A subscription model is not the most patient-centered way.
Consider this primary health care arrangement:
- Provider operates a cash practice
- no insurance taken
- no third party billed
- Provider may secure payment with a retainer
- balance is carried
- refreshed when balance falls below a set threshold
- Provider may bill patient for services rendered on any basis other than subscription
- specific fees for specific services; or
- flat per visit fee for all patients; or
- patient-specific flat visit fee, based on patient’s risk score; or
- patient-specific flat visit fee, based on affinity discounts for Bulldog fans; or
- fee tiers based on time/day of service peak/off-peak; or
- fee tiers based on communication device: face-to-face/ phone/ video/ drum/ smoke signal; or
- any transparent fee system based on transparent factors; but
- Provider elects not to bill a subscription fee, e.g., she does not require regular periodic fees paid in consideration for an undetermined quantum of professional services.
The plan above is price transparent to both parties. It is more transparent than a subscription plan because it is easier for each party to determine a precise value of what is being exchanged.
The plan above gives a patient “skin in the game” whenever she makes a decision about utilization.
Patient and doctor have complete freedom to pair and unpair as they wish. There will no inertial force from the presence of a subscription plan to interfer with the doctor-patient relationship.
The patient gets to use HSA funds, today. The plan above is fullly consistent with existing law and its policy rationale; a subscription plan is not.
Precisely because this plan beats subscription plans on freedom, transparency, and “skin in the game”, this plan is likely to lower your patient’s total costs better than a subscription plan — even if your patient does not have an HSA.
The specific fees and fee-setting methods will be disciplined by market forces. Some providers, for example, might find that the increased administrative costs of a risk-adjusted fee are warranted, while other stick with simpler models. Importantly, forgoing subscription fees should reduce the market distortions that arise when contracts that allocate medical cost risk between parties.
Health care economics has lessons about cherry picking, underwriting and death spirals, dangers associated with increased costs. These dangers have palpably afflicted health insurance contracts. Subscription service vendors are not immune. A subscription-based PCP unwilling to pick cherries will be left with a panel of lemons.
HDHP/HSA plans were created as a countermeasure to the phenomenon described by Pauley in 1968 , that when “the cost of the individual’s excess usage is spread over all other purchasers of that insurance, the individual is not prompted to restrain his usage of care“. A state legislature declaring that subscription medicine “is not insurance” does nothing to check the rational economic behavior of a DPC subscriber with no skin to lose when seeking her next office visit.
Some who generally do subscription medicine have, for years, also used per visit fees like those suggested above to address concerns about HSA accounts. In fact, one of the more widely touted self-studies by a direct provider, Nextera’s whitepaper on Digitial Globe, supported its claim of downstream claims cost reduction by comparing traditional FFS patients and a “DPC” population that included a significant proportion of per visit flat rate patients. Although Nextera claims that its study validates “DPC”, it presented no data that would allow determination of which DPC model – subscription or flat rate – was more effective.
In fact, before the end of March 2020, several DPC practices responded to the pandemic by offering one-time flat-rate Covid-19 assessment to non-members, such as non-subscribed children or spouses of subscribed members. Those flat-rated family members would have been able to use HSA funds for that care in situations in which the actual members might well have been unable.
I urge the rest of the no-insurance primary care community to reconsider its insistence on a subscription system that simultaneously reduces the ambit of “skin in the game” and cuts off the access of 23 million potential patients to tax-advantages HSAs. There’s a better way — less entangled with regulation, less expensive, more free, more transparent, and even more “patient-centered”.
UPDATE: IRS showed in recent rulemaking process that it fully believes DPC subscription fees are, by law, a deal breaker for HSAs, despite the president* signalling his favor for DPCs. In my opinion, IRS would prevail in court if it cared to enforce its view. Philip Eskew of DPC Frontier is 100% correct that the odds of the IRS winning on this are closer to 10% than they are to 1%, just not in the way he apparently meant it.