Research & Commentary: Nebraska Should Move Forward on Direct Primary Care

Published January 26, 2018

One of the lesser-known factors contributing to the rapid increase in the cost of health care is the shrinking number of primary care physicians (PCPs) available relative to the size of the population. Similar to most states, Nebraska faces a severe primary care shortage. The Robert Graham Center estimates to maintain current rates of primary care utilization, Nebraska will need “an additional 133 primary care physicians by 2030, an 11% increase compared to the state’s current (as of 2010) 1,187 PCP workforce.”

Direct primary care (DPC), also known as “retainer medicine,” is one health care provider model that has become increasingly popular for doctors and patients alike and could serve to revitalize the U.S. primary health care system. Current primary care doctors face myriad regulations and a reimbursement system that is slow and costly, creating overhead that can eat up to 60 percent of a typical primary care practice’s revenue. Today, 23 states have a direct primary care law in place. According to the Direct Primary Care Coalition, the number of direct primary care practices nationally has grown from a few in the early 2000s to more than 700 today.

Nebraska has already taken a strong step toward expanding direct primary care. In 2016, the Nebraska Legislature unanimously adopted a law establishing basic standards for the agreements and making it clear DPC arrangements are not insurance plans, and therefore aren’t subject to state insurance regulations.

Under a direct primary care agreement, patients pay a monthly membership fee, typically ranging from around $50 to $80. As part of the membership, patients receive a more-generous allocation of appointments than they would under most traditional plans. Some agreements even include same-day appointments and house calls. The model removes the layers of regulation and bureaucracy created by the traditional insurance system and allows physicians to see fewer patients and focus more time on each patient.

Routine tests and procedures are included in most DPC plans, and lower membership fees are typically charged for programs that do not provide these additional services. According to the Docs4Patient Care Foundation, under a DPC model, medical practice overhead can be reduced by as much as 40 percent. Costs are reduced across the board under DPC, a study in the American Journal of Managed Care found that individuals who receive direct primary care are 52 percent less likely to enter a hospital than patients with a traditional private practice. The authors found that “increased physician interaction is the reason for the lower hospital utilization and ultimately lower healthcare costs.”

Nebraska legislators are considering a direct primary care bill that would establish a DPC pilot program for state employees in 2019 and run through 2022. The program would offer two DPC plans, a high-deductible option and a low-deductible option, and the program could include wellness incentives as part of the direct primary care health plans.The pilot program would be a substantial step forward for the state and could prove to be an important test case for determining whether additional expansion should be considered.

Direct primary care empowers patients and doctors, giving them greater freedom to establish and participate in health care provider models that work best for their unique needs. Nebraska’s proposed pilot program reaffirms the state’s goal to remove unnecessary regulatory barriers to direct primary care to help revitalize the state’s primary health care system.

The following documents examine direct primary care in greater detail.

Free-Market Physicians Look to Save America’s Broken Health Care System – Directly
Matt Kittle of the MacIver Institute examines the potential for direct primary care in Wisconsin and the new bill that could make rapid expansion possible. “Direct care is empowering consumers and the free market to drive down the cost of health care and, as has been abundantly documented, improve outcomes. It offers the return of the true doctor-patient relationship because it shifts control from far away bureaucrats to health care consumers,” wrote Kittle.

Don’t Wait for Congress to Fix Health Care…/dont-wait-for-congress-to-fix-health-care
In this Policy Brief, Heartland Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled, even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs, or submit even more ambitious requests for waivers to the Department of Health and Human Services – a suggestion the Trump administration has encouraged.

Policy Diagnosis: Seize the Moment to Reform State Health Care Laws  
In this interview, Michael Hamilton asked Dr. Hal Scherz, board secretary for the Docs4PatientCare Foundation, how the Trump administration is changing the health care regulatory environment and what actions lawmakers should take to improve health care.

Research & Commentary: Ten Health Care Reform Options for States–commentary-10-health-care-reform-options-for-states  
In this Research & Commentary, Matthew Glans outlines 10 steps state legislators should take to improve the cost and availability of health care in their states.

Direct Primary Care: An Innovative Alternative to Conventional Health Insurance
Insurance-based primary care has grown increasingly complex, inefficient, and restrictive, driving frustrated physicians and patients to seek alternatives. Direct primary care is a rapidly growing form of health care which alleviates such frustrations and offers increased access and improved care at an affordable cost. State and federal policymakers can improve access to direct primary care by removing prohibitive laws and enacting laws encouraging this innovative model to flourish. As restrictions are lifted and awareness expands, direct primary care will likely continue to proliferate as a valuable and viable component of the health care system.

Restoring the Doctor-Patient Relationship: How Entrepreneurship Is Revolutionizing Health Care in Maine
This report by Liam Sigaud of the Maine Heritage Policy Center analyzes the current direct primary care (DPC) landscape in Maine, evaluates how DPC is benefiting patients, highlights some of the challenges DPC practices face, and offers policy recommendations to promote this type of practice in the future.

Where Obamacare Leaves Questions, Direct Primary Care May Offer Answers questions-direct-primary-care-may-offer-answers?source=policybot
Proponents of the Affordable Care Act (ACA) set out to remake American health care with the law’s passage in 2010, but in many respects the ACA didn’t change the health care paradigm at all; it simply doubled-down on a broken, decades-old status quo making health “coverage” a national priority, rather than focusing on limiting health care costs and enhancing health care access. Patrick Ishmael of the Show-Me Institute explores in this essay a promising medical practice model, direct primary care, which he says could deliver on the promises made by proponents of the ACA to lower costs and improve access to quality health care.

Direct Primary Care: Practice Distribution and Cost Across the Nation
Philip M. Eskew and Kathleen Klink describe the direct primary care (DPC) model; identify DPC practices across the United States; distinguish it from other practice arrangements, such as the “concierge” practice; and evaluate data compiled from existing DPC practices across the United States to determine the cost advantages associated with this model. Eskew and Klink confirmed DPC practices’ lower price points and broad distribution, but data about quality are lacking.

Direct Primary Care: A Legal and Regulatory Review of an Emerging Practice Model
Philip M. Eskew examines concerns related to the “business of insurance” (BOI) encountered by DPC physicians. He analyzes recommended contractual provisions used to minimize BOI risk; compares state laws written chiefly to address risks related to BOI; considers the DPC provisions in the Affordable Care Act; and briefly considers the tax and scope-of-practice policy implications of the DPC model.

Direct Primary Care: Restoring The Doctor-Patient Relationship
Katherine Restrepo writes about direct primary care and how it could lower costs and improve the relationship between doctors and patients in this article in Forbes. “The beauty of practices like Doctor Direct is the traditional doctor-patient relationship is restored. By cutting 40 percent of overhead which is normally spent on getting paid by insurance companies, primary care providers can devote hour-long appointments to their patients and deliver care at a fraction of the cost.”

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database. 

If you have any questions about this issue or The Heartland Institute’s website, contact John Nothdurft, The Heartland Institute’s government relations director, at [email protected] or 312/377-4000.