Brekke’s “Paying for Primary Care”, Comment on Part 4

In the first three installments of her Paying for Primary Care series, actuary Gayle Brekke’s invoked actuarial principles and behavioral economics to scold coverage of primary care on the ground that the costs of primary care are “predictable, routine, likely events over which the customer has a great deal of control”. In her fourth installment, on the other hand, Brekke tenderly embraces subscription-based direct primary care which provide coverage for these exact same “uninsurable” primary care events. 

In this response to Brekke 4, we explore some of the foundations of Brekke’s enthusiasm for $900 per year subscription DPC. Doing so actually helps clarify why the traditional insurance model might deliver primary care at a $565 average annual adult cost, a lot less than DPC.  

In Part 4, Brekke develops a theoretical perspective on physician financial incentives that declares that patients’ financial interests are certain to be more impaired under the traditional model than under direct pay. In a nutshell, she tells us that too many corrupt, venal FFS-PCPs incur unnecessary visit costs because they are immune to patient dissatisfaction, while all D-PCPs are so fully sensitive to patient satisfaction that they are immune to venality and corruption.

Brekke explicitly accounts this difference to the proposition that “in exchange” for entering agreeing to the terms of an insurers network contract a traditional FFS physician receives “a full schedule of insured patients”. Accordingly, physicians have zero financial incentive to satisfy their patients. Although this is the linchpin of her financial incentives argument, neither Brekke nor other DPC advocates who make the same claim, e.g., Dr Kenneth Qiu, adduce any evidence for it.

Actual evidence points the other way, that insurers rely on patient-satisfying PCPs to keep their member panels full and growing. Almost every insurance plan election platform includes an engine allowing prospective plan members to determine the network status of preferred PCPs.

Brekke, like other DPC advocates, also seems to feel that D-PCPs are ethically superior to FFS-PCPs; there is certainly no evidence of that. What is clear is that all PCPs, regardless of who writes the checks, owe precisely the same duty of patient care, as demanded by professional ethics and enforceable by law.

At her most vivid, Brekke proposes that too many traditional physicians will even “require another visit when the patient has a second concern so that they can charge another fee”. (How is this necessary, or even possible, with those full schedules?) I hear Brekke’s suggestion that a corrupt PCPs would require an unjustified second visit just to collect an extra fee. What Brekke cannot hear is this inner voice of that same PCP:

How sad to be a petty grifter sneaking an extra primary care visit charge every now and then, and hoping the insurer doesn’t catch on.

Do’h! I actually need to show up for those visits to make that grift work. 

I need a better and bigger grift.

I should be selling — in bulk — prepaid visits, some of which will never even happen, by offering “unlimited” visit primary care subscription packages, at a $900 annual rate for adults, knowing full well that an average adult can be expected to use only about $450 worth of my services and is unlikely to attend more than two visits a year. 

Ima Goniff, MD

There is more than one way to violate the duty of putting patients first. As a new and different payment model, subscription DPC necessarily presents those who so incline with new and different avenues for gouging. But where there is a corrupt will, there will be a corrupt way. 

One DPC thought leader, at least, has recently asserted that subscription-based direct primary care is, in the hands of some, nothing more than a vehicle for venality; Douglas Farrago, author of the best-selling book on DPC, is actively rallying “push back” against what he regards as multiple, insufficiently virtuous iterations of the subscription-based direct primary care model. 

If Dr Farrago is committed to using administrative savings from direct pay to improve patient care, good on him. But merely switching from FFS to DPC is not sufficient to make that happen. Any PCP operating under any payment model who secures overhead savings or who can merely talk his way into higher rates for his services is free to elect any combination of increased personal compensation, reduced personal effort, or increased patent access.

Whenever D-PCPs stress the danger and likelihood of FFS physicians billing for unneeded services just to get more money — constantly, in other words — it brings to mind the childhood taunt: “It takes one to know one.”

In Parts 1 and 2, Brekke exaggerated by three-fold both PCP-side and insurer-side administrative cost costs associated with paying for primary care under an insurance model. A realistic figure for these two elements combined is about 15% or less. In Part 3, Brekke addressed certain cost-increasing behavioral phenomena, but my analysis suggested that, in today’s actual insuarence markets, those factors actually favor the insurance model over DPC. 

In Part 4, Brekke identified theoretical incentives that might lead D-PCPs to do good and FFS-PCPs to do bad, but wholly ignored similar incentives for D-PCPs to do bad and FFS-PCPs to do good. Unsurprisingly, either payment model can be abused to extract more money from patients.  

If you are wondering where abuse might lie, then, consider following the money. DPC clinics charge an adult $900 a year for primary care. Under the traditional model, primary care providers receive an annual average annual adult spend for primary care of $450. 

Most DPC advocates confess the reality that DPC is more expensive, then seek to justify it in one way or another. I can not explain why Brekke insists that insurance inevitably adds over fifty percent to costs. Her four part series shows no such thing.

Moreover, Brekke’s series has an immense blind spot. She made no effort to address whether there are any ways in which “Paying for Primary Care” under the traditional insurance model might, even while increasing some cost components of primary care relative to direct pay, might reduce other components. To address whether there are positive financial “features” of the insurance model that make Paying for Primary Care easier and financial “bugs” of direct pay that make Paying for Primary Care more expensive, Brekke’s Paying for Primary Care needed a Part 5, and a open mind.

I will deliver my take on a Part 5 at this link when it is ready. That post will further explain why, in the real world, the cost of subscription DPC is 50% more than the cost for primary care under an insurance model. I invite Ms. Brekke to respond to Part 5 or, if she prefers, to anticipate it. I look forward to hearing from her.


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