The 101 on Direct Primary Care

By: Ashley Lockett

Overview of Direct Primary Care

Direct primary care is a type of primary care that differs from traditional practices in terms of patient care and billing. In contrast to traditional models that rely on insurance billing, direct primary care operates on a membership model. In the membership model, patients pay a membership fee. This membership fee typically ranges based upon factors such as location, experience, and services offered. Employers may also offer direct primary care as an employee benefit.

Because the membership fee is the source of income for direct primary care practices, they do not accept insurance and do not participate in Medicare, Medicaid, or other government programs.

Differences Between Direct Primary Care and Other Models

While direct primary care has been around for over a decade and in recent years is gaining more traction, there are still other models of care that continue to dominate. Most notable are traditional primary care and concierge practices.

1. Traditional Primary Care

In traditional primary care practices, patients often have a general practitioner that they see for their everyday needs and common concerns. Beyond those everyday needs, the primary care physician may refer their patients to a specialized practice to appropriately handle the patients’ specialized concerns.

Though the general practitioner may be well equipped to continue the patient care without a referral, the number of patients in the traditional primary care setting may make referring patients a more efficient method in the long run. In traditional primary care settings, there may be 2,000 to 3,000 patients compared to the 400 to 600 patients who are in direct primary care practices. In addition to referring patients to other specialized practitioners, physicians in the traditional primary care model often use nurse practitioners, physician assistants, and other healthcare professionals to help render primary care services to the patient.

Another notable difference is that unlike direct primary care, traditional primary care operates based on a system dictated by insurance. Because of this, patients more often chose to be seen by providers that are covered by their insurance and are typically referred to specialists only within their network. For physicians, involving insurance companies affects the need to document and code their patient’s medical records to justify billing or including reimbursement codes.

2. Concierge Care

While similar to the direct primary care model with membership-based care, concierge practices still have a few differences that make the two distinct from each other. Typically, concierge practices cater to higher-income populations with a monthly or annual membership contract that has higher fees. The average cost of concierge medicine is usually between $2,000 to $5,000 per year and may cost even more than that in places like South Florida where it can range from $3,500 to $10,000 per year. One of the biggest differences between the concierge and direct primary care model is that in concierge practices, most continue to accept insurance plans and government programs.

Advantages of the Direct Primary Care Model

Due to the smaller number of patients that are commonly seen in direct primary care practices, one of the main advantages of this model is how patient-oriented it is. On average, physicians can spend more time with each patient, allowing for more quality care. Other examples of increased quality care may include reduced wait times, customized treatment plans, and same or next-day appointments depending on the practice.

With the absence of insurance companies or government entities, there is no third-party interference in the care of each patient. This means care is dictated by the physician to the patient only, and not modified through those third parties who can often determine which procedures or medications are covered by the plan/program or not.

Additionally, with costs, the payment system under the direct primary care model may be more transparent. The membership fees are generally clearer than the costs that are associated with care models that use insurance. Small business owners and independent contractors who are considering healthcare plans, may see direct primary care as an option, as the flat fee rate is more stable in contrast to insurance where costs can be unpredictable because of high insurance premiums that are subject to change.  

Disadvantages of the Direct Primary Care Model

Under a direct primary care model, most routine medical examinations, treatments, and services are covered by membership dues. Unlike traditional insurance, the membership fees typically do not contribute to your deductible. Meaning, patients may still have out-of-pocket costs for visits outside the scope of primary care such as specialists’ visits, hospitalizations, and other emergency medical needs. Because of this, patients may need to have additional insurance to cover those unforeseen events, which can be costly.

In some places, the direct primary model may not meet the health insurance requirement of the Affordable Care Act (ACA). This reinforces the idea that people using the direct primary care model may need to have insurance in addition to direct primary care if it does not qualify as health insurance under the ACA. 

For those seeking tax-advantaged medical savings options, the membership fees paid for direct primary care, may not be compatible with Health Savings Accounts (HSAs), which allow individuals to put away tax-exempt money for healthcare expenses, up to an annual maximum.

Though the direct primary care model has been around for years, there is still no official framework for how it operates. While that may be an advantage to some providers to be more flexible in their practice, it may also cause confusion for patients. It is also important to note that because direct primary care does not work with government programs such as Medicaid and Medicare, it isn’t subject to various cost and quality regulations, such as the Medicare Access and CHIP Reauthorization Act.

Things to Consider When Opening a Direct Primary Care Practice

There are important things to consider if a physician were opening a direct primary care practice. Some considerations are the necessary steps of finding an office, staff, and electronic health record (EHR), determining per-patient pricing is one of the most significant steps.

Generally, the price calculation is based on the sum of all expenses divided by the anticipated size of the patient panel. The sum of all expenses may include the staff salaries and benefits, office space mortgage/rent, technology fees, marketing fees, laboratory fees, and all other expenses.

*****************************************************

It should be noted that I am not your lawyer (unless you have presently retained my services through a retainer agreement). This post is not intended as legal advice, it is purely educational and informational, and no attorney-client relationship shall result after reading it. Please consult your own attorney for legal advice. If you do not have one and would like to retain my legal services, please contact me using the contact information listed above.

All information and references made to laws, rules, regulations, and advisory opinions were accurate based on the law as it existed at this time, but laws are constantly evolving. Please contact me to be sure that the law which will govern your business is current. Thank you.