Concierge, Direct Pay, or Hybrid: Is One Right for You?

Leigh Page

Disclosures

April 06, 2016

In This Article

Choosing the Right States for Direct Pay

Your success as a direct-pay physician depends a lot on which state you practice in. Although Dr Eskew never lived in Wyoming before, he chose to practice there because he thinks it's one of the friendliest states in the country for direct pay. Wyoming has no prohibition against in-office dispensing, no certificate of need laws, no gross receipts tax on physicians, and no individual or corporate income tax, he says.

Though he graduated this past June from a residency in West Virginia, he says that he would never practice there because he thinks it's hostile to direct pay. A little over 10 years ago, he says, the West Virginia Department of Insurance ordered a Wheeling physician to stop charging his patients a membership fee because the department had concluded that he was, in effect, running an insurance company. The doctor lobbied the state legislature and was able to get an exemption for his own practice, but other direct-pay practices would have a tough time in the state, Dr Eskew says.

On the insurance issue, only direct-pay practices are at risk. Concierge practices are not affected because they submit claims to insurers, Marquis says. In addition to West Virginia, Maryland and New York authorities have similar interpretations of their insurance laws. In 2009, he says, the New York State Insurance Commissioner charged a direct-pay physician with violating the state's insurance laws, and the doctor agreed to charge patients a $33 fee per "sick visit," which in the commissioner's opinion made it OK. While he didn't know of other cases in New York, this one case has had a chilling effect on direct pay in New York, he says.

Marquis regards the situation in Maryland as more serious than in New York because the insurance commissioner has actually issued an opinion stating that virtually all direct-pay practices are subject to Maryland's insurance code. The commissioner added that he would decide on a case-by-case basis whether direct-pay practices need to be treated as insurers. (Marquis has laid out these problems in an in-depth article[5] on his law firm's website.)

To counter the threat of being mistaken for an insurer, a lobbying group for direct-pay practices called Direct Primary Care has been asking state legislatures to pass bills that exempt direct-pay practices from state insurance regulation. The group reports[6] that as of July 2015, thirteen states have passed legislation that exempts direct-pay practices, including Texas, Washington, Michigan, Arizona, Oregon, and Utah.

Not Just for Wealthy Patients

While concierge practices still focus on higher-income patients who can afford the extra amenities, many direct-pay practices are going down-market.

"I have patients who are multimillionaires, and I have patients who are borderline homeless," says W. Ryan Neuhofel, DO, a family physician in Lawrence, Kansas, who founded his solo direct-pay practice 4 years ago, direct from training. He doesn't think there are enough rich people to keep practices like his open, and he wouldn't want only them, anyway.

Indeed, many of his lower middle-income patients aren't making enough money to afford health insurance, and about half of all of his patients are uninsured. He says he hasn't sought out uninsured patients and doesn't encourage them to stay uninsured, but he isn't afraid of working with them, either. He worked in a safety net clinic during residency.

One problem with treating uninsured patients, though, is that they have a lot of uncontrolled symptoms that require a great deal of medical attention, Dr Neuhofel says. For patients with unmanaged diabetes, for example, Dr Neuhofel schedules twice-weekly sessions lasting 30-45 minutes each, and this goes on until they have gotten their diabetes under control. "In the short run, that's a terrible deal for me," he says, "but once their diabetes is managed, hopefully they don't need as much care." When his current patients become more stabilized, he hopes to increase his panel size from 600 to 700 or 750 patients.

Many of Dr Neuhofel's patients have high deductibles, and he's happy to work with them. He believes that insurance should only be used for catastrophic care, and everyday expenses should be paid out of pocket. He wants healthcare to return to basically a doctor-patient transaction.

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