Why patients should pay doctors directly


There are distinct advantages for the patient who pays the primary care physician (PCP) directly: higher quality, lower cost and greater satisfaction.

The fundamental problem in health care delivery today is a payment system that is highly dysfunctional leading to higher costs, lesser quality and reduced satisfaction. The core problem? The patient is no one’s customer. With employer-based insurance, the physician’s customer is the insurance company that sets the rates, defines the rules and accepts or denies the bill. And the insurer’s customer is the employer. This is much different in concept and function than the professional-client relationship with your lawyer or tax accountant. Those relationships are direct; you establish your requirements, negotiate the fee or choose a different provider. In medical care, the patient has no standing in the financial arrangement whether employer-based insurance or Medicare or Medicaid.

Add to this the non-sustainable business model PCPs find themselves in today. Insurers have kept reimbursements flat for a decade or more. Meanwhile office costs have risen. With more expenses and static revenue, the PCP tries to “make it up in volume” by seeing more patients for shorter visits. Twelve to 15 minutes may be fine for a quick blood pressure medication check or a sore throat but it is not enough for good preventive care. Nor is it adequate for the patient who has a complex chronic illness (e.g., diabetes, heart failure or cancer), which consumes 70-85% of insurance claims paid. This patient will need a multi-disciplinary team of providers to render all the care needed. But the team needs a quarterback and if care is not well coordinated by the PCP, the number of specialist visits will skyrocket, as will tests, procedures and expensive prescriptions.

How will primary care be paid for if not by the insurer? By the patient paying directly.

When it is his money, he commands more physician time, the time needed to do careful assessments, to call a needed specialist and describe the rationale for the referral and to request a prompt appointment. When it is the patient’s money, he will begin to challenge the doctor – “Do I really need to take that test, visit that specialist or take that prescription?”  “Will the result of that test alter my care or is it just to ‘be complete’”? Questions like these lead to better care and lower costs.

With a direct payment arrangement with the physician, patients can buy a high deductible policy with its lower premiums for the unexpected expensive needs. The patient and physician now have a direct professional business relationship. And the patient begins to take a much more active role in the entire care process.

Direct payment saves the doctor time and money (estimated to be about $58 per visit) by not having to do the billing functions. This savings alone could allow for more time with the patient at the same level of reimbursement as what insurance pays today.

Some employers make high deductible options available; this should be the standard, with savings going to a health savings account (HSA) to use toward paying for primary care. Medicare does not have a high deductible option, although it should. The Affordable Care Act allows for high deductibles in the insurance exchanges but not for Medicare where there are also no HSA options. High deductibles would be a useful accommodation and help bring down – today – the spiraling costs of Medicare.

The ACA also mandates that approved preventive care, including screenings, be offered with no deductibles or co-pays by both commercial and government sponsored insurance. Why not let the individual choose to either pay for preventive care directly or have free preventive care with correspondingly higher premiums.

Absent change in the insurance model, PCPs are taking steps on their own to change their business parameters. Large numbers are simply closing their practice and being employed by the local hospital. Others refuse insurance, expecting only direct payment. Other PCPs are switching to a retainer-based practice where they charge $1,500-$2,000 per year. They agree to reduce the number of patients followed from 1,500-2,000+ down to about 500. This allows for the time PCPs need to give comprehensive preventive care plus orchestrate the multi-disciplinary team care for patients with complex chronic illnesses.

There is a strong need now to change the professional relationship so that the patient has reason (dollars) to take control of their doctor-patient relationship. Direct payment for primary care services creates the appropriate professional-client relationship that leads the PCP to deliver quality and service while investing the patient in the responsibility of taking ownership of his own health and wellness. These are changes in the delivery system that need to occur and the sooner the better.

This post appeared as an Op Ed in the Washington Times, October 17, 2012.

Stephen C. Schimpff is an internist, professor of medicine and public policy, former CEO of the University of Maryland Medical Center and is chair of the advisory committee for Sanovas, Inc. and the author of The Future of Medicine – Megatrends in Healthcare and The Future of Health Care Delivery- Why It Must Change and How It Will Affect You.


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