To learn how much direct primary care can do, try it first in the ACA-compliant, full-benefit individual market.

If Georgia must mandate the availability of direct primary care, here’s how.

For some future open enrollment period, the individual market will offer paired plans that differ only by how primary care is paid for and how it is received. Bigco, for example, offers Bigco Silver FFS and Bigco Silver Direct ; MajorCo probably offers MajorCo Silver FFS and MajorCo Silver Direct. There will be similar paired offerings from Aetna, Cigna, and LargeCo. Each company has contracted with primary care practices to provide fee for service, primary care services at in-network rates; each company has also contracted with one or more direct primary care practices to provide in-network primary care services at an agreed monthly fixed fee.

The scope of direct primary care services to be covered by the fixed fee is defined in a list. The sole compensation to direct primary care practices by the insurer is the monthly fixed fee. In addition, the direct primary care practices may, if they wish, perform unlisted services at the insurer’s in-network rates.

BigCo, MajorCo, and the other large insurers will have sat down with competing direct primary care providers and will have been presented with data purportedly showing potential downstream care reduction performance . The competing insurers will each have a team of actuaries and econometricians make an independent evaluation of these performance claims; the insurers will then determine which direct primary care providers, if any, are likely to deliver cost-effective results if contracted to the insurers network.

Some insurers may accurately estimate the performance of direct primary care and produce appropriately priced DPC policies for the market, relative to FFS policies. Some insurers may make inaccurate estimates of DPC performance, resulting in relative underpricing or overpricing of DPC policies. Any underpriced policies will spell losses for the insurer on a per policy basis; moreover, these loses will be magnified because the underpriced policies will attract a enhanced disproportion of policy sales.

While subsequent enrollment cycles approach, however, insurers’ econometric/acutarial teams will adjust prices based on accumualting performance data. The payments insurers are willing to make willing to make and the prices DPC providers are able to demand will move as needed toward pricing that reflects whatever actual downstream cost reduction performance direct primary care has delivered.

The resulting premium differential, if any, between DPC and FFS coverage will come to reflect strongly, if not entirely, the real difference, if there is any, between DPC and FFS in cost-effectiveness. However that turns out, there would likely remain some willing to pay a premium to remain in particular plans to retain the FFS or DPC primary care physicians they prefer.

At least in the individual and small group markets, moreover, selection bias would not play a role determining how an ACA marketplace comparison of DPC and FFS delivery would turn out. The Affordable Care Act includes a risk adjustment process under which plans with riskier populations receive funds from plans with less risky populations. The very intent of risk adjustments was to get providers to compete by innovating in healthcare systems instead of competing by risk selection. Accordingly, a mandate that Georgia insurers make direct primary care available for a serious market test might be relatively safe in the risk-adjusted market.

Since Georgia is not a command economy, however, it seems wise that any mandated test be of limited scale, say something limited to an urban county, a rural county and one in between. A limited test may also be wise given that there are relatively few direct primary care providers in Georgia. Upscaling for a full statewide test could stretch direct primary care resources too thin. Relatedly, some attention might be needed to assure that neither negotiating insurers nor physician practices willing to provide direct primary care are forced by the mandate’s design to make bargains that would prevent the real value of direct primary care from being correctly determined and reflected in the market.

For the large group market, the ACA does not have a built in risk adjustment procedure. Without that backstop, it would make sense to allow direct primary care prove its cost-effectiveness in an individual market experiment, prior to mandating the availability of direct primary care in the large employer market.

On the other had, allowing the large group market to test direct primary care would be dandy.

The best reason to limit and, even, to eschew entirely any mandate is that insurers can figure all of this out on their own. Some large insurers seem to be moving on their own toward incorporating something like direct primary care. See, e.g., this piece which ties together direct primary care, Aetna’s merger with the drug delivery giant CVS, and CVS’s experiment in offering somewhat DPC-like “Health Hubs”. For another example, large insurers are working alongside both and established DPC providers on coordinated arrangements like these involving Boeing, Iora Primary Care, Aetna and Cigna.

At same time, the features or results of direct primary care that are touted as being most effective for reducing downstream costs are already known to insurance companies through past and/or present experience: a set number of primary care visits included without any charge; primary care visits for a small copay; “welcome” physicals; wellness programs; fees-for-service that pay primary care physicians more money for longer visit durations; and, of course, primary capitation itself, including that with rates tied to results.

Rather than a new mandate, why shouldn’t the health insurance marketplace work out the role of direct primary care on its own?

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