December 2, 2016

RALEIGH — A new Direct Primary Care option helped Union County government save more than $1.28 million on health care claims in its first year, without sacrificing quality of care for county government employees. A new John Locke Foundation Spotlight report highlights the cost savings.

The report urges other local governments across North Carolina to consider Union County’s example. “If other counties added a DPC option, had similar employee participation rates, and accrued similar per-employee savings, statewide savings easily could reach nearly $75 million within the first year,” said report co-authors Katherine Restrepo and Julie Tisdale.

Union became the first N.C. county to offer a Direct Primary Care option to its employees in April 2015. DPC removes insurance companies from basic primary care. In exchange for a monthly fee, patients have unrestricted access to their physician and unlimited access to a defined package of services.

“Much like a gym membership, which allows a person unrestricted access to whatever equipment and classes they wish as often as they wish, DPC grants access to whatever primary care the patient needs,” said Restrepo, JLF’s Director of Health Care Policy. “All of this is done for an average monthly fee of about $75.”

The number of DPC doctors jumped from 146 in 2005 to more than 4,400 in 2014. “By dealing directly with patients and filing no insurance billing whatsoever, DPC practices are able to eliminate 40 percent to 60 percent of their overhead expenses,” Restrepo said. “This also frees up far more time for doctors to spend with their patients.”

Employers and the health care industry have identified a “quadruple aim” for health care coverage: improved provider engagement, improved overall population health, enhanced patient experience, and lower costs. Union County government already had pursued that goal by providing a consumer-driven health plan, which combines lower premiums and higher out-of-pocket cost sharing with a tax-preferential health reimbursement account.

“Union County was an early adopter in providing its employees with a CDHP starting in 2003,” said Tisdale, JLF’s City and County Policy Analyst. “The county’s human resources executive director, Mark Watson, says that this type of benefit package can yield high satisfaction rates if it’s designed and managed properly.”

Watson and other key county government leaders took another step “to optimize the consumer-driven model” by bringing in a DPC provider in 2015, according to the report. “This decision allowed employees to choose to receive their primary care services from a DPC physician at a clinic set up near government offices.”

First-year results have been promising, Restrepo and Tisdale said.

“Perhaps the most obvious difference that patients have experienced is increased access to physicians,” Restrepo said. “Same-day appointments are available, and doctors are available around the clock by phone. The appointments are longer as well, averaging 30 to 45 minutes. That compares to the seven-to-10 minute appointments in traditional fee-for-service settings.”

DPC doctors provide 85-90 percent of patients’ health care services, and patients face no co-pays. “The membership provided by Union County covers all available services without further fees,” Tisdale said. “Under Union County’s traditional insurance plan, employees are responsible for $750 in out-of-pocket expenses for routine medical services, but that money remains in the pockets of employees who opt for DPC.”

Removing barriers to service has helped patients with chronic illnesses, Restrepo said. About 59 percent of the people in Union County’s DPC program have at least one chronic illness, and 35 percent have multiple chronic illnesses. “DPC members with more than one chronic condition cost on average 28 percent less than those enrolled in Union County’s traditional insurance plan.”

The $1.28 million in savings is based on a comparison of average per-employee per-month costs of medical and prescription claims incurred in the consumer-driven health plan versus DPC. “The average per-employee per-month savings top $260 for the 44 percent of Union County employees who have chosen DPC.”

Those employees incur 23 percent lower medical expenses, according to the report. They incur 36 percent less in prescription expenses, and they spend 46 percent less out of pocket for prescription and medical expenses. “Workers who have chosen DPC also report significant improvement in their overall health by a nearly 3-1 margin,” Restrepo said.

Union County implemented DPC while maintaining “budget neutrality,” according to the report. The county redirected $750 from participating employees’ health reimbursement accounts to pay instead for DPC membership. “The DPC option allows Union County to extend an added benefit to its employees at a fixed cost,” Tisdale said.

Other county governments should consider Direct Primary Care, Restrepo and Tisdale said. “While each county will face a unique set of circumstances, the potential savings are high enough that local governments should consider whether DPC might be a viable option for their employees.”

“DPC offers a unique opportunity to save millions of dollars while maintaining and even improving the quality of employee health care,” the report concludes. “These are funds that could be returned to taxpayers in the form of lower property taxes or allocated to other government projects.”

“The DPC model has the potential to go beyond reforming our local and national health care delivery system to effectively transforming it.”

Katherine Restrepo and Julie Tisdale’s Spotlight report, “Direct Primary Care for Local Governments: Helping Union County save $1.28 million in health care claims,” is available at the JLF website. For more information, please contact Restrepo at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].