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Retainer Physicians Help Uninsured But Face Legal Obstacles
Robert Lowes
June 4, 2009 — Instead of waiting for Washington, DC, to solve the problem of the uninsured, general surgeon John Muney, MD, in New York City launched his own reform program last year.
He began offering unlimited primary and urgent care to patients at his 5 clinics for $79 per month, plus a $10 copay for acute-care visits.
It's an arrangement that appeals to many physicians — a direct financial relationship with patients that bypasses insurers, their paperwork, and their profit margins. However, Dr. Muney's plan didn't pass muster with the New York state insurance department. The reason? Dr. Muney, the department ruled, was operating as an unlicensed insurer.
This regulatory obstacle has emerged in other states where primary care physicians have charged monthly retainer fees. And when state legislators have sought to exempt these practices from insurance regulations, they've met resistance from the health insurance industry. However, retainer physicians have won legal standing in Washington state, where some employers are starting to provide their employees with paid membership in these practices along with high-deductible health coverage for hospitalization and specialty care.
"It's an idea that can save the healthcare system," said Seattle internist Garrison Bliss, MD, president of a 7-physician group called Qliance that has pioneered this practice model.
Insurers Want Level Playing Field
Physicians like Dr. Bliss make up a minority of "concierge" physicians who charge retainer fees. Most of these practitioners accept reimbursement from a patient's health insurer for office visits and procedures, and charge the retainer fee for services not covered by insurance, such as comprehensive annual physicals, 24/7 cell-phone access to the physician, and same-day appointments, said family physician Thomas LaGrelius, MD, in Torrance, California. He is board chairman of the Society for Innovative Medical Practice Design, which includes many conciergists.
In contrast, the monthly fee charged by the likes of Dr. Muney and Dr. Bliss cover most if not all the services they provide — office visits, minor procedures like wart removal, onsite tests, even X-rays — regardless of whether the patient is insured. Family physician Vic Wood, DO, in Wheeling, WV, throws in crutches and tetanus shots under his $83 monthly fee for an individual. No insurance company cuts a check. At the same time, such physicians stress that their fees do not cover a hospital stay, outside specialty care, or prescription drugs.
Physicians who guarantee primary and urgent care for a monthly fee, however, strike the health insurers as competition, especially as these companies market "mini-medical" or limited-benefit plans of their own at similar rates. "If a person is providing an insurance product, they should be licensed and follow the same rules as all insurance carriers," Robert Zirkelbach, a spokesperson for American's Health Insurance Plans, a trade group, told Medscape Medical News.
States, for example, require insurers to have financial reserves as proof they can deliver on their promises to insurees. That concern figured into Dr. Muney's run-in with New York regulators, who forced him this year to raise the copay on acute-care visits from $10 to $33 — an amount covering Dr. Muney's costs — and limit these visits to 15 per year.
"We want to ensure solvency," said Andrew Mais, a state insurance department spokesperson. However, the $33 copay on top of the retainer fee will discourage patients from signing up, Dr. Muney told Medscape Medical News.
Dr. LaGrelius thinks it is unfair to view colleagues like Dr. Muney as insurers like Humana or Cigna, noting that such physicians typically have far smaller panel sizes than those who accept reimbursement from health plans, minimizing the risk of getting overextended. "There hasn't been a single case of a patient complaining that he didn't get the service he was promised," said Dr. LaGrelius.
Retainer Practices Seek "Legal Certainty"
The debate about retainer practices and insurance has reached state legislatures. The controversy over Dr. Muney led to a bill pending in the current session of the New York State Assembly that would essentially exempt retainer practices like his from insurance regulation.
Dr. Wood sought that same kind of law in West Virginia several years ago after the state insurance department threatened to prosecute him for operating as an unlicensed insurer. The legislation died, thanks in part to lobbying by the insurance industry, but Dr. Wood eventually got what he wanted when his practice was later included in a state pilot project testing the value of prepaid primary care for the uninsured.
Sonia Chambers, who chairs the West Virginia Health Care Authority, told Medscape Medical News that her agency has yet to evaluate the pilot project, which consists of 5 providers and some 550 patients. This experiment looks promising enough, however, to state Rep. Eric Koch of Indiana, who introduced a bill this year to establish a similar pilot project in his state. The bill died in committee, but Koch said he hopes to reintroduce it in the next session. More physicians will consider the retainer model, he said, if they have "the legal certainty that they aren't offering an illegal insurance policy."
Legal certainty arrived for Dr. Bliss and other physicians charging all-encompassing retainer fees in Washington state in 1997, when lawmakers there exempted them from strict insurance regulations and substituted less onerous ones, such as the requirement to accept all patients, regardless of health status. And just this year, the state legislature broadened opportunities for retainer practices by allowing them to accept their fees directly from a patient's employer.
Before this law was enacted, employers who wanted to offer employees paid membership in a retainer practice had to funnel the fee to them through a health savings account (HSA) or health reimbursement arrangement (HRA), and let the employee pay the bill himself, says Chapin Henry, the membership development director at Qliance, the group practice of Dr. Bliss. Fourteen employers so far have gone this route with Qliance, said Mr. Henry, with most of them giving their employees high-deductible insurance coverage as well.
One Washington state employer intending to exploit the new law on direct payment is Tri-Tec Manufacturing, which makes naval piping equipment. Tri-Tec provides its 38 employees with traditional health insurance, but rising costs forced the company to raise the deductible from $200 to $1500 during the past 2 years to keep the premium affordable, said company technology director Rick Cordray. At the same time, Tri-Tec reimburses employees for 75% of their deductible expenses through an HRA. Mr. Cordray said the company plans to offer employees paid enrollment in Qliance this summer with the hope that the more they see Dr. Bliss and his colleagues, the less they will tap their HRA for other medical costs.
Qliance charges patients $49 to $129 per month, depending on their age and the level of care desired. Because Qliance eliminates the deductible and copays that sometimes discourage people from seeking medical care, employees won't have to decide if they're sick enough to see a physician, said Mr. Cordray. "We like the Qliance model — 'come in anytime, you've already paid.' "
That same open-door model also appeals to the 10% to 15% of Qliance patients who lack any sort of health coverage. "We can take care of 70% to 90% of their medical needs," said Dr. Bliss. For Dr. John Muney in New York City, all of the patients who pay him a monthly retainer fee are uninsured, many of them victims of the recent economic downturn. "My plan is the next best thing to sliced bread for them," said Dr. Muney, who unlike Bliss, accepts health-plan reimbursement for patients who have insurance.
Band-Aid or Building Block?
To Princeton University healthcare economist Uwe Reinhardt, retainer practices do not represent a long-term solution to the problem of the uninsured. "It's just a Band-Aid over a festering sore," said Mr. Reinhardt. "It might seduce people into a false sense of security. However, relative to a horrible insurance situation in America, it fills a need."
For his part, Dr. Bliss argues that retainer practices can be a key building block in a revamped healthcare system. Financing primary care and its steady stream of small charges through traditional health insurance, he said, not only wastes money in administrative costs, but forces physicians to earn a living in a grueling piecework manner, seeing patients every 12 minutes. However, insurance coverage is still needed for catastrophic, big-ticket medical problems. It'd be affordable for everyone, said Dr. Bliss, if primary care were removed from the insurance equation and financed instead through retainer practices. In the process, his field could thrive again, attracting more physicians.
Dr. Bliss said he's taking this message to lawmakers in Washington, DC, as they craft healthcare reform legislation.
"I love insurance," said Dr. Bliss. "I own plenty of it. But if we don't move away from our current system, we're going to bankrupt the country."
