A recent review by CNN shows that the percentage of physicians who have gone to a direct pay practice has doubled in the past year. Currently, 6% of physicians are in this mode of health care delivery and the numbers are expected to rise as health care reform takes hold.
The beauty of direct pay physicians is that they are working for the patient, not an insurance company or government entity. Savings from negotiations with hospitals, labs, and other health care support companies can be passed on to patients. This allows patients and their doctors to decide what tests, imaging studies and procedures are actually needed. This model is a true partnership between a physician and patient. By not having to employ support staff to deal with red tape and paperwork, a physician’s overhead is drastically reduced and prices can be set at a market competitive rate.
The insurance game is played by having patients return time and again in order to deal with their health issues, necessitating different level office codes and repetitive copay amounts. In a direct pay practice, time is allocated to address most issues in one visit and physicians have the time to spend with their patients in a more efficient manner. Over time, copay amounts for several visits actually are more expensive for the patient than in a direct pay to physician model. Patients may still submit the physician’s charges to their insurance for reimbursement should they desire.
We have found, however, that full office charges are the patient’s responsibility if their deductible has not been met. These office charges are always higher than in a direct pay model. A review of our billing cycle recently indicated that over 90% of patients were responsible for the charges incurred in our physician office based on rising deductibles and their insurance contract.
Here is a recent example. A family of six insured last year with a major insurance carrier cost the family $1375 per month with a $2500 deductible per person per year, or $5000 deductible per year for the family. If the out of pocket deductible was met, the costs to this family would be $21,500 in one year. This is a healthy family with few medical problems. By switching to a catastrophic policy with a per person deductible of $5000 per year, or $10,000 per year for the family, the insurance cost dropped to $224 per month. This is an annual premium of $2688 per year versus $16,500 per year. If the family deductible were to be met, total out of pocket expenses for this family would be $12,688 per year.
All physicians and hospitals will negotiate discounts if patients are paying out of pocket. If necessary, a $10,000 deductible could be placed in an account for future needs and out of pocket costs would be just over $200 per month, depending on the carrier.
This is the model we are using at our practice. Office calls are affordable. Lab discounts are negotiated with major labs saving patients up to 80% on their test fees. Discounts can also be negotiated with imaging centers, mammogram units, hospitals, medical supply businesses, physical therapists and other ancillary health services.
In short, direct pay for health care makes more sense, eliminates control over your health by third parties, and is more cost effective.
Bryan J. Treacy is a physician.