Medicaid patients often struggle to access primary care, primarily because physicians face low reimbursement rates and high administrative burdens. This leaves many beneficiaries relying on costly alternatives, such as emergency departments, for routine care. In contrast, the private market has seen the rise of Direct Primary Care (DPC), a retainer-based model. In this model, practices charge patients a fixed, periodic fee, rather than the traditional fee-for-service structure. Fees range, typically from $500-$1500 per year, cover usual primary care services, same-day appointments, increased access to physicians via text or email, as well as blood tests, and generic medications at wholesale costs. Patients in DPC practices also get the benefit of care coordination that directs patients to a network of low-cost specialists and imaging centers.
The DPC model is an attractive model for physicians because of the significantly lower administrative burden associated with running these practices - physician patient panels are smaller, there are no documentation requirements for billing or quality metrics, the electronic health record system doesn’t need to meet Medicare’s meaningful use requirement, and there is significantly less time spent on prior authorizations. As a result, these practices report lower burnout, improved doctor-patient relationships and better access to care.
Low regulatory burden allows these practices to harness technology in providing access to remote or underserved areas.[1] Free from meaningful use requirements, practices can build low-cost electronic health record systems that work for their specific needs. Additionally, they need not adhere to Medicare’s rules on telehealth. For example, while the originating site regulations were relaxed for the public health emergency, the future of those regulations are in question. Yet this doesn’t matter for DPC clinics. The originating and receiving site for telehealth can be whatever that office decides is best for their patients.
While Medicaid Managed Care Organizations (MCOs) have played a crucial role in managing costs and coordinating care for beneficiaries, they are increasingly relying on shrinking pool of fee for service network providers to deliver medical care. Adding DPC as an option could enhance role, with their existing public health management infrastructure ensuring care coordination. This may be possible with recent legislation, the bipartisan Medicaid Primary Care Improvement Act, passing the House. If this legislation becomes law, Medicaid programs could draw inspiration from another successful government benefit program that empowers beneficiary choice, the Supplemental Nutrition Assistance Program (SNAP), to extend DPC services to Medicaid beneficiaries.
The passage of legislation is necessary to reassure state Medicaid programs that they could obtain waivers for DPC integration into MCO models without running afoul of Medicaid regulations, allowing the choice of a DPC benefit alongside traditional Medicaid options. MCOs would still have a large role, with this bill giving those organizations the leeway to offer DPC along with other innovative care delivery options. DPCs focus on preventative care would align with MCO goals for population health, likely decreasing overall costs.
For this to be most successful, programs should make the DPC benefit a SNAP-like program, giving patients the funds to purchase their own DPC care with no strings attached to physicians that participate. SNAP does not require onerous quality metric reporting from grocery stores, its near-universal acceptance speaks volumes to its low administrative burden. A Medicaid DPC benefit should mimic that. This will allow patient choice and preference to drive quality without oppressive administrative burdens. Meanwhile, Medicaid could still act as insurance for non-primary care services, such as emergency room visits, hospitalizations, surgeries, or other large, unexpected costs with MCOs playing a role in distributing the DPC benefit and handling those non-DPC services. Even when that Medicaid insurance is needed, patients will still benefit from a DPC physician who can coordinate care, as primary care is meant to do. Expanding DPC to Medicaid would grant these patients the same benefits currently enjoyed by private-pay DPC patients, including fewer emergency department visits, reduced hospitalizations, and lower overall costs. Importantly, expansion of a healthcare model free of many of the administrative headaches of insurance-based fee for service models will help stem the growing tide of burnout and dissatisfaction among primary care physicians that leads many to quit medicine entirely.
The benefits to the Medicaid program that would accrue are manifold. The non -FFS, retainer-based model is cost-inhibitory by its very nature, and represents better value to Medicaid recipients through better access, fewer emergency department visits, hospitalizations, and surgeries. The DPC price transparent cash model also leaves little room for price-gouging or fraud. Just as grocery stores can’t charge different prices for SNAP beneficiaries, DPC providers couldn’t charge Medicaid beneficiaries different prices than their private pay clients.
The idea of “retainer medicine,” is frequently criticized as a realization of a two-tiered American healthcare system. By subsidizing Medicaid patients’ access to this, policymakers can ethically support a system which has proven benefits over the status quo. Given the recent growth of DPC, and that many physicians drop public payors to become DPC providers, we argue that failure to provide a Medicaid DPC benefit is actually the unethical choice. The SNAP program allows grocery stores to do what they do well - source and deliver groceries at the lowest cost possible, and allows the government to fulfill its moral obligation to indigent citizens by redistributing income to them to buy food. SNAP recipients can choose trader joe’s, ACME, or local mom & pop grocers. Similarly the Medicaid DPC benefit could be used in any setting, allowing healthcare providers to innovate to compete for their services.
Conclusion
Introducing a DPC benefit within Medicaid could significantly improve access to high quality care, reduce costs, and mitigate physician burnout and loss. Following SNAP’s “no-strings-attached” funding approach is essential to giving current and future DPC physicians the flexibility to participate in this model and preserve the integrity of the patient-physician relationship without interference by third parties. Success of this model will require thoughtful collaboration between policymakers and MCOs to create an efficient benefit distribution framework while preserving DPC's low-overhead model.
expand on this?
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The central reason why patients don't have access to primary care in Medicaid is because of low reimbursement. In most states, Medicaid reimbursement is way below "break even" and if practices will go bankrupt if their patient panel is made up of majority Medicaid patients.
The challenge with paying for Direct Primary Care (DPC) is the same as paying for RVU based reimbursement. Eventually the rates will get ratcheted down to below "break even." Back to square one!
A much "simpler" fix is increasing PCP reimbursement in Medicaid. This will make it "profitable" to see Medicaid patients in the office.
Next up - we need more PCPs. But that is also a reimbursement issue 🤔