Direct Care Increases Access and Transparency, Lowers Health Care Costs

What if, instead of a sky-high deductible, paying outrageous premiums, and waiting months for a doctor’s appointment, it was possible to pay a membership fee for unlimited visits, routine testing and treatment, and 24/7 access to the doctor? Direct care, a model in which patients pay a monthly fee averaging $77, allows patients to receive more time with physicians, know prices up-front, and eliminates the need for insurance.

Direct care uses a financial arrangement made directly between a patient and a healthcare provider — similar to car insurance or a Netflix subscription — eliminating the price-distorting influence of insurance companies. With direct care, patients pay a monthly fee to their provider for all or most primary care services, including standard and clinical laboratory testing, consultations, and care coordination.

According to a 2018 survey, 44 percent of respondents said they did not visit a doctor when they were sick or injured because of expensive costs. Traditional insurance, in which bills are calculated after the work is finished, is a sufficient deterrent to obtaining care for these 44 percent. Furthermore, one in five insured adults received a “surprise bill,” in the past two years.

Using direct primary care is correlated with lower rates of emergency department visits, and more access to primary care providers is associated with higher life expectancy, which makes it all the more unfortunate that traditional insurance disincentives visits to primary care providers. Moreso, a patient’s insurance coverage — whether private, Medicaid, or Medicare — currently dictates the medical professionals seen, the medications prescribed, and the procedures one can undergo, which nearly eliminates patient choice. Some people, especially those with medical problems, are reluctant to leave their jobs because of the expense of replacing their employer-provided health insurance. Clearly, insurance should not be a consumer’s only choice, as it does not guarantee care – nor does it guarantee affordable care.

One might think that physicians are harmed by cutting out third-party payers like insurance companies, but the evidence suggests physicians gain from reducing overhead costs, cultivating a stronger doctor-patient relationship, and eliminating the enormous burden of filing insurance claims. Currently, traditional doctors are laboring under an enormous burden of paperwork: 40 percent of an average primary care practice’s revenue goes to claims processing and profit for insurance companies. One physician who converted to direct primary care claims their overhead costs reduced between 40 and 60 percent. The monthly fees paid by a direct care patients provide a predictable revenue stream. Because insurance is out of the question, doctors are freed from battling for payment with insurance companies. Direct care has the potential to increase Alaskans’ access to physicians, promote price transparency, and most importantly, lower health care costs in the Last Frontier – which all result in better health outcomes for Alaskans.

Furthermore, physicians are paid based upon the number of patients they see. This fee-for-service health care system of paying doctors based on volume creates a perverse incentive toward providing more service – including unnecessary, and even harmful, testing and treatments – rather than focusing on better service that keeps the patient healthier. Both physicians and patients are better off when adopting a direct care model.

Doctors who switch to  direct healthcare often remark on their newfound ability to focus on their patients due to reducing the time spent on insurance paperwork. One early adopter, Dr. Brian R. Forrest, who launched Access Healthcare in North Carolina in 2001, noted this advantage:

“I don’t have to spend any of my day worrying about billing. I don’t have to spend any of my time charting so that I can get paid a certain code. One-hundred percent of my time is spent face-to-face with my patients figuring out what we can do to optimize their health. I get to do what I love, which is patient care. I don’t have to do any of the baloney with insurance.”

As of 2021, there are 1474 direct primary care practices across 48 states and D.C. that have loyal patients. One reason for the success is direct care physicians can dedicate more time to their patients than traditional physicians; direct care physicians generally have patient panels between 600 and 800 patients, whereas typical primary care providers billing insurance have patient panels upward of 2000 patients. This reduction in panel size means that patients spend more time with their doctors: direct care patients receive on average 35 minutes per visit compared with 8 minutes in the traditional model. Further, most direct care doctors make themselves available by phone or email 24/7 (and even house calls sometimes), while traditional doctors are only available during standard office hours.

Direct care works outside of primary care, too – direct surgical and specialty care clinics present fully transparent prices and a pay-as-you-go model so that patients can pay in cash. These practices usually perform non-urgent procedures like knee replacements, setting and casting broken bones, and procedures for carpal tunnel. The Surgery Center of Oklahoma is one example for surgery; though they don’t offer any ongoing membership fees, this practice only accepts a single cash payment that covers the facility fee, the surgeon’s fee, and anesthesiologist’s fee. In addition, the Surgery Center of Oklahoma boasts extremely low infection rates compared to national averages. Often, direct surgery care providers do not charge additional fees for unforeseen complications, which means that in the unlikely case of infections, these providers won’t charge the patient for their error.

Both plastic surgery and LASIK use direct care models, and as a result developed competitive markets where costs have increased at a much slower rate than other procedures, and prices for LASIK have decreased by about 25% between 1999 and 2011. Direct care in other aspects of health care holds the same potential to increase access and lower costs.

My Heart.Life PLLC in Glendale, Colorado demonstrates that direct care works for specialty care as well, in this case cardiology. Because they are consultative and do not accept insurance, costs are kept low and transparent, and monthly plans can be established for those needing many regular visits. In addition, some dentistry models like Kleer help to promote dental wellness for patients that may have traditional health insurance but do not include dental benefits.

But there is one crucial barrier that stops patients from joining direct care practices: government regulation. Alaska does not recognize direct care as “not a form of insurance,” which means that it is risky for providers to adopt direct care models. Alaska should follow the lead of 29 other states and recognize direct care “as a medical service outside of state insurance regulation” to meet the unique needs of Alaskan patients. By recognizing direct care as a health care agreement rather than insurance, providers can reach patients that may otherwise not be able to access health care for a reasonable cost. Montana is the latest state to pass a law of this kind: SB 101 permanently authorizes direct primary care in Montana as a non-insurance relationship. Dr. Todd Bergland, President of the Montana Direct Primary Care Association, gave this testimony in favor of SB 101 that clearly states the case for direct care:

“The patient/doctor relationship is sacred, and the direct primary care model allows me to keep this relationship at the center of medical care, without having to swim mightily against the system to do so. I work for and am accountable to the patient, rather than a 3rd party with other interests. DPC brings back the caring piece of medical care that has faded away over the last few decades.”

In addition, federal tax law views direct primary care plans as a form of insurance, which prohibits those with some forms of care from also obtaining a DPC plan. Current federal IRS rules prohibit individuals with Health Savings Accounts (HSAs) paired with high deductible health plans (HDHPs) from making agreements with a direct primary care provider. The Primary Care Enhancement Act, also known as H.R. 365 and S 1358, is a bipartisan bill that would change the interpretation to allow those with HSAs and a form of insurance to also obtain a DPC plan. The IRS has also proposed clarifications to rules that allow DPC arrangements to qualify as medical expense deductions.

Direct care restores the heart of the doctor-patient relationship. Without the involvement of the government or insurance companies direct care physicians have the time and energy to devote to finding the best solution based on their patients’ individual needs and personal life experiences, not on the calculation of an insurance company. Patients benefit from lower costs, transparent prices, unlimited and easy access to their provider, short wait times, longer appointments, and improved outcomes. Protecting and providing direct care in Alaska is one excellent way to give consumers choices, reestablish doctor-patient relationships, and lower health care costs.