The DirectAccessMD clinic that serves the employees of Anderson County, SC, is run by a tireless advocate for, and deep believer in DPC, Dr J Shane Purcell. Here the employer, with Dr Purcell’s apparent support, has taken steps that seems to have somewhat mitigated the selection bias that is baked into most other direct primary care option arrangements. Specifically, the dual benefit plans here have both a lower deductible ($250) and a lower co-insurance maximum ($1250) for DPC patients than for non-DPC patients ($500, $2500). Where other benefit plans structures, like the Nextera SVVSD plan reported here, push higher risk patients away, the Anderson County plan is more welcoming to those patients. I applaud the County and Dr. Purcell.
In fact, a high risk Anderson employee can see more than $1500 per year in added costs if she declines DirectAccessMD. A patient expecting the average utilization seen for the FFS cohort (~$4750) in Anderson County would likely incur about $375 in added costs by declining DPC, where an average patient in Nextera’s SVVSD plan would have saved $925 for doing the same. Again, this important difference is a feather in Dr Purcell’s cap.
In November 2020, we applied CMS’s actuarial value calculator to compare the County’s plans. The traditional plan had an actuarial value of 82%, the DPC plan of 87%. More of this update below.
Yet, as the recent Milliman study suggests, high risk patients may be reluctant to disrupt standing relationships with their PCPs, and may choose to resist other incentives if it means having to select a new PCP from a small panel at a given DPC clinic. Consider also that older employees, even those not at high risk, are more likely than younger employees both to have deeper attachments to their long-standing PCP and to have more disposable income to spend on keeping that relationship going. On average, therefore, we would expect employees who eschewed the direct primary care package to be an older and/or riskier group. Let’s go to the tape.
Not surprisingly, raw data — without any risk adjustment — from the employer indicates a noticeably smaller percentage of purported savings than has been bragged about by other DPCs in the past. Anderson County’s net cost for DPC members came in at 9% less than for non-DPC members, but the employees in DPC paid OOP only about half of what their non-DPC counterparts did. Combining both employer and employee costs, the average total spend for Anderson County DPC patients came to about 14% less than for non-DPC patients, purported savings of $56 a month.
But note these warning from the Milliman study: “We urge readers to use caution when reviewing analyses of DPC outcomes that do not explicitly account for differences in population demographics and health status and do not make use of appropriate methodologies.” Or this more recent one: “It is imperative to control for patient selection in DPC studies; otherwise, differences in cost due to underlying patient differences may be erroneously assigned as differences caused by DPC.”
An risk analysis of the health status of all the county’s patients, fully detailed as to all chronic coniditions, may not have been financially feasible for a modest operation like Dr Purcell’s. But a sensible population demographic methodology is at hand: comparing the ages of the two populations and using that as a predictor of utilization. This is certainly a “rough approximation”. But, not only is a rough risk adjustment likely to be better than no risk adjustment at all, the reasonableness of using age as a proxy for predicted utilization is affirmed by the fact that nearly all DPC practices use age-cost bands, and no other risk-based factor, in setting their subscription rates. Basic demographics are at the core of risk adjustments used by CMS for the ACA; over 75% of ACA enrollees in insurance plans under 65 have no adjustment-worthy chronic conditions; they are risk-adjusted on demographics alone.
The coefficients for age/sex risk adjustment used by CMS for ACA plans in 2020 can be seen here. Dr. Purcell’s slide pointing out the DPC cohort of Anderson County employees was 2.7 years younger than the traditional cohort is here. Going back to the tape, I estimated the risk adjusted overall medical costs for the DPC membership to be about 11.5% lower than for traditional primary care group.
A second adjustment points the other way. All other things being equal, richer plans are known to produce “induced utilization”. CMS’s risk transfer machinery applies an induced utilization factor to adjust for benefit richness. As shown on the calculation sheet also linked above, this adjustment would increase employer costs by 3.8%.
This brings a tentative measure of savings, pending more definitive risk adjustment, to nearly 8% overall, about $31 PMPM.
Maybe it is not what what Dr. Purcell hoped, but his results are more promising than most others.
The great caveat, of course, is that proper risk adjustment could turn this estimate up or down. In the Milliman study, the difference between actuarial of the benefit packages of the DPC and FFS programs was modest, yet the Milliman team still found massive adverse selection into the FFS. Milliman accounted for this as the result of sicker people clinging to the trusted PCPs who had served them in the past. I think of that as adverse selection by narrow primary care panel. Whatever the explanation, Milliman found that the selection bias required an overall upward adjustment of 36% of DPC costs; and they predicted that most employer DPC option clinics would see similar. On the other hand, a fairly large difference in benefit packages favoring DPC members, as in Anderson County, is something the Milliman team appears not to have contemplated, and it must surely drive some of the risky into the DPC pool.
I am still not betting on DPC saving big money. But, if you call me with your proposed wager, I’ve shortened the odds.