Concierge medicine has been around for over two decades but has recently exploded in popularity. Overwhelmed with high patient volume, high administrative costs, and low reimbursement rates from third party payors, primary care physicians are turning to the concierge model to provide better care to their patients without risking loss of income. The concierge model’s fee structure allows physicians to reduce their patient volume and in turn allows them to spend more time on patient care and less time on the administrative and billing tasks associated with the traditional model. However, as with anything in the heavily regulated healthcare industry, concierge medicine faces regulatory issues and compliance concerns.
This field guide is a four-part series and will cover the issues and concerns associated with concierge medicine physicians must navigate to set up a compliant model:
We cannot talk about concierge medicine without understanding the impact and exploring what drives it. Understanding how a physician is paid for their services, primarily through the third-party payor system is the starting point.
Third-party payors are entities that provide payment on behalf of the patient and consist of commercial and federal payors. Commercial payors include large scale publicly traded insurance companies such as UnitedHealthcare, Aetna, Blue Cross Blue Shield, and Humana. Federal payors include Medicare, the federal health insurance program for seniors and people with disabilities, Medicaid, the joint federal and state program which grants healthcare coverage to people with limited income and resources, and TRICARE, the health program for uniformed service and national guard/reserve members and their families.
At a simplistic level, after a physician provides a service to a patient covered by third-party payor insurance, the physician submits a claim to the third-party payor for reimbursement. Once the claim is processed, the third-party payor pays the physician for the services rendered and the patient may have a financial responsibility for a particular amount required by their insurance or otherwise not covered. Diving deeper, the process depends significantly on whether the physician is considered “in-network” or “out-of-network,” issues we will explore further in Part 3 of this field guide.
In today’s world of medicine, many physicians have become frustrated and feel dissatisfied with third party payor constraints, bureaucratic limitations, and an overall reduced ability to provide quality care to patients due to outside noise. Even physicians joining large groups hoping to avoid the headaches associated with the administrative side of medicine continue to be met with lengthy pre-authorization requirements and other insurance plan restrictions. They spend hours dealing with administrative documentation and tasks in order to ensure the medical record has sufficient information third-party payors require to pay for the services. Instead of treating patients how they envision, most of their time with patients is spent checking boxes and filling out forms.
Many physicians also feel overwhelmed because they are at or above capacity with the number of patients they see and yet can’t afford to reduce the volume. The standard panel size for a primary care physician is 2,500. As stated by the Journal of the American Board of Family Medicine, it is estimated that “a family physician would need 21.7 hours per workday to deliver recommended care to a panel of 2,500 patients.” However, reducing patient volume is not an option as third-party payors continually reduce or limit reimbursements or reimbursement rates are insufficient to cover the rising costs of providing the associated services. Without adequate or full reimbursement, physicians are forced to maintain high patient volumes simply to support their practice and expenses.
Primary care doctors are frustrated with Medicare because it does not provide for adequate reimbursements and requires an extensive amount of paperwork in order to be paid. The Center for Medicare Advocacy found that Medicare usually only pays doctors 80% of what private health insurance pays. Even when a physician is to be reimbursed, it can take months for the physician to receive the funds. Further, the low reimbursement rates make it difficult for physicians to remain in private practice as they struggle to maintain their overhead costs. As such, the number of physicians opting-out of Medicare or are non-participating continues to increase.
Physicians also experience similar struggles when billing Medicaid. Medicaid reimbursements are on average lower than both Medicare and private insurance but the administrative burdens are still significant due to the paperwork and regulations involved. Once again the challenges and low reimbursement rates steer doctors away from accepting Medicaid.
Even with commercial payors, which typically reimburse at a higher rate than both Medicare and Medicaid, the tasks of ensuring proper documentation, and complying with the many differing commercial payor rules and regulations can be overwhelming for practices. Also, while accepting a contract with a commercial payor and being an in-network provider brings about a level of certainty when it comes to reimbursement amounts and timing, the fact remains that the reimbursement rates offered may not be sufficient. Accordingly, many physicians choose to not seek contracts with commercial payors and operate out-of-network in an effort to set their charges. While this allows for the physicians to control their fee schedule, it creates new hurdles resulting from a lack of contractual relationship with the commercial payor and therefore certain guarantees. In addition, it can have a negative effect on patients leaving them with significantly higher bills which is being dealt with across the country through no surprise bill legislation (again creating more hurdles for physicians).
These constraints and pressures fuel physician burnout and simultaneously drive a shift to concierge medicine.
Concierge medicine addresses many of the issues faced by physicians in one key way: cash revenue. The focus of concierge medicine is to develop a revenue stream through the collection of a fee, usually paid monthly or annually, directly from patients for a contracted set of services to be provided by the practice. While some concierge practices continue to collect revenue from third party payors, the patient paid fee is usually the primary source of revenue. This not only allows the practice to become less dependent on third party payors and their reimbursements, but it can also save physicians time on administrative tasks, allow for a reduction of patient load while maintaining a consistent level of revenue, foster a higher quality of care, and give more control over a physician’s practice.
With many of these benefits, it is no surprise that concierge medicine is growing, with a predicted 10% annual growth rate, as predicted by Medical Economics.
Concierge medicine also has its challenges, some of which will be touched on more in depth later in this field guide. The main challenge is the additional cost to the patients as concierge medicine is not meant to completely replace the services provided through traditional health insurance coverage. Medicare will not cover the membership fee for concierge medicine and most commercial payors have strict policies on concierge practices. As a result, switching to a concierge medicine model may result in a physician losing patients as they may not be able to afford the membership fee or want to be part of a subscription like model. Therefore, setting an appropriate membership fee might be a challenge. Physicians must find a balance between a fee that is acceptable to patients in their targeted demographic, yet sufficient to pay for the services to be provided and ensure the practice can be profitable.
Managing Patient Expectations
Another challenge is patients’ potential expectations that they will be entitled to a higher service level and even higher standard of care because they are paying an out-of-pocket fee. This may cause the expectation that they can reach their physician at all hours or be seen on a moment’s notice. While the concierge model does offer some flexibility to meet these expectations, instilling boundaries and meeting patient expectations can be challenging.
Contact ByrdAdatto if You Are Thinking About or Have a Concierge Practice
In Part 2 of this series, we explore what concierge medicine is and how it differs from other practice models. If you have any questions or would like to learn more about concierge medicine, schedule a consultation with us firstname.lastname@example.org.