Under a traditional health care benefit plan, a patient tells the doctor what’s wrong. Then the patient, insurance company, or self-funded employer pays the doctor for each of the things she does in trying to fix it.
For the past three years, that’s not how things have worked at Seattle-based Becker Trucking. For Becker, funding employee health care is a little like paying for gym memberships.
The company pays Seattle-based Qliance, a defined primary care business, $54 a month for every covered adult and $39 a month for every covered child. Employees and their families see participating Qliance doctors as many times as necessary, from none to twice a week for a worker that Becker CEO and president Frank Riordan calls “the biggest hypochondriac in Washington.”
There's no co-pay or additional cost for patients to see Qliance doctors. Covered services include labs and imaging technology, and doctors try to prescribe generic drugs, which are typically inexpensive. The company doesn’t provide emergency room care, hospitalization, or outpatient care (such as chemotherapy) for serious conditions.
For that, Becker relies on an insurance policy with an annual $5,000 deductible for each covered individual. The company pays the first $2,500 of individual claims on that policy. Workers pay the remainder.
“We’ve always provided medical and dental insurance for our people,” Riordan says, “but it’s so difficult to provide medical coverage.” When the company offered a fully insured plan through Regents, that company wanted a 34 percent increase. The firm switched to HealthNet, which wanted a 14 percent increase over the previous year.
The Qliance fee, by contrast, has stayed level.
The employee reaction, Riordan says, “is all over the place. For some of my drivers it’s good. You get an hour with the doctor every time you go in for a physical. My industry is notorious for still smoking and for poor eating habits, and the doctors work to help people improve their overall health.” At least two employees have lost significant amounts of weight with help from Qliance providers, he says.
Those that don’t use Qliance often prefer to see a doctor who doesn’t work for the company; gynecologists and pediatricians often generate particularly loyal followings. Becker offers a traditional medical benefits plan for workers who want to see a non-Qliance doctor. “Those people have more out of pocket expense—a co-pay on the visits and so forth,” Riordan says. “The average age at this company is 52, and they’re not huge on change.”
Pros and cons
Some workers, however, are proving flexible.
“So far I'm pretty happy,” says Bruce Campbell, who drives a truck for Becker and uses a Qliance clinic for his health care. “I like the fact that there’s no out of pocket when you go. The doctors are nice—maybe too nice. They try to set aside an hour for each patient and, when you go to fix your hurt hand, they want to talk about blood pressure and how much exercise you’re getting. It’s a small complaint. I work 11 to 12 hours a day, and that doesn’t lend itself to exercise.”
Campbell recently went to the emergency room for a finger that he hurt badly when he caught his hand in his truck’s steering wheel. “In that case Qliance does nothing for you, but we understood that. If there’s a drawback, it’s that they are not a 24/7 provider. I think the benefits outweigh those drawbacks,” he says. “I train new guys and this is a selling point.”
Qliance is the brainchild of physician Garrison Bliss, who ran a direct care practice for about ten years and decided to expand the idea in 2006. Initially he thought of the model as a way to help stressed physicians.
“Environments were increasingly difficult for primary care physicians, who were expected to do all they should do in seven to ten minutes and were getting paid less and less to do that,” says Erika Bliss, the founder’s cousin and Qliance’s current president and CEO. “The reimbursement rates are so low that you have to see many patients to make your practice work.”
Qliance employs its doctors and can count on a steady income stream and reduced overhead, because the company doesn’t hire the insurance reimbursement specialists that help keep most traditional practices in the black.
Doctors are each responsible for about 800 patients, down from the 2,000 to 3,000 they might see in another practice, and can earn bonuses based on patient satisfaction and quality of care.
“We work with a lot of companies that have wellness programs in place,” Erika Bliss says. “We can partner with the program that’s in place or offer wellness incentives on our own. We’ve gone on boats to give flu shots when a fishing company’s people are on shore, for instance.”
The firm grew 65 percent between August 2011 and August 2012, with the majority of growth coming from employers and unions. “We’re usually one choice of several, and the vast majority of employers we work with pay all or most of the monthly fee. Some have a small cost share,” Erika Bliss says. “Some employers get a group rate from us and then their employees can buy from us at that rate.” Sometimes they couple it with a high deductible plan.
“More and more we deal with large, self-insured companies,” she adds. Such employers save on overall costs within one to two years. They also bend the cost curve down, so that they see increases in line with inflation on what they’re paying for overall health care costs.
Reinsurance rate increases are typically smaller for self-insured Qliance customers, at least in part because the insured populations are healthier. “It’s easier to get reinsurance if you've got lots of things that protect reinsurance companies,” Erika Bliss says, adding that Qliance is considering possible partnerships with reinsurance companies.
Cigna, she says, is the first insurance company that has offered credits and discounts for employers using Qliance. The firm hopes others will follow.
Working with brokers
Qliance works with brokers and third-party administrators.
Broker Robert Anderson, who is vice president at Benefits Strategies in Richland, Wash., has worked with a variety of plan types, including direct primary care.
Anderson says plans involving direct primary care pay him less than those involving traditional insurance, but make up for it in other ways.
“You lower prices for your client and that could mean a lower commission, but you’ll have the employer as a client for a longer period of time and you’ll have a more loyal client,” he says. “It’s hard to pull an employer out of that plan because people like it and they're saving money. Brokers may make a little less per head but they’ll make it up in volume, because there's so much interest in this kind of plan design.”
Another defined primary care provider is MedLion, based in Monterey, Calif. Samir Qamar, the company’s founder and CEO, says he started the firm to help people who couldn’t otherwise afford care.
“I had a concierge, VIP medical practice, and my wife, Hisana Qamar, had a more traditional primary care practice,” Qamar says. “In 2008 there was a huge decline in her practice because of the economy. People were reluctant to come in because they had lost their jobs and the benefits associated with them. They found it difficult to pay self-pay rates out of pocket.”
Preventive care went out the window. “People don’t want to pay $200 to be told how to lose weight when they need to pay the mortgage with that money,” Qamar says. His wife’s income suffered.
The couple decided to combine concierge medical practice principles with a more affordable monthly fee. “We experimented with different monthly rates. We needed something that was sustainable from a business standpoint that didn't also scare people away,” Qamar says.
The business began in late summer 2009.
“We did the math and realized we were on to something. We saw half the patients but made more money because of decreased overhead, and we could keep patients healthier, which meant they didn’t come in every month,” Qamar says.
MedLion charges patients $59 a month, plus a $10 per-visit co-pay for “essentially unlimited” doctor visits, Qamar says. Like Qliance, MedLion doctors try to prescribe generic medications. Its plan doesn't include labs and imaging, though the company has deals with various labs, imaging providers and pharmacies that make these services and products less expensive for their members.
Unlike Qliance, MedLion doesn’t employ its physicians directly. The company licenses its model to other physicians and takes a percentage of their income from direct primary care. The same doctors can also accept insurance if they wish, allowing them to keep their existing patient base.
So far, Qamar says, most of MedLion’s business has come from people who are self-employed or between jobs. “Businesses aren’t coming to us. We’re coming to them,” he says, with about 75 percent of MedLion’s marketing dollars spent to reach businesses.
“We helped a small business, an orthopedic practice, that was paying a $1,500 deductible. They went to a $3,000 deductible with MedLion and saved 42 percent,” Qamar says.
In addition to saving by paying less for primary care and reinsurance, a business could also use direct primary care to save on worker's compensation claims. “When you absorb workman's comp costs into direct primary care, it doesn't get charged against insurance. At the end of the year, you don't see paid claims against you and that reduces your workman’s comp premiums,” Qamar says.
A market shift?
MedLion is pitching its services to bigger companies. They hope a variety of factors will help them improve their market penetration.
First, the combination of direct primary care and high-deductible insurance coverage will be an option on the insurance exchanges that health care reform mandates.
Second, Qamar says, "we've found a way to make costs qualified medical expenses and therefore tax deductible for the company. We equate it to direct medical care in the contracts."
Up in Washington, Qliance is also looking to expand. A new clinic in January will offer on-site or near-site clinics for employees to use while at work. "That clinic becomes part of the Qliance network," Bliss says, adding that an employee's home clinic can still be in their neighborhood.
“This is a total benefit option for primary care,” Bliss says. “It has the potential to completely shift the health care delivery system."
As always, the market will decide.