Direct Pay - Something Old is New Again

It used to be that when you went to see the doctor you paid your bill directly to the physician. If you were fortunate enough to have insurance, then you sent a copy of the physician's bill and receipt to the insurance company for reimbursement. Sometime in the late 80s that changed. At some point physicians assumed the overhead of filing insurance claims and took over the responsibility of payroll for employees who used to work for the insurance companies.

Now, with every modifier, ICD code match, and E&M code, physicians are spending most of their revenue on billers, coders, and personnel (or services) needed to file insurance claims. How did we ever get hoodwinked into assuming insurance-company overhead just to get paid for the services we provide?

However, things are starting to change. Now, with increasing pressures from payers, patients, and government agencies, physicians are beginning to "just say no" to the bureaucracy of filing reimbursement claims.

I am going on my 10th year as a physician practicing in a direct pay model of care, and I can tell you the benefits are too numerous to ignore:

• More time for patient care (30 to 45 minutes on average);
• Better quality of care (we are in the top quintile for almost every commonly measured patient outcome); and
• Access for the underinsured (with up to 80 percent off standard pricing for primary-care services).

And all of this accomplished with complete price transparency. Isn't that what we really need in health reform anyway?

Several new models of care have emerged over the last few years due to increasing demands on physician time, lower payments, and higher overhead to practice. Some physicians have gone to house-call-only practices to eliminate their swollen overhead. Others have gone to nursing-home-only practices where they literally drive from facility to facility to provide care. Concierge practices have emerged that charge premium fees for improved service.

All of these new models have some advantage over the traditional system. But they also have their drawbacks. House-call-only physicians tend to have much smaller patient panels and thus, they exacerbate the primary-care workforce shortage. Concierge practices often charge too much for the average person to be able afford out of pocket.

So, where does a low overhead, direct pay practice fit in? It offers the advantages of longer visits, higher quality care, and greater physician satisfaction that are also seen with concierge practice. And, it offers the low overhead that is associated with the "no office" practices. The key difference is that it is available for the average or low income patient, not just for those who can pay hefty annual fees that can run over several thousand dollars per year. This means that this mode of practice can be adapted to various geographic regions, and a broad demographic, while not depleting the physician workforce - since the patient panels are comparable to traditional models.

How do you do it? There are several key aspects that are vital to success in a direct pay practice:

Click on each image for larger versions.

If you are thinking about getting away from the world of complex coding, recovery audits, and high-volume patient days where you cannot seem to catch your breath, then this might be the model for you. Some physicians are concerned about this type practice working in their area and this is the most common question I get: "It looks great for physicians and patients, but will it work in my (small/rural/inner-city/low-income) area?"

It can work in most any area where patients want affordable, quality care. I have homeless patients who come to me because they say "it is the only practice I can afford to come to." I also have wealthy patients who also come to my practice because they tell me "Dr. Forrest, I cannot pay a physician in my area enough to spend the amount of time that you do with patients." One day I looked out in my waiting room and saw both of these patients sitting next to each other. I felt great - because I knew that they were both getting BMW care at a used-Toyota price.

Brian Forrest, MD, is the founder of Access Healthcare and Direct Pay Health. He serves as an adjunct associate professor at UNC Chapel Hill School of Medicine where he teaches a class called "New Models of Care." He can be contacted at brianforrest@directpayhealth.com.

*If you are interested in further researching a direct pay model of practice, these articles are a good place to start:

Cash for Doctors Revisited (The Weekly Standard, 4/4/11)
Cash for Doctors (The Weekly Standard, 5/24/10)
Care for Cash (The Daily Tar heel, 5/20/10)
Cash Only Physician Practice (Diana Hsieh: Noodle Food, 4/26/10)
A Call to Arms for Doctors ... and Patients (FOXNews.com, 4/6/10)
How to Run a Cash Only Practice and Thrive (Modern Medicine/Medical Economics, 1/22/10)
If Physicians Led Reform (Raleigh News and Observer, 9/30/09)
The Real Costs of Insuring Routine Medical Care (CPRights.org, 5/23/09)
IdeaLab: Cash Only Practice Still Works (Physicians Practice, 7/08)
Healthcare Reform: Voting for Change (Bankers Healthcare Group, 2008)
Breaking Even on Four Visits per Day (AAFP.org, 6/07)
Cash Doctor (The Story, National Public Radio, 3/19/07)
NC Doctors Offer New Services (The Heartland Institute, 11/06)
Best Doctor in the Triangle (The Independent, 6/14/06)
2,500 Cash Paying Patients and Growing (AAFP.org, 2/06)
Healthcare Innovation (Carolina Journal, 10/6/05)
The Doctor Is In (Raleigh News and Observer, 6/27/02)