By: Susan St. John
As the provision of health care services continues to evolve, many practitioners are contemplating creating membership-based services for their patients through Direct Primary Care Agreements (“DPCA”). Although DPCAs are not necessarily a new concept, the Florida Legislature enacted a bill during the 2018 legislative session making DPCA’s exempt from the Florida Insurance Code. Thus, DPCAs are not a form of insurance subject to regulations of insurance products but are private contracts between practitioner and patient for specified health care services. Here is how the DPCA concept works.
DPCAs are private contracts between patients and primary care providers. Section 624.27, Florida Statutes, defines primary care provider as a provider licensed pursuant to Chapters 458, 459, 460, and 464, or a primary care group practice, who provides primary care services to patients. Included under this broad definition of providers are: allopathic doctors, osteopathic doctors, physician assistants, anesthesiologist assistants, chiropractors, RNs, LPNs and ARNPs.
A DPCA is an agreement for primary care services, that is screening, assessment, diagnosis and treatment of a patient within the primary care provider’s practice act and specialized training the provider might have. Pursuant to Section 624.27, Florida Statutes, the DPCA must be in a writing signed by the provider or provider’s agent and the patient or patient’s legal representative or employer. The agreement must have a 30-day out clause in case the parties wish to terminate the relationship. It should also contain provisions allowing for immediate termination for breach or any violation of the physician-patient relationship. The agreement should set forth the monthly fee for services, the scope of services included in the monthly fee, the duration of the agreement, and whether the agreement will automatically renew. It should also specify services that are not covered by the monthly fee, but if provided to a patient, would be an additional charge. Further, should the provider cease to offer the primary care services, the agreement must include a provision on refunding the patient any monthly fees paid in advance. The agreement must also include the following language in a minimum of 12-point type and in a contrasting color:
This agreement is not health insurance and the primary care provider will not file any claims against the patient’s health insurance policy or plan for reimbursement of any primary care services covered by the agreement. This agreement does not qualify as minimum essential coverage to satisfy the individual shared responsibility provision of the Patient Protection and Affordable Care Act, 26 USC Section 5000A. This agreement is not worker’s compensation insurance and does not replace an employer’s obligations under Chapter 440.
The DPCA creates a practice model that has the potential to eliminate third party payers from the physician-patient relationship. The DPCA does not indemnify for services provided by a third party.
Primary services may include, but not be limited to: office visits, home visits, annual physicals, routine lab tests, vaccinations, wound care, treatment of broken bones and fractures, ECGs, colon cancer screening, or other necessary primary care procedures. It might also include patient education and chronic disease management. The monthly fee includes access to the primary care provider for the services set forth in the agreement and the patient can access all the services set forth in the agreement for no extra charge each month the DPCA is in place.
What are the Benefits to Direct Primary Care Agreements?
For patients, the benefits may be obvious – certainty in health care costs. The patient pays a set fee and in return, is entitled to a menu of services. No co-pays or deductibles to figure out, no pondering whether the service is covered or non-covered by insurance or Medicare (or other federally or state funded health insurance program). No unpaid balance to the provider, unless of course, services outside of the DPCA are provided to the patient.
The benefit to the provider may not be as readily apparent, at least not in the short run. If a provider chooses to transition to a Direct Primary Care model, and no longer must worry about billing an insurance company or a federally or state funded health insurance program, keeping up with CPT or other billing codes, refiling claims, fighting claims denials, etc., it is likely the provider will be able to reduce his or her overhead. More money can be reinvested in the practice itself to benefit patients and the provider.
What might be the downside to Direct Primary Care Agreements?
The downside for patients is that the DPCA does not satisfy PPACA’s individual responsibility provision requiring minimum health insurance coverage that meets minimal essential coverage standards set forth in the law. Thus, to avoid potential tax penalties, a patient may still be required to obtain and pay for certain health insurance coverage, at least through 2018 as the mandate goes away starting in 2019. Another downside is that the DPCA may not cover all the services a patient may need from a particular provider. A patient will need to come up with additional out-of-pocket funds for services not covered under the DPCA or have health insurance in addition to the DPCA.
The downside for providers might be whether they can sign people up for services under a DPCA if they are in-network providers for health insurance plans. A provider will need to carefully review and understand existing contracts with health insurance plans prior to initiating DPCAs. Health insurance contracts may prohibit the provider from entering into DPCAs with insured beneficiaries. An in-network provider that enters into a DPCA with an insured beneficiary may end up losing in-network status. This could cause a significant disruption in revenue for the provider. Further, if the provider is enrolled in Medicare, whether participating or non-participating, he or she is duty bound to bill Medicare for covered services notwithstanding that the provider may have entered into a DPCA with a Medicare beneficiary. To enter into a DPCA with a Medicare beneficiary for primary care services, the provider would need to “opt-out” of Medicare and enter into a private contract with the Medicare beneficiary that contained provisions mandated by the Medicare Program. (Opt Out of Medicare: What Physicians and Practitioners Need to Know and Medicare Opt Out Part II).
Who are DPCAs right for?
DPCAs can work well for Chiropractors who may be out-of-network providers or in providing palliative or maintenance treatments or services not covered by insurance or Medicare. DPCAs can also work well for providers with a large patient base whose age is less than 65, who are uninsured, or insured by a health care insurer where the provider is out-of-network. DPCAs may also work well where the menu of primary care services are services not covered by Medicare or other health insurers. When contemplating starting or adding a DPC practice model, a provider will need to carefully consider what services should be provided under a flat monthly rate and what that flat monthly rate should be. Offering too few services and setting fees too high will not attract patients looking to optimize care and save on health care costs.
DPCAs may impact local coverage determinations for federally or state funded health care programs or health care insurance companies if these insurers equate the patient obligation under a DPCA with providers’ usual, customary and reasonable charges. To minimize the probability that this will happen, it will remain important for providers offering DPCAs to maintain a list of charges by procedure, treatment or services offered to patients. DPCA providers need to be aware that the monthly DPCA fee is not a substitute for his or her charge structure. Another important reason to maintain a list of charges is to periodically measure income derived from DPCAs and what income would have been derived without DPCAs. The provider should also compare profit margins derived from DPCAs and what profit margins would have been without DPCAs. Current year and prior year financial comparisons should also be undertaken to assist the provider in evaluating whether adding DPCA to a practice has been economically advantageous.
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