concierge medicine: an evolution in delivery of primary care · qa physician who agrees to accept...

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Concierge Medicine: An Evolution in Delivery of Primary Care

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©2009 Foley & Lardner LLP

Introduction

Jordan Busch, M.D. – Why and how some physicians are converting to concierge medicineMichael Blau – Structural, legal and ethical considerationsGerry Zitoli – The payors’ perspectiveJeff Butler – National developments in concierge medicine arrangements

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Background: Physician Financial Squeeze

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Fee Update

MEI-adjusted

RBRVS is implemented

Congress passes “sustainable growth rate” (SGR) measure to limit fee growth

Weak economy causes SGR to trigger large fee cut

Congressional action blocks deep payment cuts; mandates 1.5% increase in ’04-’05

Sources: MedPac, 2006

Annual Update in Medicare Physician FeesUS Market, 1992-2007

Volume growth generates concern and large negative payment updates

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Background: Physician Responses to Market Trends

Increased hours/workloadManage to a better case mix – cherry pick patients and payorsPursue revenue enhancement strategiesSeek/demand stipends

– ED call, coverage– Medical directorships– Committee participation

RelocateRetire earlySeek employmentSeek capital/technology partners and joint venturesConsolidateAlign/integrate with hospital or health systemConvert to concierge practice

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Background: What Is Concierge Medicine?

Distinguishing features of primary care models– 300-600 patients– 24/7 availability– Same/next day appointments– Annual health/wellness assessment– Plan of care– Amenities/Enhancements– “Retainer” fee

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BackgroundApproximately 500+ concierge practices nationally (146 identified by GAO in 2004-5)– Approximately 20 in MA– Most are adult primary care– Approximately 10% medical specialists

Cardiology, infectious disease, pediatrics, gynecology

Location– East/West Coast (MA, FLA, CA, AZ, WA)– 25 states

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Figure 1: Location of Concierge Physicians Identified by GAO, 2005

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GAO Report: Concierge Characteristics

GAO Report (GAO-05-929; August, 2005):– Metropolitan areas– Average length of practice = 19 years– Average fee = $1500/year ($60-15,000 range)– On average 326 concierge patients per physician

(down from 2,716 patients before conversion)80% have not met enrollment goal50% met enrollment goal after 3 years

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GAO Report: Concierge Characteristics

– 1/3 include some non-concierge patients– 76% participate with insurers; 21% opt-out of

Medicare

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Why and How Physicians Convert To Concierge Medicine

Jordan Busch, M.D.,Founder,

Personal Physicians Healthcare,Chestnut Hill, MA

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Premier Primary Care

Why?What?How?The Results?

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Why?What?How?Results?

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A Visual Summary of a Typical Primary Care Practice

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Disconnect Between Physician Incentives and Patient’s DesiresPhysician compensation based upon “production”Payers pay for units of production (i.e. visits)Patients value care

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Trends in Primary Care Trying to Stay Even

OverheadOverhead

Net Payment per Visit

Net Payment per Visit

Number of Visits

Number of Visits

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Paying For Experience* Medical Fee schedule payments per procedure; * Medical Fee schedule payments per procedure; all others fee schedule charges per hourall others fee schedule charges per hour

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Legal Accounting Plumbing Medical *

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Patient Frustrations - Access to Care

Even People with health insurance– Barriers to choice of doctor and hospital– Barriers to care when and where it is wanted or

needed– Barriers to non-visit care (telephone, e-mail)– Barriers to access to your doctor (call groups,

urgent care, physician extenders)

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Volume vs. Quality

At some level of patient volume, different for each physician, quality and service will deteriorate.Controversy has surrounded our choice to see fewer patients.Little attention to the choice to see more?

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Making a Change

If… “Every system is perfectly designed to achieve exactly the results it produces”. (Edward Demming)

Then… the solution for us could only be to create a new practice design – the ideal practice

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Why?What?How?

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Drucker on Quality

Quality in a product or service is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not quality because it is hard to make and costs a lot of money, as manufacturers typically believe. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality.

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Service Standards in Primary Care

Standard Care*– 3000 to 4000 patients

per physician– 4500 patient visits per

year– Large coverage groups– Visits average 8 minutes

of physician patient contact

Premier Care– Maximum 300 patients

per physician– 1000 patient visits per

year– On-call for our own

patients 24/7/365– 90 minute

comprehensive visits w/o overbooking or double booking

* Data Source: Affiliated Physicians Group

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Non-visit Care

TelephoneE-mailTeachingLiterature review / information servicesTime

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Patient Valued Features Our Care Model

Each doctor on-call for their own patients 24/7/365Same day visits at patient’s requestNo overbooking or double bookingHouse calls when neededAccompaniment to important consultations and visits

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Patient Valued Features Our Care Model

Enhanced communication– Open ended inquiry– Reflective listening

Increased Patient satisfactionIncreased Physician satisfactionA different style of careBetter care ?

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“I’m afraid you’ve had a paradigm shift.”

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Why?What?How?Results?

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How

It’s never as easy as it looksDetermining your patient base– If I build it, will they come…– Notifying patients in an appropriate way

Legal Issues – May affect your business structure

Developing a Business Plan that can be used to acquire financing– Financial spread sheets– Accountants

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How

It’s never as easy as it looksFinancing– Bank, VC, Friends?– Collateral? Your Home?

Designing and Building the SpaceDealing with the 3rd Party payers

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How

It’s never as easy as it looksChoosing/Implementing Appropriate Infrastructure– Software needs (EMR, Accounting)– Banking Systems– Communication systems– Staffing needs– HR to help design and administer employee benefits– Billing– Management

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How

It’s never as easy as it looksAppropriate transition of patients– Those joining– Those not joining

Doing all of this while running your current practice– Where you want to dazzle patients enough to believe

that they should join your new practice

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Starting Point

$800,000 of debtSalary reductions of 30%3 doctors4 staff and a practice directorApproximately 270 membership patientsAn additional 90 “pro bono” patients

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Why?What?HowThe Results

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Growth

Predicted– 2002: 520 patients– 2003: 800 patients

Actual– 2002: Approx 600 patients– 2003: Approx 820 patients– 2004: Approx 900 patient– 2005 rate increase– 2007 rate increase– 2008 physician added/1100 patients– 2009 ???

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Patient Satisfaction

Enjoy the ease of communication – they can reach their doctor!Ease of appointmentsAssistance with arranging specialty appointmentAppreciate the value of specialists knowing their history in advance of the appointment

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Satisfaction

Over 100% Re-enrollment– Less than 1% have chosen not to re-enroll

Searching for a doctor who can “solve” their problemMoved out of state

– Often re-enrollments have been accompanied by requests to have other family member join

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Satisfaction

Professional:– Great job in a great environment – I love going to work– Time to spend with patients– Time to follow up with patients – Time to follow up with specialists– Time to read about diseases– Elimination of unnecessary “after hours” calls – Feel that patients respect and value our time– Feel that we are able to effectively partner with patients– I go home feeling that I have done my job to the best of

my ability

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Structural, Legal and Ethical Considerations

Michael Blau, Esq.

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Business/Ethical ConsiderationsConsumer choicePersonalized health carePreventive medicineResponsiveAmenitiesPatient satisfactionPhysician satisfactionMore community activitiesBetter economicsBetter outcomes?Insurance “wrap-around”?

Impact on accessProliferation concernAbuse potentialVoluntariness?Incentive to overutilize?Two levels of care?Reduction of patient panelSkills erosion?Loss of patient diversity?Adverse selectionImpact on referral sources?Access to specialists?Lack of coordination with health systemPayor risksRegulatory risks

Pros Cons

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Ethical ConsiderationsAMA Council on Judicial and Ethical Affairs (Report 3-A-03)– Voluntary participation, no undue pressure– Facilitate continuity of care for terminated patients– Do not claim better quality– No medically unnecessary services to appease

patients– Separate amenities from covered health services to

avoid patient confusion– Seek opportunities to provide services to indigents

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Regulatory ConsiderationsBan on balance billing/double billing– Medicaid/Medicare (unless opt-out)

A physician who agrees to accept assignment of Medicare benefits “agrees to accept the Medicare payment as payment in full for the services furnished to the beneficiary and is precluded from charging the beneficiary more than the deductible and coinsurance based on the approved Medicare fee amount. 42 C.F.R. §402 (definition of “assignment”)Breach of terms of assignment agreement by charging for Medicare covered service, violates Civil Monetary Penalty Law (42 U.S.C. §1320a-7a(a)(2)(A) and (B))Penalty is $10,000 per violation; up to 3 times amount charged; potential exclusion

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Regulatory Considerations– State insurance and consumer protection statutes

“No participating physician . . . shall charge to or collect from a subscriber or covered dependent any amount in excess of the amount of compensation determined and allowed by an [insurance carrier] pursuant to the applicable method of compensation approved by the commissioner”, other than for deductibles, copayments and coinsurance. G.L. c. 176B, §7; 176G, §21&22, 1760, §6&7, 176I, §1; 211 C.M.R. §52.12(8)

– Terms of participation agreements– Retainer fee must be structured so as not to involve

balance billing/double billing“Retainer” fee must pay for noncovered services and amenitiesNon-covered administrative vs. non-covered healthcare servicesGrey area between what is covered and what is not

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Regulatory Considerations

Concierge fee cannot cover Medicare co-payments and deductibles– Balance bill (if in excess of applicable copays/

deductibles)– Beneficiary inducement in violation of CMP Law (if

less than applicable copays/deductibles)

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Regulatory ConsiderationsCMS Position – No prohibition of properly structured arrangements

– Tommy Thompson “no action” letter (March 26, 2002)– OIG Special Fraud Alert (March 31, 2004)

“Charging extra fees for already covered services abuses the trust of Medicare patients by making them pay again for services already paid for by Medicare”

– 2 OIG SettlementsR. Douglas Thorsen, M.D., Minnesota ($53,400 CMP settlement) - Services offered for $600 fee included coordination of care with other providers, a comprehensive assessment and plan for optimum health and extra time spent on patient care (07-28-2003)

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Lee R. Rocamora, M.D., North Carolina, ($106,600 CMP settlement) – Membership fee in exchange for (1) annual comprehensive physical exam, (2) same day or next day appointments, (3) support personnel dedicated exclusively to members, (4) 24/7 physician availability, (5) prescription facilitation, and (6) coordinating and expediting referrals (05-15-2007)Not clear which services OIG found to be covered by Medicare

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Regulatory Considerations– “Neither [the 2003 settlement] nor the OIG

Alert takes a position on concierge-care or boutique-medicine” (Jennifer Leonardo, Senior Counsel, OIG, 4/26/04)

– GAO Report (05-992) finds no adverse impact on Medicare beneficiary access and confirms that concierge practice is permissible under Medicare statutes as long as concierge fee is not for Medicare covered services

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Legitimate concierge financial models– Nonparticipation, to extent permitted by state law

Can opt-out of commercial insurance and balance billPhysicians who opt-out of Medicare in Massachusetts cannot charge in excess of the Medicare allowable (G.L. c. 112, §2; BORM Advisory Ruling AR-1998-1)Opting-out of Medicare in MA does not solve the Medicare balance billing problem

– Participate and charge for noncovered amenities only (not for any professional services)

– Participate and charge for noncovered amenities (including noncovered professional services)

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Participation/Nonparticipation– Nonparticipation may impair marketability of

concierge practice– Nonparticipating physician cannot serve as PCP

gatekeeper (e.g., cannot authorize in-network referrals)

– Nonparticipating specialist may jeopardize conventional practice

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– Nonparticipating physician will be treated as an out-of-network provider, whose services will be subject to higher copays

– Nonparticipation may jeopardize ability to participate at other locations

– Nonparticipation does not resolve Medicare double billing issue in MA

For these reasons, 76% participate nationally

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Participation Model: Structural Considerations

Patient/Member

MD(s)

BusinessEntity

PracticeEntity

MembershipAgreement

Doctor/PatientRelationship

• Professional Services• Accepts insurer payment as payment in full, subject to copay, co-insurance, deductibles

AdministrativeAgreement

Ownershipor ContractOwnership

• Not authorized to practice medicine• Provides amenities• Charges retainer fee

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Spending Account (FSA, HRA, MSA, HSA) Reimburseability– Eligible medical expenses– Fee for noncovered medical services may be

reimbursable– Fee for noncovered administrative enhancements

are not reimbursable– Trade-off between balance billing compliance and

spending account reimbursement

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Participation Model

LowModerateHighLegal Risk

Type of ServiceCovered Professional Services

NoncoveredProfessional Services

NoncoveredAmenities/Enhancements

Examples of Service

E.g.; Office visits24/7 availabilityER visitsAnnual health

assessment?

E.g.Screening examsTelephone/email

consults

E.g.Communication/Internet

tools“Arranging for” functionNonmedical items (e.g.,

discounted health club membership, nutritious snacks, exercise physiology testing by personal trainer)

Charge/Payment

Accept health insurance as payment in full, subject to copays, deductibles

No health insurance coverage;within or outside concierge fee?

Concierge fee

Spending Account Reimbursement Yes Yes No

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Discrimination – Concierge program must not discriminate on a prohibited basis– Concierge practices generally do not violate

nondiscrimination provisions since participation is offered to all who are able and willing to pay

– Concierge practices do not discriminate based on payment source

– Discrimination vs. free enterprise

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Business of Insurance– Service contract for nonmedical services vs.

insurance contract– Should not be a prepaid health plan that assumes

risk of cost of services provided by third parties or spreads actuarial risk among a pool of patients

Consumer protection– Avoid consumer confusion– Avoid misrepresentations and false advertising

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Regulatory ConsiderationsHMO licensure and accreditation – All states other than NJ and NY permit payors to contract with concierge practices– Mass. DOI Ruling, March 6, 2002 - HMOs can

contract with concierge practices consistent with G.L. c. 176G

Status with payors – Where permitted, most payors will do business with concierge practices; some will not– Aetna?; CIGNA?; United (NC); Anthem (VA)– Payor contract terms

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Current Regulatory Status

AMA Ethical Standards – CJEA Report 3-A-03GAO Report, 05-929 – no adverse impact to date on Medicare access; consistent with Medicare requirements as long as fee is not for any Medicare covered serviceCMS no-action position; but OIG AlertDivisions of Insurance – Regulatory approval by MA DOI; No regulatory disapproval except NJ and NYPhysician Licensing Boards – No regulatory disapproval, but in MA cannot opt-out of Medicare and bill in excess of Medicare allowable

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Payor positions – MA payors generally willing to accommodate, with some possible national payor exceptions

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Legislative responses– 2002: U.S. Senate Bill 1606 (Sen. Kennedy), H.R.

345 – Not enacted – Section 650 of MMA (Dec. 8, 2003): GAO Study by

June 2005– State anti-concierge medicine bills filed in MA

(2003-5), but not enacted; sent to study commission in 2005

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The Payor Perspective

Gerry Zitoli, Esq.Assistant General Counsel,

Tufts Health Plan

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The Payor PerspectiveStatus with payors – Most payors will do business with concierge practices; some national payors will notHMO licensure and accreditation – Mass. DOI Ruling, March 6, 2002 – HMOs can contract with

concierge practices consistent with G.L. c. 176GDisclose contracts to DOIContract must assure that patients are not charges for covered services, other than copays, co-insurance and deductiblesHMO must amend provider directory to designate concierge practices

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The Payor Perspective

HMO must make clear to enrollees that concierge services are not covered by planContract must require advance notice by provider before establishing a concierge practice

– Terms of participation agreementsNo balance billingNo discrimination based on source of paymentNo access fees?Anti-concierge clauses

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National DevelopmentsIn Concierge Medicine

Arrangements

Jeff Butler,Founder and President,

Privia Health

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National Concierge Networks

MDVIP – 285 (National)Concierge Choice Physicians – 79 (National)F&L – 40 (Regional/national)PartnerMD – 5 (Virginia)MD2 – 2 (Seattle)SignatureMD

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MDVIP

Founded in Nov 2000Headquarters in Boca Raton, FLFounder - Edward Goldman, MD280 physicians in 26 states95,000+ patients2004 investment by Summit Partners (Boston)2007 minority investment by Procter & GamblePatient membership fees - $1500 to $1800 per year

– $1000 to doctor, $500 to MDVIP– $1000 x 400 patients = $400k per year in retainers

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MDVIP - Services to MDTransition:

Patient demographic analysisPatient telephone surveyInitial & follow-up direct mailingsHost patient education seminars (local country club/hotel)MDVIP sales rep in officeProcessing membership enrollments (phone, mail)MD staff support (staff model, training, etc)

Ongoing:Membership maintenance - billing & collectionsMDVIP Branding and ongoing marketing for practiceElectronic Medical RecordsAfter hours call center support

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MDVIP - SwaTStrengths:

Significant traction and year over year growthScale (95,000 patients x $1500 year = $142M in revenue95%+ patient satisfaction reported95%+ patient retention reportedBy far the most experience doing conversions in the industry

Threats:Value to doctors post conversion?

– Pricing pressure at contract renewal?

$1500+ price point in recession?# physicians with demographics to achieve full practice conversions# physicians who are willing to do full practice conversions

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Privia Health

Physician practice development company1. Improve quality & patient experience2. Increase practice income (new revenue sources, cost savings from economies of scale)3. Win back physicians time (rightsize practice, smart technology, midlevels)

Branded network of top physicians– High quality (“best doctors”, Mayo Clinic affiliation)– Service excellence (Ritz Carlton training)

New Revenue: Membership models– Limited participation of existing patients– “Inch deep and mile wide”– Combines concierge benefits with “medical home” coordination

Personal Health Advisors (care coordination, coaching, health advocacy)Nutrition & Fitness AssessmentsWellness PlansOnline access to health records & wellness tools, etc, etc

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Trends to Watch

Medical home– Health plans expansion of “covered services” (Kaiser, etc)– Medicare medical home pilots

Impact of economy– Concierge patient retention rates– % of successful conversions

Consumer Driven Plans– Will a tipping point be reached?

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Concluding Remarks

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What Does the Future Hold?

“It is difficult to make predictions, especially about the future.”

Yogi Berra

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What Does the Future Hold?Other legislative responses?– Obama administration health reform– Priorities are coverage expansion, access,

affordability, quality improvement, HIT adoption and cost control

– Easy political target for liberal Democrats?

Consistent with trend toward consumerism and consumer directed healthcareWild card -- Universal health care?European-style public/private system?

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Speakers

Jordan Busch, M.D.Personal Physicians HealthCare,

[email protected]

Michael L. Blau, Esq.Foley & Lardner [email protected]

Gerry Zitoli, Associate General Counsel

Tufts Associated Health Plans, Inc.

[email protected]

Jeff Butler, Chairman & CEOPrivia [email protected]

concierge medicine: an evolution in delivery of primary care · qa physician who agrees to accept...

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