DPC cherry-picking: the defense speaks. Part 1.

Jump to Part 2.

Within days of the Milliman report warning of the “imperative to control for patient selection in DPC studies [lest] differences in cost due to underlying patient differences [] be erroneously assigned as differences caused by DPC”, the first rumbling of resistance from the DPC advocacy community emerged. This was a suggestion, addressed to one of its authors, that the Milliman study may have treated the direct primary care employer unfairly.

KPI Ninja also reached out to me. After some initial misunderstanding on my part, and subsequent examination of KPI Ninja’s online published material on this subject, I reconstruct my understanding of KPI Ninja’s argument in the immediately upcoming section. For reasons discussed in the next following section, I have concluded that KPI Ninja’s argument, although not without insight, simply does not apply to the risk-adjustment methodology used in the Milliman study itself. Thereafter in this post, I begin to respond more broadly to the KIP Ninja critique and to the not-yet fully visible “remedy” it is apparently developing. I will conclude in a subsequent post.

KPI Ninja’s Donut Hole Concept

Some data used in some risk-adjustment methodologies are diagnostic data harvested from claims, including both primary care and downstream care claims. The risk that manifests itself in downstream claims properly counts in evaluating a patient’s risk, whether the patient is a DPC or an FFS patient. But a problem can arise (a”donut hole” in KPI Ninja’s lexicon), in situations where some PCPs have success at averting downstream claims. If the patient is in an FFS practice, the practice is scored as bearing any risk factor appearing in the primary care claims submitted by the FFS PCP. FFS practices, in essence, get fair credit for their good work in avoiding downstream claims. On the other hand, D- PCPs do not file primary care claims; as a result DPC patients risk factors go unrecorded when not reflected in downstream claims; DPC docs therefore do not get proper credit for their good works.

In the upshot, DPC patients look relatively less risky than they really are. On this analysis, risk-adjustment by claims dependent methods of two equally risky panels of DPC and FFS patients will inevitably disfavor DPC.1

The Milliman study of DPC used risk-adjusment that had no donut hole.

There are ways of evaluating population risk that do not depend on harvesting diagnostic data from physician claims, methods for which there is no claims associated donut hole. Milliman itself, based on experience with millions of people, developed and validated at least two methodologies that do not require claims data: one (age/sex) determines risk factors based only on the age and gender characteristics of the populations being compared; a second (Rx) adds, to age and gender, additional patient information about the usage of different therapeutic classes of prescription drugs. Under the Rx methodology, claims are not looked at; DPC and FFS docs get the same “null credit” for every prescription drug avoided through their primary care work.

Of course, Milliman also has a claims based risk-adjustment methodology (Cx). For its study of Union County’s direct primary care option, Milliman carefully considered using the Cx methodology and, precisely because they identified the donut hole, expressly rejected it. Milliman also considered using its age/gender risk adjustment methodology , but decided to use its more granular RX methodology.2

Simple, lost cost risk-adjustments are affordable for modestly sized employers

The beauty of an age/gender risk-adjustment is that it is straightforward. Nor is it doomed to failure by its simplicity. Over three-fourth of persons under the age of 65 lack any diagnosis consider significant for risk adjustment carried out under the Affordable Care Act. Nor is it likely to be expensive; it is definitely not rocket science. A college freshman just learning how to use a spreadsheet could fire it off in an hour, if pointed to a readily available table, and a data set with each employee’s age and gender.3

In its own published “research”, one of the larger DPC groups (Nextera) used raw total claims from an immediate pre-DPC period as a basic risk adjustment methodology for employer DPC and non-DPC groups claims data for the period following the creation of the DPC option. Those choosing Nextera had vastly lower prior claims.4

Dan Malin, a TPA exclusively serving small employers, addressed a 2019 DPC Summit forum on employer DPC with about 100 attendees present. He claimed that his firm could calculate the medical consumption of that group for a coming year to within five or six percent by having each fill out an ordinary health insurance application.

Has an employer-option DPC cohort ever been OLDER than its FFS counterpart?
Or ever entered a DPC option with a HIGHER prior claims experience?

But DPC advocates could go some of the way long way toward reassuring ordinary employers by demonstrating measurable similarities between cohort members being studied. Say, for example, that a DPC group had virtually the same claims as an FFS group in a claims year prior to creation of a DPC option. Unfortunately, for some reason, whenever these type of comparison have been made, the DPC cohort has turned out to to have had a history of smaller pre-DPC claims. This might be because, as Milliman warned, direct primary care is a cherry-picking machine.

As one DPC thought leader has pointed out, “larger direct primary care companies like Qliance, Paladina, and Nextera have repeatedly reported 20% plus savings for employers using the DPC model. Many smaller employers have found similar savings [].” If those selecting DPC were equally likely to be older or younger than their FFS counterparts, the chance that even as few as ten5 such studies would each have had younger DPC populations would be less than 0.1%.

Alas, for some reason, there are no known reports of a DPC cohort being older than its FFS counterpart. Also, perhaps for some related reason, it often appears that employer DPC cohorts are younger than their FFS counterparts.

In some cases, DPC advocates make an effort to show that a presumably large percentage of a DPC cohort have multiple chronic conditions, but reliably matched data from the corresponding FFS counterpart cohort has not, to our knowledge, been reported. Indeed, a DPC advocate promoting the very poster-child clinic studied by Milliman once sarcastically dismissed the idea of cherry-picking by pointing to the chronic conditions of the DPC’s patients — while noting that “control group data is not available”. Really! Since Milliman presented that very control group data in May, we’ve heard no comment by that author.

Does any of these methods have any significant built in distortion against direct primary care? Does direct primary care make younger? Did receiving direct primary care in one year lower claims costs for the preceding year?

Link to Part 2.


1 A masterful extention of that argument came in a tweet from one DPC thought leader, who was asked about the lack of risk-adjustment in a just-published savings claim for his own DPC practice. He invited the inquirer to consult DPI Ninja “or spend $100,000 to prove them right or wrong.” Is this how he plans to answer employers who’ve read Milliman’s advice for employers?

2 Interestingly, Milliman recorded that adjustment using Rx in this particular case was more favorable for DPC than using age-sex adjustment.

3 Virtually every direct primary care clinic in the country has chosen an even simpler path when using age only to establish a variable, usage-anticipation- component for its monthly fee DPC schedule.

4 The employees who chose Nextera’s direct care had, on average, historical prior claims that were 30% less than those who declined direct primary care. Interestingly, Nextera sought to rely on a “difference in difference” analysis, but intertemporal claim comparisons of that sort fail if, for example, the declining groups higher “pre” claims can be accounted for by intractable chronic conditions, something that seems entirely likely.

5 At the moment of commencement of DPC Summit 2020, a least ten such studies of employer option DPC have been publicized. At least one additional study seems likely to appear on July 18, 2020. I wonder if the study results reported will include a comparison of the average age of the two cohorts.

Link to Part 2.

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