in the right place, “The idea that we need more regulation on physicians is a little ludicrous,” Umbehr said.
It’s the power of free market forces that provides the best oversight of direct primary care practices. “Like any other industry, you’re incentivized to show patients your worth,” the physician said.
Direct primary care, which relies on a heavy dose of doctor-patient trust, relies on patients finding value in their doctor and staying on as a customer.
“We don’t want any distrust to infiltrate our doctor-patient relationship, so we have to go above and beyond and have a level of transparency that’s really unprecedented in most health care experiences,” Umbehr said.
Pro-efficiency Providers
Direct primary care is marked by price transparency, which is almost nonexistent in the traditional, fee-for-service, insurance-driven health care industry – a leading reason costs have spiraled out of control in the era of Obamacare’s runaway premiums.
Direct primary care’s power to reduce costs by increasing efficiency and cutting down paperwork might be its best feature. “Sometimes I think the idea of us being insurance-free means we’re anti-insurance, or maybe anti-government. We’re really just pro-efficiency,” Umbehr said.
Insurance companies can even make more money while charging lower premiums, making direct primary care a win for everyone.
“It should sound a little too good to be true…this is just a smarter way of combining health care and health insurance,” Umbehr said.
Under a DPC arrangement, most routine medical procedures can be done in the primary care physician’s office at no additional charge. Memberships, often compared to a gym membership, typically cost around $50-70 per month depending on the patient’s age, $10 a month for children. At Umbehr’s practice that includes unlimited home, work, and office visits as well as unlimited telemedicine via phone, text, or video conference. There are no copays for anything, ever, in the office, he said.
DPC isn’t so-called concierge care, a high-end health care model for the wealthy and healthy, Umbehr said. “This is affordable care. Rich, healthy people don’t need affordable care.”
Walmart, renowned for its low prices, can sell 90 blood pressure pills for $10. Even that’s nothing if you’re able to buy pills wholesale and sell them to patients at cost, Umbehr said.
“We get 1,000 pills for $10,” he said.
“We’re able to get breast cancer chemotherapy for $6 a month, relative to when patients are quoted hundreds of dollars a month. Most blood tests are one, two, three, four dollars.”
That’s a huge help to people who are uninsured, but DPC also pairs with health insurance to decrease premiums by 30-60 percent, saving employers and individuals alike a potential fortune. Employers who offer DPC in conjunction with regular insurance often pick up the tab for the primary care membership cost.
“It should sound a little too good to be true…this is just a smarter way of combining health care and health insurance,” Umbehr said.
Umbehr gave just a few examples of how stacked the traditional health insurance deck is against cash-strapped families facing rising medical costs.
Direct Savings
A panel of DPC doctors testifying before the legislative study committee hit members with a flurry of numbers, painting a stark picture of inflated costs under traditional health insurance.
Dr. Steve Bondow, a DPC physician in Milwaukee, told the committee he can charge $18.46 for a routine physical as compared to $300-500 when submitted to insurance. Savings on medications alone can often cover the entire monthly membership cost.
Likewise, Umbehr, who also testified, said he could test for diabetes for $2.25 as opposed to $150 under insurance and provide pediatric seizure medicine for $40 a month, as opposed to $400 a month.
“I’ve had people come in with some of their co-pays they were required on medications where their monthly co-pay was $80, $100, $150 and [we] were able to supply it for $20 for three months,” he said.
Likewise, Umbehr, who also testified, said he could test for diabetes for $2.25 as opposed to $150 under insurance and provide pediatric seizure medicine for $40 a month, as opposed to $400 a month. Another medication commonly taken by Medicare patients costs $66 a pill at the pharmacy – Medicare doesn’t cover the cost – and he gets it for 19 cents a pill.
The current system is broken. The comparison between the traditional health care financing model and direct primary care doctors’ experience shows just how broken.
Look to La Crosse
Despite the doctors’ testimony and stacks of powerful anecdotal evidence, there’s just not enough data to reach a scholarly conclusion about whether DPC yields better health outcomes or reduces costs, health policy experts from UW-Madison told the committee.
But the City of La Crosse and La Crosse School District – along with countless primary care doctors and their patients – might beg to differ.
The School District of La Crosse has seen significant savings through a health insurance package that includes direct primary care.
“It costs us one-third of what it would cost if those claims were coming from a preferred provider,” Patricia Sprang, executive director of the district’s business services’ department, told MacIver News Service.
She said last year, the district saved approximately $1.5 million with staff members and their family members opting to use fixed-cost, direct primary care. Moreover, because DPC brought down the number of more expensive, traditional health insurance-based claims, the district saw no increase in its health insurance plan and no change to its benefits.
The cost savings realized thanks to La Crosse’s popular direct primary care offering could be reproduced in the state’s behemoth Medicaid program.
The City of La Crosse, too, has seen seen significant savings through DPC.
Valerie Fenske, the city’s director of finance, said traditional health care claims dropped substantially last year, with 1,462 of 1,589 covered employees, spouses and dependents eligible for DPC using it. Both local governments dodged significant premium increases thanks to their embrace of innovation.
The La Crosse experience could be reproduced in the state’s behemoth Medicaid program. Rep. Joe Sanfelippo, the author of an Assembly bill last session that defined DPC in state law as not being a form of insurance and authorized a DPC pilot program in BadgerCare, says adding direct primary care to the Medicaid program could drive down costs by as much as 20 percent, potentially saving taxpayers hundreds of millions of dollars.
Or more. A similar pilot program in Michigan, if expanded to all the state’s 2.4 million Medicaid enrollees, could generate savings of up to $3.4 billion, according to one study.
Direct primary care opens the door to potentially enormous cost savings to patients, employers, and taxpayers by introducing a seemingly quaint notion back into health care — free market economics.
“This isn’t us being brilliant, this is just basic economic principles applied to an industry that’s really forgotten these things,” Umbehr said at the hearing.
But Dr. Suzanne Gehl, a DPC family practice physician in Delafield, warned that the promise of market-driven innovation in health care could be squandered by legislators bowing to pressure from interests invested in the traditional health insurance-driven system.
“Certainly, putting more burdensome regulations onto direct primary care could be a huge disincentive…I just want to make that we maximize what’s working well and not develop some onerous regulations in the process,” she said.