Dr. Lee Gross runs Epiphany Health in North Port, Florida alongside his co-founder, Dr. William L. Crouch, Candice Nicol, ARNP and their four staff members. As a leading subject matter expert on the hybrid DPC model, Dr. Gross has led ongoing efforts to educate the broader Direct Care community about an exceptionally valuable and often misunderstood medical model. To further Best Practice’s mission to bring our readers the most relevant information and facilitate a deeper understanding of an often neglected topic, we asked Dr. Gross to share his knowledge on the what, how, when, why, and who of the hybrid model. Here’s what he had to say:
What is hybrid DPC?
We’ve come to the consensus in the medical community that practices that don’t bill third parties constitute DPC practices regardless of whether they charge membership fees or a fee for each service. But people often muddle the distinction between DPC and hybrid DPC, often suggesting that hybrid practices are those that charge a monthly membership fee and then bill insurance on top of that for a select set of services. In reality, that’s more like a typical concierge relationship. The “hybrid” in hybrid DPC actually refers to the existence of two distinct payment options, instead of a “hybrid” payment method wherein patients pay both a membership fee and use their insurance to cover care. It’s the practice itself—with a panel made up of both DPC patients and fully-insured patients using their insurance—that’s hybrid, not the payment model.
How did you end up practicing under the hybrid model?
As our practice name suggests, the entire team at our traditional practice had a collective “epiphany” back in 2010 about how we could better deliver care. A small business owner, who we already provided primary care for nearly all of their employees, asked why they had to pay an insurance company to pay us, when it would be more simpler and more cost-efficient to just pay us directly. The “epiphany” was that we were using health insurance wrong. Why were we using the most incredibly inefficient system, health insurance, to pay for the most basic and affordable health care service, primary care? At the time, Direct Primary Care wasn’t a well-known medical model. Since there were no “experts” in the field, we had to start from scratch, spending nearly $100,000 in legal and accounting fees over the next year doing our due diligence.
Uninsured patients ended up being low-hanging fruit in terms of difficulty of onboarding. They saw the membership-based model as their ticket to affordable medical care. After deciding on a pricing model and building a local network of independent physical therapy groups, pharmacies, imaging centers and laboratories to provide affordable ancillary services, we immediately started offering the alternative payment model to our existing panel without sending away patients who wanted to continue using their insurance. One-hundred patients switched to DPC almost overnight. We stopped billing their insurance and charged them the first monthly payment. The folks that didn’t make the switch continued to experience care delivery and coverage in the exact same way they did under our entirely traditional practice. It was a win-win.
The Nitty Gritty
How does the hybrid DPC model work from a business operational standpoint?
To provide care under both the DPC model and the traditional insurance model, we established a new legal entity, Epiphany Health LLC. To clarify, an LLC is a limited liability company which combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. This entity acts as a contracting agent for patients.
When a DPC patient contracts with Epiphany Health, we essentially create a provider agreement between Epiphany Health and the existing practice corporation. Epiphany Health just serves as a pass through to make it possible for us to contract with payers like Blue Cross and Cigna, while simultaneously billing other patients a monthly membership fee. For the existing practice, it is no different than signing a capitation agreement with one insurer and agreeing to a fee-for-service agreement with another. The LLC is not a risk bearing entity, as it is a dollar-for-dollar pass through of fees collected from the patient being paid to the provider practice. The LLC shows no profit or loss. The practice never bills an insurance company for any services provided to a patient that is paying us a membership fee.
Of course, doctors could certainly structure their hybrid practices in other ways. When I started out, we had no one’s lead to follow, so it fell on our legal team to provide us with a workable strategy. They didn’t want us to have to implement multiple fee schedules--that is, they didn’t think it was feasible for us to have separate fee schedules for patients with Medicare, patients using an accepted payer, and patients paying a monthly fee. The existence of Epiphany Health as an LLC addressed some of those more formidable roadblocks.
What does cutting out payers actually entail?
Doctors considering terminating relationships with certain payers need to make sure they do so in compliance with those contracts. Most insurance companies will only allow termination at specific times, otherwise the contract will automatically renew. Our contracts typically require that we give ninety day notice, so three months before we want the relationship terminated, we contact the insurance company and send out a letter to patients insured by that payer. Be careful to notice if the contract specifies 90 day notice prior to the renewal date, or 90 day notice given at any time.
Typically, patients don’t read our letters very carefully. They see that we are terminating their insurer and assume that means they’re getting kicked out of the practice, or need to change insurance plans to one that we are still in network. It’s incredibly important for doctors to make clear at the beginning of the letter that the patient is wanted and can stay. It’s also the time most conducive to having a fruitful conversation about DPC at every point of contact leading up to and during that 90 day window. It is never too soon to start educating your patients about the change.
What’s it like working with both DPC patients and fully-insured patients on a regular basis?
The way patients approach their care depends entirely on the payment model that makes it possible for them to receive it. The conversations I have with my DPC patients vastly differ from the ones I have with those who kept their robust insurance plan, and my capacity to see both on a daily basis has made it possible for me to easily compare the two. People who pay a fortune to have great insurance policies with low co-pays want absolutely every single test and treatment done. They want the expensive scan, the newer drug, the cutting edge therapy, regardless of whether they really need it. DPC patients, on the other hand, really want to understand every cost. The direct care model makes it possible for me to tell them the price of a lab, procedure, or prescription down to the penny, for the first time allowing us to bring the cost of care into the conversation of risk, benefit and alternatives.
Weighing the Options
What are the benefits of transitioning to the hybrid model opposed to a full-blown DPC practice?
To put it simply: implementing the hybrid model allowed us to test the waters before diving in, and gradually transitioning to third-party free on our own schedule. We didn’t have to take a risky financial leap. I didn’t have to moonlight in an emergency room for eighteen months while working as a primary care physician. Learning the ins-and-outs of practicing medicine under a completely new business model is incredibly difficult, but learning them when the entire practice rides on your capacity to sell that model is even worse. The hybrid model provided us with the time, space, and revenue to figure out infrastructure, cash flow, and effective patient recruitment while staying afloat. We had the chance to orient Epiphany Health towards long-term success without putting all of our eggs in one basket, making a sudden change, and announcing to patients that they could only stay at the practice if they signed up for a model that many of them didn’t even understand. Additionally, you cannot enroll Medicare eligible patients into your DPC program until you have opted out of Medicare. Since we did not have to immediately opt-out of Medicare, it still leaves moonlighting as an option for additional revenue during transition, since most moonlighting opportunities require Medicare participation.
What are the benefits of transitioning to the hybrid model opposed to remaining entirely insurance-based?
Again, to put it simply: implementing the hybrid model made it possible to rid ourselves of the worst offenders without throwing the baby out with the bathwater. Now, as insurance companies adjust their programs and become more onerous to work with, we can put them on notice and terminate our relationship with them. Under a traditional practice, terminating a contract with a payer means that patients insured by them would have to leave. Under the hybrid model, we can keep them on under the DPC portion of our practice. Over the course of several years, we’ve stopped billing Humana, United Healthcare, Cigna, and Aetna. As of today, we only have active contracts with Blue Cross and Medicare. The hybrid model has made working with insurers and remaining profitable much more sustainable for our practice, compared to our colleagues. It immediately adds a steady revenue stream, unrelated to practice volume. Thanks to this approach, we remain one of the last independently owned and operated primary care practices in the region.
What are the drawbacks of the hybrid model opposed to a full-blown DPC practice?
One of my close friends in the DPC community puts it like this: “the hybrid model forces practitioners to compete with themselves for patients”. To a certain extent, he’s right. We ask patients to sign up for our membership while also giving them the option to continue using the insurance that they or their employer already payed for. Most of them aren’t going to pay on top that, especially if they’re already being provided with quality care. His criticism is legitimate--that’s why we’ve addressed it as practice. The day DPC went live, we stopped accepting any new traditionally insured patients, unless they signed up for our DPC program. We enroll all new patients exclusively into the DPC portion of our practice.
Another drawback to the hybrid model is obvious: we don’t get to practice entirely under DPC. Practitioners operating solely under the DPC model benefit from both the lower overhead associated with micropractices and the absence of hassles created by third-party payer interference. Though the adoption of the hybrid model has significantly reduced the number of hours we spend dealing with insurance companies, we still have to maintain the infrastructure and salaries necessary for coding and billing. Of course, the benefits and drawbacks of each model vary with the situation of the practitioner considering it. If a doctor already has a fully established practice, kids in school, and a mortgage to pay, making a slow transition via the hybrid model eliminates any immediate risk. If your goal is to be entirely 3rd party free, you must be certain that all practitioners are on board with the transition pace, or you risk putting yourselves in a frustrating situation where you are pulling off the Band-Aid too slowly. However, if a doctor just graduated residency and has no existing patient base to bring over to the new model, a lean approach to DPC--with minimal staffing and minimal office space--will lead to more long-term success and sustainability.
What are the drawbacks of the hybrid model opposed to remaining entirely insurance-based?
Can’t think of a legitimate answer off the top of my head--maybe just that you won’t know what you’re missing.