dpcreferee’s 2017 op-ed on Union County’s failure to save with DPC proved to be almost spot on.

In February 2017, I sent the op-ed piece below to the Charlotte Observer. It was not selected for publication. But it has been proven accurate in a detailed, independent study by a team of health care actuaries from the Milliman firm, known widely for its health care work. The study was prepared for the Society of Actuaries. See discussion below my op-ed.

My Op-Ed

Union County, scene of an 1865 dust-up involving General Sherman’s troops, is now the site of a skirmish in the national civil war over health care policy. Katherine Restrepo, Director of Health Policy at North Carolina’s John Locke Foundation, has been calling attention across the South, and in Forbes, to the county’s experience with a health care delivery vehicle known as direct primary care, or DPC.

In the Union County employee health system, all enrollees have insurance to cover most types of medical services other than primary care. For the latter, they have a choice between receiving primary care from hundreds of traditional insurance-based physicians, subject to deductibles and copayments, or receiving primary care exclusively from a small closed panel of physicians at a pre-paid insurance-free direct primary care clinic with no deductibles or copayments. According to its supporters, the primary clinic’s savings in insurance overhead allows its providers more time for patient care, which in turn curbs the need for expensive specialists, emergency rooms, hospitals, and costly medications.

When Union County created a direct primary care option for its employees and their dependents in 2015, a bit under half of them elected the DPC. When compared with the traditional plan, according to Ms. Restrepo, the direct care plan saved the county as much as 28% in medical expenses, an impressive $1500 per insured per year.

With claimed savings like that, she and other small-government advocates are eager to bet the health of every state and local government employee on DPC. They seem particularly eager to promote direct primary care as the core model for Medicaid.

But there are problems.

Unless asked directly, DPC advocates withhold the fact that the enrollees in the direct primary care group are five years younger than those in the traditional care group.  

Age matters though, and it matters a lot. Age-cost curves for health care are steep. In tirades against the Affordable Care Act, many conservatives insist that the costs for 64-year-olds are five times higher than costs for 21-year-olds; that insurance premiums should reflect this 5:1 ratio; and that the 3:1 curve mandated by the Affordable Care Act penalizes the relatively young. 

As an interim step pending ACA repeal, the Trump administration recently floated the idea of moving to an age-premium curve of 3.49:1. On that curve, a five-year gap in age would explain every penny of the difference between the health costs of the two Union County populations. 

The 5:1 curve would imply that offering the direct primary care program actually cost Union County well over $600,000.

Furthermore, DPC advocates make no adjustments for prior health experience. For example, patients with multiple health issues of long standing might choose to avoid the direct primary care clinic’s small, closed panel so that they can keep an established relationship with their traditional primary care physician; it makes medical sense.

There are rigorous ways of evaluating whether Union County’s costs savings reflect some innate superiority of direct primary care or merely that the relatively healthy preferred a different plan than their less healthy counterparts. Restrepo compares group costs, but fails to carefully assess whether health status differences between the groups might be driving the “savings”.

Let’s not bet the health care of county enrollees, Medicaid recipients, or anyone else on the idea that little Union County won big savings by offering direct primary care. A far safer bet is that Union County’s decision makers managed only to segment their enrollee population by health status, then proclaim an unjustifiable win for a still-unproven health care concept.

An mistaken presumption in my op-ed

The calculations in the op-ed were based on there being a five year age difference between the two groups, my best estimate at the time. Later in 2017, the County advised me that the difference was almost exactly four years. Accordingly, my estimate of net County loss under a 5:1 curve should have been closer to $400,000.

Milliman’s study conclusion

Here’s the core conclusion from the Milliman firm:

[T]he introduction of a DPC option increased total nonadministrative plan costs for the employer by 1.3% after consideration of the DPC membership fee and other plan design changes for members enrolled in the DPC option.

https://www.soa.org/globalassets/assets/files/resources/research-report/2020/direct-primary-care-eval-model.pdf at page 7.

Milliman’s total cost computation was based on estimates monthly DPC of $75 per adult and $40 per child; using those numbers, the 1.3% increase corresponds to $7 per member per month, a net loss to the County of $6,000 vs a claimed savings of about $1.3 million.

Milliman’s one major error: its estimates of monthly fees were far too low.

Apparently Milliman’s team did not realize that, instead of estimating the month fees, they might have simply looked in the public record. The contract between the County and the provider set monthly fees at $125 per adult and $50 per child. Direct primary care cost Union County, not $7, but $41 per member per month — about $430,000 per year.

The deepest significance of the high DPC fees in Union County is not that the county lost a lot of money. Rather, it is that it took a very large investment to gain the downstream cost reductions, which were largely driven by reduced ED visits. $430,000 a year will easily fund an additional PCP to simply do phone calls and housecalls intended to intercept unnecessary ED visits, effectively attaching a glorified doc-in-the-box to the clinic. In fact, all care in the Union County DPC was provided by Board Certified Family Physicians. Without that extra money, i.e., with a $75/adult budget, it seems doubtful that a DPC clinic could accomplish ED visit reduction at even the modest standard at Union County.

That “DPC is working while FFS is failing financially because of COVID” meme takes a big hit; proof furnished by DPC Alliance.

Reality: while it is may not be a pretty picture, no one has a clear view what the pandemic’s ultimate effects on primary care practices, FFS or DPC, will be.

On May 13th, the Direct Primary Alliance published a manifesto: Building the Path to Direct Primary Care. It was signed by every officer and board member of the largest membership organization of direct primary care physicians.

In so many words, it said:

  1. FFS primary care practice is being destroyed, financially, by the Covid-19 pandemic.
  2. DPC is thriving, financially.
  3. DPC has always been great, and has always been superior to FFS.
  4. Because of the pandemic, DPC is now even greater and even more superior to FFS.
  5. DPC will be even greater than it is now and even more superior to FFS than it is now, if we get help from government, insurers, employers, patients and everyone else.
  6. DPC achieves lower overall healthcare spending.
  7. DPC Alliance will help FFS practicitioners transfer to DPC.

In this blog, I’ve dealt previously with several of these issues, but today’s special attention goes to the new information about financial viability in mid-May 2020 that came to my attention through the DPC-PATH manifesto itself.

For its key financial arguments, the manifesto relies on an end of April survey of primary care practices , including some DPC practices, by the Larry A Green Center. That center highlighted that an astonishing 32% of PCP respondents said they were likely to apply, in May, for SBA/PPP Covid-emergency money. That means a lot of PCPs expected to certify either they have suffered a significant economic harm because of the current emergency (SBA-EIDL) or that a loan is “necessary to support on-going operations”.

The Alliance also linked a breakout focused on DPC practices. 52% of PCP in direct primary care practice responding to the same survey expected to seek such loans.

I don’t think DPC Alliance should be bragging about how much better DPC is weathering a pandemic than FFS with a survey that indicates that DPC docs were 60% more likely to seek emergency assistance this month than their FFS counterparts.

When this survey result was brought to the attention of some DPC Alliance board members, some offered the small size of most DPC practices as an explanation. I was told they feared “doom” and that they applied for government help because of the economic uncertainty coupled to their fear that they would not get government help. Interesting rationale!

But I was also told that it was reckless of me to think that DPC practices who certified to a good faith belief that uncertain economic conditions make their PPP loans necessary actually believed what they certified. Yet, strange as it is for DPC advocates to suggest that some DPC practitioners had committed felonies, one advocate earned “likes” from DPC advocates when he hammered the point home by cheerfully noting that the SBA had announced that PPP loans under $2 million would not be audited.

In fact, the SBA did not announce this non-audit policy until more than two weeks after the Green Center survey. Even then, the policy was carefully explained as intended to relieve smaller businesses from the financial burden of audit (not from the consequences of crime — fines up to $1 million and 30 years imprisonment). When DPC docs say they needed PPP loans to maintain current operations, I believe the docs and not those who accuse them of committing felonies.

On the other hand, there are clear advantages that DPC practices have had over PPS in weathering, financially, the first few months of the pandemic.

Relative to FFS practices, DPCs are concentrated in states with lower infection rates; there is less shutdown, less lost wages, less social distancing, less risk to office visits, less public panic.

Also, DPC practices do not accept Medicare, and have relatively tiny numbers of elderly patients relative to FFS practices. In average FFS- PCP practice during normal times, about one-quarter of patient visitors are over 65. But it is elders who, presently, have the strongest incentives to cancel office visits, to postpone routine care, and even to forgo minor sick visits or urgent care. Even in Georgia, the first state to “reopen”, the elderly remained subject to a gubernatorial stay at home order. FFS is taking a current revenue hit on patients who are barely visible in DPC practices.

That DPC providers tend to be located in less infected states and that their patient panels are nearly devoid of seniors means that DPC practices have likely caught a financial break relative to FFS. In terms of long-term policy goals and health care costs, however, DPC has found nothing in its response to the Covid crisis to brag about.

How will DPC practices compare to FFS practices six months or a year from now?

If Covid-19 survivors have a surge of primary care needs, DPC practices could be obliged to deliver more care for previously fixed revenue, but FFS practices are likely to be more able to match rising patient needs to rising revenues.

If social distancing continues to keep the number of in-office visits depressed, the perceived value of what was sold to patients as high-touch medicine will fall and subscribers may insist on lower subscription fees.

If the economy stays in the tank, patients may pay more attention to whether DPC gives good value. DPC would do well if those 85% cost reduction claims were anywhere near valid. But there is extremely little evidence to support the cost-effectiveness brags of DPC providers. Instead, there is solid actuarial evidence that can DPC increases cost.

Reality: while it may not be a pretty picture, no one has a clear view what the pandemic’s ultimate effects on primary care practices, FFS or DPC, will be.

DPC advocates: an undoubtedly small number of individuals can be as high as 23,000,000.

Summer 2019

DPC advocates argue against a $1.8 budget score for their pet DPC/HPHP/HSA fix. They argue the impact is zero, and they cite a study by The Moran Company that says:

The number of individuals presently barred from HSA participation solely by reason of DPC enrollment is undoubtedly small.

March 2020

DPC Coalition glumly reports that their DPC/HDHP/HSA fix was not included in the CARES act, even though:

We were successful in getting our [HSA fix] bill included in the original Senate Finance Committee draft of the [CARES] legislation as a means of expanding virtual care to 23 million more Americans with HDHP/HSA plans.

DPC: “Unlike FFS, we’re keeping our doors open, except when they’re not.”

Ahem, indeed!

The thrust of the vox.com article cited by Dr. Edwards is that primary care physicians are losing in-person visits and telemedicine visits return fewer dollars. It’s key sentence: “Doctors and other health care providers have seen a precipitous drop in the routine visits they depend on for revenue, and experts fear many offices will have to close.”

But the same pandemic constraints that have lead FFS docs away from in-person medicine have served to make the reality of FFS practivce and DPC practice more similar, not less.

How often do we hear DPC advocates and their fellow travelers mention that some of the rest of us confuse “insurance” with “access”? From a patient’s perspective, the current “access” problem is the result of social distancing, not payment model.

DPC docs have long relied heavily on patients perceiving exceptional value in frequent, lengthy, face to face visits. That perception paves the way for charging hefty fees on a subscription basis, month after month, visits or no visits, so that in-depth service is there more-or-less on demand. When DPC shifts its mix away from in person visits, patient perception of DPC value will surely fall.

Notwithstanding the difference in payment model, revenue of both FFS and DPC medicine will reflect a similar, pandemic-constrained mix of in-person visits and telemedicine. I can’t imagine what makes Dr. Edwards think DPC revenues will not take comparable hit, if slightly delayed, to those in traditional practice.

Consider too that the most distressed FFS practices cited in the Vox piece are small, independent practices – the smallest of which are probably close to the average size of a typical DOC clinic.

Moreover, a great many DPC patients receive their care through employer-clinic contracts. The DPC practices holding these contracts are likely to receive an immediate revenue hit as employees are laid off. See, e.g., this contract between Paladina, one of the largest DPC providers and Union County, NC, a county dependent on a % sales tax.

Similarly, DPC practices generally decline accept Medicaid. But it is estimated that between one-third and one-half of all who lose employer coverage will become enrolled in Medicaid. Many of those paying for DPC out of their own pocket will both lose the income they need to pay their DPC and will be able to join Medicaid plans with minimal out-of-pocket costs.

DPC and the pandemic: more capable than FFS? Or less?

DPC advocates are talking a lot these days about how a pandemic shows the superiority of direct primary care.

Today, I learned this.

Along with individualized medicine and the flexibility of fewer patients, however, comes one negative side effect: as Dr. Donohoe puts it, “the biggest roadblock to more people doing Direct Care pediatrics is the vaccine issue.” Children need vaccines, and, while vaccines aren’t an issue for most insurance-based pediatrics practices, many Direct Care doctors run into difficulties due to the high overhead costs that vaccines require


Then, too, some DPC clinics found themselves too thinly capitalized to provide COVID-testing for their uninsured patients even though federal legislation provided that coverage without cost-sharing even for the uninsured. At the same time, any DPC patients who had ordinary (or even high-deductible) insurance were eligible for free testing through their insurance plan and outside the DPC, even as many DPC clinics were treating appointments for COVID-testing as a billable extra not covered by the subscription charge.

I’ve commented elsewhere that much of the “we’re good for pandemics” bragging being done by DPC advocates ultimately rested on the value to DPC physicians and their lucky patients of small patient panels. I’ve noted that even in ordinary times, a shortage of primary care physicians means that greater access for some comes at the expense of lesser access for others; that resource allocation problem is a public health issue and ethical issue in its own right.

Add a pandemic and the key role of testing and vaccination to a now-aggravated resource allocation issue, and one can start to build a argument that direct primary care is in a uniquely POOR posture for a near future dominated by COVID-19.

Survivors of COVID-19 could well have a markedly unpredictable range of significant sequelae of unpredictable intensity and duration; the number of survivors is unpredicatable. Pricing the primary care needs of such survivors into a subscription model involves a very high measure of risk, while the overwhelming majority of DPC practices have low capitalization. Fee-for-service payment models are likely to prove significantly more flexible than subscription models in helping physicians meet these unknowns.

Early DPC brags about how superior to FFS it was during an emergent pandemic focused on telemedicine. But within a week or two, FFS practices largely closed that gap. At the same time, social distancing has left DPC practices no longer well-positioned to return to their longer-standing emphasis on how small panels result in lengthy in-person visits. But with FFS telemedicine moving toward a par with DPC telemedicine, FFS docs will themselves be able to increase in-person visit times.

An officer of DPC Alliance posted this brag/unbrag sequence on April 27, 2020.

More about @Dr_A_Edwards’s twitter post here.

Is there any advantage left for DPC? Well, it will remain true that squeezing out a good measure of insurance/billing overhead could result in DPC being more cost-effective than an insurance dependent counterpart. But this leads us back to this blog’s on-going attempt to assess the DPC community’s on-going claims of cost-effectiveness. And on THAT score, despite a surfeit of DPC advocate brags, there is still no independent investigation that shows that DPC delivers any value at all.

To the contrary, there is a constant flow of extravagant claims that are easily debunked. Here’s one, about two years old, that a DPC advocate, Lee Gross, MD, re-flogged as recently as yesterday. It claims potential 86% savings for a family of four over ten years by combining direct primary care with a short-term, limited benefit wrap-around plan.

To realize those savings though, all four patients would have to go for a decade without exceeding the limitations of the plan. And one can glean a sense of how likely that is simply by looking at the premium the article assumes for the plan’s wraparound coverage: $2136 per year for a family of four for all downstream care. That’s low, even for these plans, despite their being underwritten, excluding pre-existing conditions, and often having benefit caps. And these plans do not guarantee renewal, so however low a first year premium might be for a family in perfect health, the likelihood of any family seeing a full decade of clean-slate pricing is about zero. For a family of average health, 86% savings is nowhere near credible.

In fact, about two month before the article claiming 86% savings, Consumer Reports published a broad analysis of short-term plans and warned against using them on an extended basis. Moreover, that article pointed out that an average annual premium for these plans was $3,096 for a family of four – 45% higher than Gross claimed.

I suspect that for the next few years, DPC advocates will press forward with internally generated data. Independent academics or other analysts with the chops to mount careful, serious study of health care finance and cost-effectiveness will find that the pandemic has generated matters for study that are both more interesting and more pressing.

There may or may not be major reorganization in regard to delivery of health care in general and primary care in particular. If direct primary care has all along been everything that its advocates claim, it will be simply sad if DPC is excluded from that upheaval simply because DPC’s own advocates failed to marshal credible evidence.

I am no lover of insurance companies. Maybe that’s why I’ve always thought that direct primary care had significant potential for realizing its promise. Instead of developing and publishing meaningful evidence of effectiveness (particularly evidence with appropriate measures to account for selection bias), however, DPC advocates have spent years relying on brags ranging from thin, unvetted internal studies downward to complete and utter bullshit. That failure by DPC’s advocates may well cause them — and the rest of use — to miss the window for important primary care reform.

Or maybe not. DPC Alliance leaders have recently touted one of their own as some sort of data maven poised to prove how great DPC performance will has been and will be.

I guess we’ll see.

A personal favorite: a tweet by a DPC marketing director saying , “Every dollar spent on direct primary care now saves $13.”

DPC warns Congress: our patients are at financial risk; please spend $1.8B. DPC warns its patients? Nah.

Scene One. November 2019. In an open letter to Congress, the President of the Direct Primary Care Coalition explains that, under current law, payment of subscription fees to a DPC makes an individual ineligible to contribute to an HSA. Calls for passage of a legislative fix.

Scene Two. March 2020. Discussing exclusion of the DPC/HSA fix from the CARES Act of 2020 in an March 2020 webinar, the Executive Director of the Direct Primary Care Coalition advises attending DPC practitioners that they have no responsibility for advising their patients of any tax consequences that might befall them if they subscribe to DPC. Calls for DPC docs to advocate for a fix, presumably by giving their patients’ legislators the very information they do not find themselves obliged to give to their patients.

Scene Three. Flashback, months before November 2019 and, flashforward, into the present (6/2/2020). Website of a Founding Member/Board Member of the DPC Alliance:

Are DirectAccess’s monthly fees eligible for HSA or FSA reimbursement?​”

Yes, our fees are generally reimbursable. This is one smart method of paying for your health care needs with pre-tax dollars.”


In fact, that precise misrepresentation appears in an FAQ section of a website template designed for DPC clinics across multiple states. Moreover, a number of individual DPC clinics actively recommend their patients to get an HSA, like this this one for example by yet another Founding Member of DPC Alliance:

As a patient of Forest DPC, will I still need health insurance?

Yes. We recommend that our clients continue to carry a medical plan and a health savings account, thereby ensuring financial help should hospitalization or referral to a specialist be necessary.


And, while there are other DPC clinic websites that are significantly less misleading, I’ve looked at nearly a hundred of them and no more than a few that directly warn their patients that purchasing a DPC subscription puts their HSA at risk.

Scene Four. June 2020. DPC Alliance continues the push for the DPC/HSA legislative fix to conform tax law so that in the future it will conform to these past and present misrepresentations of the law.

Scene Five. (7/8/2020). Tweet from the first of the two aforementioned Founding Member/Board Members of the DPC Alliance:

Why a policy wonk like Wyden might (and, perhaps, should) kill a DPC/HDHP fix for subscription medicine. Short version.

A 1.8 billion dollar subsidy to support subscription-model contraction of primary care patient panel sizes is a problematic policy in a country when there is a shortage of primary care physicians.

I came to this trying to figure something out. We hear that Ron Wyden kept the DPC/HDHP fix for subscription fees out of the CARES Act. DPC Coalition’ s Jay Keese flatly indicated that this was because Wyden was confused about the relationship between DPC and concierge. Because Wyden is a pretty wonky guy, and his wonkiness extends especially to health care policy, I just don’t believe that his concerns are so simple they can be addressed by explaining that “DPC is not concierge”; I’ll bet he understands the differences as well as anyone.

Differences do not always make the difference. Sometimes the similarities matter more.

It matters not how much DPC and concierge differ on some or even most possible variables, if DPC and concierge are, at the same time, similar on one or more of a set of decisive variables.

Most likely, Wyden’s biggest concern is to avoid using the tax code to support subscription fees that buy, in large part, exclusionary access to PCP services that are in short supply.

700 member patient panels at DPC clinics literally exclude the 701st and all additional patients. If there were plenty of PCPs to go around this fact would be less significant. DPC cannot be sufficiently scaled for everyone, or even most people, to have DPC in any near future. In fact, if every PCP goes to a 700 person panel today, tens of millions who had a PCP yesterday would not have a PCP tomorrow. This is precisely what subscription based small panel DPC shares with concierge practices: more attention for some comes at the price of less attention for others.

Why should taxpayers subsidize that?

One can image basing a possible answer to that question on real data to demonstrate that the cost-or-health effectiveness of DPC creates off-setting value. But, as far as I can tell, and this blog closely follows the barrage of brags by DPC advocates, there is as yet no independent, peer-reviewed study to support the proposition that DPC is cost-effective, not even for its own members. Not one.

Even if what is needed is a larger pool of PCPs, why not directly subsidize primary care practice. A tax fix for subscription fees is a roundabout way of getting that result, and compounds this issue of access inequality with issues of wealth inequality. See this in-progress, longer version of this post.

If one wishes to determine what the law should do about ________,he can approach the question in either of two ways: by definition or by analysis.

Dworkin, Roger B. (1973) “Death in Context,” Indiana Law Journal: Vol. 48 : Iss. 4 , Article 6.
Available at: https://www.repository.law.indiana.edu/ilj/vol48/iss4/6

The article by Roger Dworkin explains why it is problematic to try to solve real problems simply by invoking definitions. In this context, that means it is hard to resolve the issues by saying that “DPC is by definition not the same thing as concierge” Here, the reasons which apply to denying public financial support to concierge practices apply in the same general way, if to a lesser degree, to DPC subscription fees. To solve policy problems, decision makers need to look at broad effects, not mere word formulas.

The “DPC is uniquely able to telemed” train has left the station. Everyone is telemeding now.

October 20, 2019: 500+ word Open Letter to Members of Congress by DPC Coaltion President asking for support and co-sponsorship of the The Primary Care Enhancement Act. Missing words: telehealth, telemedicine, virtual, telephone, phone, text message, text, SMS.

March 26, 2020: DPC Coalition laments exclusion of the bill from CARES despite being sold as “means of expanding virtual care to 23 million more Americans with HDHP/HSA plans.”

Fortunately, all 23 million HDHP members dodged that bullet when a huge swatch of FFS primary care docs (along with DPC docs willing to code) stepped up to virtual care practically overnight.

Have a look at this for example:

In literally a week we have had 50 providers convert to providing a virtual care model that includes phone-visits, e-messaging, and video visits. We’ve seen the mindset shift from considering what we might use telehealth for to what we can’t use telehealth for. In just one week we have transitioned 50 percent of our clinic visits to a virtual format.


It is likely that on a single day or two last week, (3/23 to 3/27) the number of FFS PCPs who learned to telemed exceeded the total number of DPC docs present in country. By April 1, there should be many fold more telemeding FFS docs than telemeding DPC docs. [Indeed, a U.S. Senator from Georgia bet on that a month ago, buying telemedicine-related stock based insider information about the impending disaster. ]