If you ask any of our Mercer physicians what the most important thing someone can do for their health, the first answer is always “get a primary care physician”. Having a primary care physician is important for a long list of reasons that includes regular check-ups, preventive care, and having someone to consult before seeking more intensive care.
Yet, according to a study done by Kaiser Family Foundation, 28% of men and 17% of women in the US don’t have a personal doctor or healthcare provider. Part of the problem is that primary care physicians are in short supply, especially in rural areas. To make matters worse, the Association of American Medical Colleges estimates the US could lose as many as 100,000 doctors by 2025.
Employers have long recognized the value of primary care. One way they ensure that employees (and increasingly their families) have easy access to primary care is by offering onsite medical clinics. Mercer’s National Survey of Employer-Sponsored Health Plans found that nearly a third of employers with 5,000 or more employees (31%) offered a primary care clinic in 2018 -- and another 14% were considering adding one by 2020. Of course, an onsite clinic is not feasible for all employers. But a newer strategy -- Direct Primary Care (DPC) -- may be worth exploring as a way to provide better access to primary care manage costs and enhance quality.
What is DPC and how does it work?
DPC is an alternative payment model designed to provide better access to primary care for a simple, flat, membership fee -- usually around $70-90/month. There are no fee-for-service payments and no third party billing. Patients have 24/7 unlimited access for care in person or via telemedicine/email/text. The key value is providers can give more time and more attention to their patients, developing a strong and trusting relationship.
There are variations on the model. Another form of DPC provides access to a primary care practice with bills for health care services submitted to the health insurance plan. While it also operates on a membership fee basis (usually around $200-$500 annually), this model doesn’t cover unlimited access to care but typically includes attractive perks such as same-day appointments, no waiting times, and 24/7 access via email and telemedicine – all of which helps to improve access to primary care for patients.
There are some compliance issues to be aware of. DPC models that cover all primary care at no cost are not compatible with an HSA-eligible high-deductible health plan because first-dollar coverage is provided. Last year, the House of Representatives passed legislation that would allow DPC payments in an HSA eligible plan, but the Senate declined to take it up. The legislation has yet to gain traction in the new Congress. Executive Order signed by the President this past June urges the Secretary of the Treasury to act within the extent of the law possible to propose regulations that would potentially clarify that DPC expenses are qualified health expenses under 213(d) of the Internal Revenue Code. Regardless, when considering DPC, you need to take into consideration compliance issues.
Using DPC as an Employer Health Plan Strategy
Employers can contract with a DPC clinic and offer it alongside a PPO plan. Because the DPC is where members go first, most (if not all) primary care provided is through the DPC, with the health plan covering other services. It’s an attractive benefit because care is provided to employees and their families at no cost. Employers also save because they pay a flat fee per employee per year rather than for all charges generated over the course of the year – and the flat fee is typically lower than the total claims cost would be.
In DPC staffing models, physicians have 500-1,100 patients, as opposed to the typical patient ratio of 2,000-2,500. This allows for standard 30-minute office visits, extensive discussions on lifestyle issues, more successful preventive care and better management of chronic conditions. This more helpful, collaborative health care experience in turn results in lower utilization of ER, urgent care and specialist services. In addition, most DPC practices offer longer office hours, which can help reduce absenteeism.
Some employers using this strategy currently have focused on specific locations that needed better access to care, on providing more support for members with chronic conditions and as a benefit enhancement to reduce turnover. As a relatively new offering, DPC is a location-specific strategy, which can be challenging for some employers. Check out this map to see where DCP is currently available.
As employers look for ways to manage health costs that don’t involve shifting cost to employees, we expect to see more of them taking advantage of DCP in certain markets to address access, quality and other issues. We’ll keep you updated as we see more activity.
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