Concierge Medicine: An Evolution in Delivery of Primary Care
Concierge Medicine: An Evolution in Delivery of Primary Care ©2009 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500 2 Introduction Q Q Q Q Jordan Busch, M.D. – Why and how some physicians are converting to concierge medicine Michael Blau – Structural, legal and ethical considerations Gerry Zitoli – The payors’ perspective Jeff Butler – National developments in concierge medicine arrangements ©2009 Foley & Lardner LLP 3 Background: Physician Financial Squeeze Annual Update in Medicare Physician Fees US Market, 1992-2007 10% Fee Update 8% MEI-adjusted 6% 4% 2% 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 -2% -4% RBRVS is Congress passes implemented “sustainable growth rate” (SGR) measure -6% to limit fee growth -8% -10% Sources: MedPac, 2006 ©2009 Foley & Lardner LLP Weak economy causes SGR to trigger large fee cut Congressional action blocks deep payment cuts; mandates 1.5% increase in ’04-’05 Volume growth generates concern and large negative payment updates 4 Background: Physician Responses to Market Trends Q Q Q Q Increased hours/workload Manage to a better case mix – cherry pick patients and payors Pursue revenue enhancement strategies Seek/demand stipends – – – Q Q Q Q Q Q Q ED call, coverage Medical directorships Committee participation Relocate Retire early Seek employment Seek capital/technology partners and joint ventures Consolidate Align/integrate with hospital or health system Convert to concierge practice ©2009 Foley & Lardner LLP 5 Background: What Is Concierge Medicine? Q 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 5 ©2009 Foley & Lardner LLP 6 Background Q Approximately 500+ concierge practices nationally (146 identified by GAO in 2004-5) – – – Approximately 20 in MA Most are adult primary care Approximately 10% medical specialists Q Q Cardiology, infectious disease, pediatrics, gynecology Location – – East/West Coast (MA, FLA, CA, AZ, WA) 25 states 6 ©2009 Foley & Lardner LLP 7 Figure 1: Location of Concierge Physicians Identified by GAO, 2005 ©2009 Foley & Lardner LLP 8 GAO Report: Concierge Characteristics Q 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) Q Q ©2009 Foley & Lardner LLP 80% have not met enrollment goal 50% met enrollment goal after 3 years 9 GAO Report: Concierge Characteristics – – 1/3 include some non-concierge patients 76% participate with insurers; 21% opt-out of Medicare ©2009 Foley & Lardner LLP 10 Why and How Physicians Convert To Concierge Medicine Jordan Busch, M.D., Founder, Personal Physicians Healthcare, Chestnut Hill, MA ©2009 Foley & Lardner LLP 11 Premier Primary Care Q Q Q Q Why? What? How? The Results? ©2009 Foley & Lardner LLP 12 Premier Primary Care Q Q Q Q Why? What? How? Results? ©2009 Foley & Lardner LLP 13 A Visual Summary of a Typical Primary Care Practice ©2009 Foley & Lardner LLP 14 Disconnect Between Physician Incentives and Patient’s Desires Q Q Q Physician compensation based upon “production” Payers pay for units of production (i.e. visits) Patients value care ©2009 Foley & Lardner LLP 15 Trends in Primary Care Trying to Stay Even s t i s i V f o er b m u N ad e h r Ove Net P ayme nt pe r Vis it ©2009 Foley & Lardner LLP 16 Paying For Experience * Medical Fee schedule payments per procedure; all others fee schedule charges per hour $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Legal ©2009 Foley & Lardner LLP Accounting Plumbing Medical * 17 Patient Frustrations - Access to Care Q 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) ©2009 Foley & Lardner LLP 18 Volume vs. Quality Q Q Q 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? ©2009 Foley & Lardner LLP 19 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 ©2009 Foley & Lardner LLP 20 Premier Primary Care Q Q Q Why? What? How? ©2009 Foley & Lardner LLP 21 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. ©2009 Foley & Lardner LLP 22 Service Standards in Primary Care Q Standard Care* – – – – Q 3000 to 4000 patients per physician 4500 patient visits per year Large coverage groups Visits average 8 minutes of physician patient contact * Data Source: Affiliated Physicians Group ©2009 Foley & Lardner LLP 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 23 Non-visit Care Q Q Q Q Q Telephone E-mail Teaching Literature review / information services Time ©2009 Foley & Lardner LLP 24 Patient Valued Features Our Care Model Q Q Q Q Q Each doctor on-call for their own patients 24/7/365 Same day visits at patient’s request No overbooking or double booking House calls when needed Accompaniment to important consultations and visits ©2009 Foley & Lardner LLP 25 Patient Valued Features Our Care Model Q Enhanced communication – – Q Q Q Q Open ended inquiry Reflective listening Increased Patient satisfaction Increased Physician satisfaction A different style of care Better care ? ©2009 Foley & Lardner LLP 26 ©2009 Foley & Lardner LLP 27 ©2009 Foley & Lardner LLP 28 ©2009 Foley & Lardner LLP 29 ©2009 Foley & Lardner LLP 30 ©2009 Foley & Lardner LLP 31 ©2009 Foley & Lardner LLP 32 “I’m afraid you’ve had a paradigm shift.” ©2009 Foley & Lardner LLP 33 Premier Primary Care Q Q Q Q Why? What? How? Results? ©2009 Foley & Lardner LLP 34 How It’s never as easy as it looks Q Determining your patient base – – Q Legal Issues – Q If I build it, will they come… Notifying patients in an appropriate way May affect your business structure Developing a Business Plan that can be used to acquire financing – – Financial spread sheets Accountants ©2009 Foley & Lardner LLP 35 How It’s never as easy as it looks Q Financing – – Q Q Bank, VC, Friends? Collateral? Your Home? Designing and Building the Space Dealing with the 3rd Party payers ©2009 Foley & Lardner LLP 36 How It’s never as easy as it looks Q Choosing/Implementing Appropriate Infrastructure – – – – – – – Software needs (EMR, Accounting) Banking Systems Communication systems Staffing needs HR to help design and administer employee benefits Billing Management ©2009 Foley & Lardner LLP 37 How It’s never as easy as it looks Q Appropriate transition of patients – – Q 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 ©2009 Foley & Lardner LLP 38 Starting Point Q Q Q Q Q Q $800,000 of debt Salary reductions of 30% 3 doctors 4 staff and a practice director Approximately 270 membership patients An additional 90 “pro bono” patients ©2009 Foley & Lardner LLP 39 Premier Primary Care Q Q Q Q Why? What? How The Results ©2009 Foley & Lardner LLP 40 Growth Q Predicted – – Q 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 ??? ©2009 Foley & Lardner LLP 41 Patient Satisfaction Q Q Q Q Enjoy the ease of communication – they can reach their doctor! Ease of appointments Assistance with arranging specialty appointment Appreciate the value of specialists knowing their history in advance of the appointment ©2009 Foley & Lardner LLP 42 Satisfaction Q Over 100% Re-enrollment – Less than 1% have chosen not to re-enroll Q Q – Searching for a doctor who can “solve” their problem Moved out of state Often re-enrollments have been accompanied by requests to have other family member join ©2009 Foley & Lardner LLP 43 Satisfaction Q 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 ©2009 Foley & Lardner LLP 44 Structural, Legal and Ethical Considerations Michael Blau, Esq. ©2009 Foley & Lardner LLP 45 Business/Ethical Considerations Pros Q Q Q Q Q Q Q Q Q Q Q Consumer choice Personalized health care Preventive medicine Responsive Amenities Patient satisfaction Physician satisfaction More community activities Better economics Better outcomes? Insurance “wraparound”? Cons Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Impact on access Proliferation concern Abuse potential Voluntariness? Incentive to overutilize? Two levels of care? Reduction of patient panel Skills erosion? Loss of patient diversity? Adverse selection Impact on referral sources? Access to specialists? Lack of coordination with health system Payor risks Regulatory risks 45 ©2009 Foley & Lardner LLP 46 Ethical Considerations Q AMA 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 46 ©2009 Foley & Lardner LLP 47 Regulatory Considerations Q Ban on balance billing/double billing – Medicaid/Medicare (unless opt-out) Q Q Q 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 47 ©2009 Foley & Lardner LLP 48 Regulatory Considerations – State insurance and consumer protection statutes Q “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 – Q Q Q “Retainer” fee must pay for noncovered services and amenities Non-covered administrative vs. non-covered healthcare services Grey area between what is covered and what is not 48 ©2009 Foley & Lardner LLP 49 Regulatory Considerations Q Concierge fee cannot cover Medicare copayments and deductibles – – Balance bill (if in excess of applicable copays/ deductibles) Beneficiary inducement in violation of CMP Law (if less than applicable copays/deductibles) ©2009 Foley & Lardner LLP 50 Regulatory Considerations QCMS Position – No prohibition of properly structured arrangements Tommy Thompson “no action” letter (March 26, 2002) – OIG Special Fraud Alert (March 31, 2004) – Q – “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 Settlements Q R. 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) 50 ©2009 Foley & Lardner LLP 51 Regulatory Considerations Q Q 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 51 ©2009 Foley & Lardner LLP 52 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 52 ©2009 Foley & Lardner LLP 53 Regulatory Considerations Q Legitimate concierge financial models – Nonparticipation, to extent permitted by state law Q Q Q – – Can opt-out of commercial insurance and balance bill Physicians 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) ©2009 Foley & Lardner LLP 54 Regulatory Considerations Q 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 ©2009 Foley & Lardner LLP 55 Regulatory Considerations – – – Nonparticipating physician will be treated as an outof-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 Q ©2009 Foley & Lardner LLP For these reasons, 76% participate nationally 56 Participation Model: Structural Considerations Membership Agreement Business Entity • Not authorized to Doctor/Patient Relationship Administrative Agreement Own e or Co rship ntrac t practice medicine • Provides amenities • Charges retainer fee ©2009 Foley & Lardner LLP Patient/ Member hip s r ne w O MD(s) Practice Entity • Professional Services • Accepts insurer payment as payment in full, subject to copay, coinsurance, deductibles 57 Regulatory Considerations Q 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 ©2009 Foley & Lardner LLP 58 Participation Model Noncovered Professional Services Noncovered Amenities/Enhancements Examples of Service E.g.; QOffice visits Q24/7 availability QER visits QAnnual health assessment? E.g. QScreening exams QTelephone/email consults E.g. QCommunication/Internet tools Q“Arranging for” function QNonmedical 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 Legal Risk High Moderate Low Type of Service Covered Professional Services 58 ©2009 Foley & Lardner LLP 59 Regulatory Considerations Q 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 ©2009 Foley & Lardner LLP 60 Regulatory Considerations Q Business of Insurance – – Q 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 ©2009 Foley & Lardner LLP 61 Regulatory Considerations Q HMO licensure and accreditation – All states other than NJ and NY permit payors to contract with concierge practices – Q 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 61 ©2009 Foley & Lardner LLP 62 Current Regulatory Status Q Q Q Q Q AMA Ethical Standards – CJEA Report 3-A-03 GAO 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 service CMS no-action position; but OIG Alert Divisions of Insurance – Regulatory approval by MA DOI; No regulatory disapproval except NJ and NY Physician Licensing Boards – No regulatory disapproval, but in MA cannot opt-out of Medicare and bill in excess of Medicare allowable 62 ©2009 Foley & Lardner LLP 63 Current Regulatory Status Q Payor positions – MA payors generally willing to accommodate, with some possible national payor exceptions ©2009 Foley & Lardner LLP 64 Current Regulatory Status Q 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 ©2009 Foley & Lardner LLP 65 The Payor Perspective Gerry Zitoli, Esq. Assistant General Counsel, Tufts Health Plan ©2009 Foley & Lardner LLP 66 The Payor Perspective Q Q Status with payors – Most payors will do business with concierge practices; some national payors will not HMO licensure and accreditation – Mass. DOI Ruling, March 6, 2002 – HMOs can contract with concierge practices consistent with G.L. c. 176G Q Q Q ©2009 Foley & Lardner LLP Disclose contracts to DOI Contract must assure that patients are not charges for covered services, other than copays, co-insurance and deductibles HMO must amend provider directory to designate concierge practices 67 The Payor Perspective Q Q – HMO must make clear to enrollees that concierge services are not covered by plan Contract must require advance notice by provider before establishing a concierge practice Terms of participation agreements Q Q Q Q ©2009 Foley & Lardner LLP No balance billing No discrimination based on source of payment No access fees? Anti-concierge clauses 68 National Developments In Concierge Medicine Arrangements Jeff Butler, Founder and President, Privia Health ©2009 Foley & Lardner LLP 69 National Concierge Networks Q Q Q Q Q Q MDVIP – 285 (National) Concierge Choice Physicians – 79 (National) F&L – 40 (Regional/national) PartnerMD – 5 (Virginia) MD2 – 2 (Seattle) SignatureMD 69 ©2009 Foley & Lardner LLP 70 MDVIP Q Q Q Q Q Q Q Q Founded in Nov 2000 Headquarters in Boca Raton, FL Founder - Edward Goldman, MD 280 physicians in 26 states 95,000+ patients 2004 investment by Summit Partners (Boston) 2007 minority investment by Procter & Gamble Patient membership fees - $1500 to $1800 per year – – $1000 to doctor, $500 to MDVIP $1000 x 400 patients = $400k per year in retainers 70 ©2009 Foley & Lardner LLP 71 MDVIP - Services to MD Transition: Q Patient demographic analysis Q Patient telephone survey Q Initial & follow-up direct mailings Q Host patient education seminars (local country club/hotel) Q MDVIP sales rep in office Q Processing membership enrollments (phone, mail) Q MD staff support (staff model, training, etc) Ongoing: Q Membership maintenance - billing & collections Q MDVIP Branding and ongoing marketing for practice Q Electronic Medical Records Q After hours call center support 71 ©2009 Foley & Lardner LLP 72 MDVIP - SwaT Strengths: Q Significant traction and year over year growth Q Scale (95,000 patients x $1500 year = $142M in revenue Q 95%+ patient satisfaction reported Q 95%+ patient retention reported Q By far the most experience doing conversions in the industry Threats: Q Value to doctors post conversion? – Q Q Q 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 72 ©2009 Foley & Lardner LLP 73 Privia Health Q Physician practice development company 1. 2. 3. Q Branded network of top physicians – – Q Improve quality & patient experience Increase practice income (new revenue sources, cost savings from economies of scale) Win back physicians time (rightsize practice, smart technology, midlevels) 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 Q Q Q Q Personal Health Advisors (care coordination, coaching, health advocacy) Nutrition & Fitness Assessments Wellness Plans Online access to health records & wellness tools, etc, etc 73 ©2009 Foley & Lardner LLP 74 Trends to Watch Q Medical home – – Q Impact of economy – – Q Health plans expansion of “covered services” (Kaiser, etc) Medicare medical home pilots Concierge patient retention rates % of successful conversions Consumer Driven Plans – Will a tipping point be reached? 74 ©2009 Foley & Lardner LLP 75 Concluding Remarks ©2009 Foley & Lardner LLP 76 What Does the Future Hold? “It is difficult to make predictions, especially about the future.” Yogi Berra 76 ©2009 Foley & Lardner LLP 77 What Does the Future Hold? Q Other legislative responses? – – – Q Q Q 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 healthcare Wild card -- Universal health care? European-style public/private system? 77 ©2009 Foley & Lardner LLP 78 Speakers Jordan Busch, M.D. Personal Physicians HealthCare, LLC 617-731-0058 [email protected] Michael L. Blau, Esq. Foley & Lardner LLP 617-342-4040 [email protected] ©2009 Foley & Lardner LLP Gerry Zitoli, Associate General Counsel Tufts Associated Health Plans, Inc. 617-923-5869 [email protected] Jeff Butler, Chairman & CEO Privia Health 202-361-6277 [email protected]
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