Total claims cost caution: when DPC is implemented primary care claims vanish. AEG/WP’s 15% estimate is not conservative in the least.

When the direct primary advocates toss out figures about overall claims cost reductions, it’s important to carefully separate overall cost, downstream care claims costs, and overall claims costs.

For example, the authors of the AEG/WP pitch for DPC in Georgia, have assumed a 15% reduction in downstream care costs and claimed that it “represents the low end of possible savings.” At the same time, they have relied on sources like the Arvada County clinic and the Nextera clinic that have show overall claims cost reductions of 22% and 20%, respectively. Properly understood, the reports from those two clinics suggest that 15% is anything but a conservative estimate of downstream care costs. Here’s why.

In analyzing potential Georgia savings, the AEG/WP authors correctly recognized that direct primary care enrollees would cease to incur claims costs for primary care. To amend their calculations, they relied on widely available medical claims cost data that indicated 7.0% of all medical claims were claims for primary care. Accordingly, they reduced overall claims cost by 7% to determine the base amount of downstream claims.

The same common sense needs to be applied to the Arvada and Nextera overall claims cost data. Since direct primary care members pay a fixed fee instead of making claims for for primary care, enrolling in direct primary directly reduces overall claims cost by 7%. So, for example, when the brochure for the Arvada clinic notes 22% lower claims costs for DPC-members vs FFS member, 7% is due to elimination of primary care claims, leaving only 15% that can be fairly attributed to downstream claims cost reductions. For Nextera, which sees a 20% lower claims cost for Nextera members, an even smaller downstream care cost reduction is demonstrated,

Even if the Arvada and Nextera claims data were entirely free of selection bias or any other errors, they come nearer to refuting than to supporting AEG/WP’s assertion that a 15% reduction in downstream care costs “represents the low end of possible savings”.