MacIver News Service

By Chris Rochester

MADISON, Wis. – The Senate is considering a free-market reform to the state’s most costly program, Medicaid, that has the potential to save taxpayers hundreds of millions of dollars or more.

The Senate Committee on Public Benefits, Licensing and State-Federal Relations on Thursday heard testimony on a bill authorizing the Department of Health Services (DHS) to launch a direct primary care pilot program in BadgerCare, the state’s Medicaid program.

Direct primary care is a method of delivering health care in which patients pay their primary care doctors directly via a monthly fee, bypassing traditional health insurance that can obscure the actual costs of procedures. Since patients are paying cash, there’s significant downward pressure on prices.

“Price transparency means patients see a significant savings with the DPC model. Some DPC providers are successfully delivering care resulting in savings of 15-30 percent,” the bill’s author, Sen. Chris Kapenga (R-Delafield), told the committee.

That kind of cost reduction means that implementing direct primary care into the state’s behemoth Medicaid program would be a taxpayer windfall.

“Medicaid spending has continued to balloon, accounting for almost 20 percent of our entire state budget, so it’s obviously an issue that we have,” Kapenga said. Total Medical Assistance payments in Wisconsin have soared from $4.7 billion in 2004 to nearly $9.2 billion in the 2016-17 fiscal year, according to the nonpartisan Legislative Fiscal Bureau.

Rep. Joe Sanfelippo, the author of a companion bill in the Assembly, says adding direct primary care to the Medicaid program could drive down costs by as much as 20 percent, potentially saving taxpayers hundreds of millions of dollars.

Or more. A similar pilot program in Michigan, if expanded to all the state’s 2.4 million Medicaid enrollees, could generate savings of up to $3.4 billion.

Kapenga compared the free-market model to a gym membership. Bypassing traditional insurance, patients in a direct primary care system pay a monthly membership fee directly to the doctor or clinic in exchange for virtually unlimited access to their primary care doctor, including many common medical services, tests, and exams.

Three doctors practicing the direct primary care model in Wisconsin said the bill would not only save taxpayer money, but improve health outcomes for those on the program.

“The first several months I was practicing in this model of healthcare, I was surprised by the number of people who came to see me who had not seen a physician in ten to 20 years,” Dr. Suzanne Gehl, a direct primary care physician in Delafield, told the committee. “We were diagnosing high blood pressure, diabetes, hypothyroidism, and cancer at unbelievable rates,” she said.

Once patients familiarize themselves with the direct primary care system, with its more personalized approach eschewing large hospitals and cumbersome health insurance paperwork, they quickly realize the benefits.

“The thing that amazed me is once you removed the barrier of cost and access, how quickly we were able to get these conditions under good control and help them navigate the healthcare system in a very efficient and cost saving manner,” Gehl said.

One source of savings is by cutting back on emergency room visits, which is often the go-to service for those on public assistance. “The culture across the spectrum is ‘go straight to the ER.’ That’s where most people get their primary care nowadays,” said Dr. Timothy Murray, CEO of Solstice Health.

Kapenga says the typical ER visit costs between $1,233 and $2,000 per visit, which is almost double what the typical DPC membership costs in a year.

According to Sanfelippo, 80 percent of Medicaid patient illnesses could be treated by a primary care provider. Instead, many of the cases are being handled in the significantly more expensive emergency room.

Even if relatively few Medicaid patients actually utilize direct primary care after it’s implemented, it will still yield savings, Murray said. Hard financials make that self-evident: the state spends $56 million annually on Medicaid recipients who use the ER more than seven times a year.

DPC also fosters a personal relationship between the doctor and patient, which will help change the culture of going to the ER instead of a primary care physician, Gehl said. Working at a traditional large hospital, Gehl handled 2,000 patients at any given time. Now she sees just a few hundred, which she says lets her spend more time with each person.

“We provide the access…I’ve seen the big systems, and I see what they can do right, and I see they struggle with providing that quick access for patients,” said Dr. Steve Bondow, a family physician in Milwaukee.

Gehl said physicians in direct primary care proactively reach out to patients encouraging them to get their annual exams, which are free at DPC clinics, and to steer them away from going to the ER in non-emergency cases.

Perhaps the most important advantage of direct primary care from the patients’ viewpoint is a personal relationship between the patient and their doctor, which is on the decline in the Obamacare era of hospital mergers and shrinking provider networks. Bondow said DPC’s main purpose is “restoring the doctor-patient relationship…that is our first goal in DPC. It just so happens that it’s cost effective also.”

With easier access to doctors, less paperwork, and a personalized approach free of health insurance dictates, it comes as little surprise that direct primary care arrangements often come with improved health outcomes. DPC patients have 35 percent fewer hospitalizations, 65 percent fewer emergency department visits, and 66 percent fewer specialist visits.

Twenty-three other states have passed similar legislation, defining direct primary care as a service, not a form of insurance, and thus outside the grasp of innovation-killing health insurance regulations.

This article appears courtesy of the MacIver Institute.
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