John R. Marquis (email@example.com)
Warner Norcross & Judd LLP
85 East 8th Street
Holland , Michigan 49423
January 23, 2007
National Committee on Vital and Health Statistics
The first thing people need to do in any discussion about concierge medicine is agree upon certain definitions. In the last several years, the term “concierge medicine” has developed an unflattering secondary meaning, and most in this segment of the physician industry are not happy with that meaning. Almost everyone agrees that the word “concierge” connotes a degree of elitism and suggests that physicians who practice this kind of medicine are seeing only wealthy patients and have essentially turned their backs on everyone else. On occasion “wealthcare” has even been used to describe these practices. The only national organization of concierge physicians, which I co-founded in 2002, was called the American Society of Concierge Physicians. The word “concierge” was so disliked by almost everyone involved that the name of the organization was changed a few years ago to the Society for Innovative Medical Practice Design.
The term “concierge medicine” is now used to describe almost any type of physician practice that accepts a periodic fee from a patient. But beyond that these practices have such diverse characteristics that it truly no longer makes any real sense to refer to them as “concierge” practices, at least if we apply the acquired meaning of that word. It is important for your purposes, however, to be clear on these definitions, since I think you’ll agree, if you accept my testimony, that the great majority of concierge practices operating today are already subject to HIPAA’s requirements and there does not seem to be a great need to go further.
There are only two basic models of physician practices that for our purposes here today legitimately can be called concierge-style medical practices. Although they differ in their economic approaches, they all have three things in common: (i) in one way or another they change the way patients access the physician; (ii) they have fewer patients than traditional practices; and (iii) the patient pays a pre-set periodic fee to the physician.
The first model is one where the physician accepts an annual or other periodic fee in exchange for giving the patient special or enhanced access to the physician. I call this style of practice the “fee for non-covered services” model (or “FNCS”), as historically the fee charged to the patient is for services that are NOT covered by private insurance or Medicare.
An FNCS practice might, for instance, require a patient to make an annual payment of around $1,500 for special or privileged access to the physician, such as freedom to call her private phone or pager number, day or night, or to make a contact via e-mail (and expect a timely response). Same day or no wait appointments, and even house calls, might be included in the special access package. Physicians using this model typically continue to accept insurance reimbursement and to participate in Medicare. While many of these practices try to include certain elements of medical care in their concierge packages, the essential things for which the patient pays the concierge fee are elements of enhanced access.
You may have heard of MDVIP, a company based in Florida, and the biggest player in the country in establishing these kinds of practices. Many even refer to this model of concierge practice as the MDVIP-style. MDVIP seems to have changed its stripes over the last two years, however, and, instead of overtly accepting an annual fee from a patient in exchange for the standard list of enhanced access, it now says that the fee it accepts is for an annual wellness physical, preventive health plan, and an electronic, portable medical record for use in traveling and in emergencies. The standard enhanced access services are provided almost incidentally and without stated compensation. I am not sure how MDVIP addresses the Medicare issue, however, since the great majority of its physicians participate in Medicare. And Medicare pays for some parts of physicals, often even parts of annual “wellness physicals.” And it pays for all of the new, one time “welcome to Medicare” physical allowed by Medicare since January of 2005. MDVIP has around 150 physicians around the country practicing this style of practice, and there are probably a like number who practice the same style of practice outside of the MDVIP corporate imprimatur.
The second model is currently outnumbered by the FNCS model. I call this style of practice the “fee for care” model. This is where in exchange for a pre-set annual or other periodic fee the physician will not only normally provide enhanced or preferred access but also primary medical care as well. These practices are almost always made up of internists and family practice physicians. Although medical care is provided as part of the concierge fee, this model typically does not participate in Medicare or accept private insurance (and in my view cannot participate in Medicare and must instead opt out of Medicare).
This model has been under considerable pressure of late from the Washington State Insurance Commissioner, the complaint being that a practice operating in this model is essentially acting as an insurance company. The theory is that the medical practice has agreed to provide all the primary medical care the patient needs during a set period of time in exchange for a fee, much like the payment of a medical insurance premium insures coverage of the patient’s medical needs during the policy period. To counteract this argument, these practices often require the patient to deposit the concierge fee in a separate fund to which the patient continues to have access and over which she retains control. Only after a certain time has passed, a month for instance, will money be released from the fund to cover the period just ended.
No insurance commissioner I am aware of (other than Jane Cline in West Virginia – and I’ll touch on that in a moment) has seriously taken the position that this “fee for care” model, properly structured, is really insurance. Except for the West Virginia example, I don’t know of any insurance commissioner who has openly and officially taken the view that the private fee arrangement between a physician and her patients falls within the realm of state regulation in general or insurance regulation in particular. The fundamental attributes of insurance is the shifting of risk by the insured to the insurer and the spreading of that risk by the insurer. Neither is involved in this model of concierge practice, again properly structured. The physician promises to give no more than the professional services he can provide consistent with his training and license. He does not promise to pay for specialists to treat the patient or for hospital stays. And the patient does not shift any risk to the physician, any more than in the normal physician-patient relationship. Both the patient and the physician can terminate the arrangement at any time without any cause, and the patient would not pay for anything he or she did not either receive or have available for the asking.
Because the practices in this model do not bill insurance, some of them perhaps may not be covered by HIPAA. The only area of the law where I have heard this to be much of an issue is the cash only practices, where the patient pays for whatever medical care is purchased on a per visit basis. These practitioners are described in this web site. http://www.aapsonline.org. These practices do not fall within what we would call concierge medicine.
The “fee for care” model originally incorporated the increased access and privileges for the patient, but there is a growing movement to make this model a means of providing primary care to uninsured and low-income patients. A good example of this is Dr. Vic Wood in West Virginia. Dr. Wood was operating this style of practice when the State’s Insurance Commissioner, Jane Cline, in an act of exuberance that I would have liked to see him challenge, told him he was operating an insurance company and would be subject to prosecution if he did not stop. While I would not have advised Dr. Wood to react as he did, his actions resulted in the passage of legislation in West Virginia to establish a three-year pilot program for this model. These test models will be limited generally to serving the uninsured, and Dr. Wood estimates that he would need to charge $83 per month per patient to have a viable practice.
While no statistics exist, I would estimate that there are no more than twenty-five physicians in the country using this kind of model. As you may know, in August of 2005 the GAO issued an extensive report on the subject of concierge medicine and its effect on Medicare. Its primary conclusion was as follows:
Although the number of physicians practicing concierge care has grown in recent years, the total number remains very small. Available measures of Medicare beneficiaries’ overall access to care, while not directly addressing concierge care, indicate widespread availability of physicians to treat them. The small number of concierge physicians at the time of our review, along with information from available measures of access to services, suggests that concierge care does not present a systemic access problem for Medicare beneficiaries at this time.
I would make the same point about the question of whether the HIPAA rules should be expanded to cover concierge physicians who because of their chosen style of practice, are exempt from compliance. The great majority of concierge physicians practice the FNCS style, and they are already covered. The balance (practicing the “fee for care” model) is so small in number that it is hardly worth the effort to expand or change the rules.