Advisories alarm Washington retainer practices

The state insurance commissioner is looking intensively at the legality of additional fees charged in these business models.

By Katherine Vogt, amednews staff. Sept. 1, 2003.

Physicians who charge extra fees for perks like telephone consultations and same-day appointment scheduling may be violating the law in Washington, according to an informal advisory issued by the state Office of the Insurance Commissioner.

The office said it has no plans to try to shut down any of the practices. However, it has embarked on an intensive review of such business models, which have been operating in the state for nearly seven years. The informal probe, thought to be the first of its kind in the nation, has rung alarm bells in the medical community.

Concierge care eyed for revenue
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Region: West

"The physicians are madder than hell. They want to be able to meet the demands of their patients. And the patients are very, very upset," said Tom Curry, chief executive officer of the Washington State Medical Society.

Curry said members of the insurance commissioner's office "are attempting to sacrifice the rights of patients to purchase something more than the lowest common denominator of care and the right for physicians to meet those patient demands. And they appear to be sacrificing those rights on the altar of a technical interpretation."

He said the medical society would try to convince the insurance commissioner to re-evaluate the guidance, and if that failed, the organization would consider seeking clarification through the Legislature or the courts.

At issue are medical practices charging fees for extra services such as 24-hour access to physicians and free parking. The practices' business models vary and have different names, including retainer, concierge or boutique practices. Seattle-area doctors are often considered to be the ones who developed the concept.

The Office of the Insurance Commissioner began looking into the legality of boutique practices after receiving complaints from consumers and increased inquiries from physicians about them, said Stephanie Marquis, a spokeswoman for the office.

"Our concern was that there were so many different forms of these groups out there that maybe we needed to look at all of them individually and look at how they were operating and what their business model was," said Marquis.

"We're still in the preliminary stages and we're in the process of setting up meetings with the groups we are aware of," she said, adding that she knew of about six of the practices in the state.

The office drafted two technical assistance advisories, similar to informal letters of opinion, and held a forum to discuss them on Aug. 12.

One advisory addresses the legality of extra fees charged by physicians who have participating provider contracts with health carriers. The fees are charged in addition to the usual co-pays and deductible allowed under a patient's insurance. The office cautions that if such fees are mandatory, they may violate state law as well as those contracts.

The other draft warns about practices that charge fixed, periodic fees for services, regardless of whether services are rendered. The draft says such arrangements may be illegal because they "in essence, are insurance agreements" and would therefore require the practice to be registered as a health care service contractor or health maintenance organization.

Marquis emphasized that the advisories are only drafts -- not rulings -- and that the office was attempting to open a dialogue about the practices with physicians and insurers.

Daniel S. Frank, MD, a Seattle internist who charges patients an extra $99 per month for premium services like flexible appointment scheduling, said the guidance won't likely have a significant impact on his practice. He believes he could avoid the legal concerns by simply seeing patients as an out-of-network provider, though it might cause some inconvenience for patients.

"The [state] law is very clear that patients can seek out a physician and get care under any terms or conditions they want. But the issue is how you interface that with the existing insurance system," he said. "I think the real problem here is that insurance companies have created these networks and patients really have given up tremendous freedom of choice by the network contracting process."

Jim Kneeland, a consultant in Seattle, said the insurance commissioner's office may be reading the law accurately. But he believes the intent of the law regarding such practices is different.

"I would hope they would look to proceed in a way to allow the Legislature to make the kinds of adjustments necessary to continue to practice," said Kneeland.

"Critics [of these practices] like to portray them as toys of the wealthy when in fact you talk to these physicians and most of their patients are those who have chronic health conditions. ... If the insurance commissioner decides to react unilaterally, he's basically having an adverse effect on the quality of care for a lot of people out there."

ADDITIONAL INFORMATION:

Concierge care eyed for revenue

Tufts-New England Medical Center will become one of the first academic medical centers to open a concierge practice as it tries to find revenue sources to offset losses in primary care.

For an annual fee of $1,800, the practice will offer patients extra amenities such as preventive care visits, shorter waiting times for appointments and direct access to contact physicians 24 hours a day. Profits generated by the fees will go back to the hospital -- instead of the physicians -- and help fund primary care services.

Concierge practices, which typically offer patients extra perks for a fee, have spread at general hospitals and clinics in recent years. But Deeb Salem, MD, chair of the hospital's department of medicine, said he believes this is the first time an academic group, at least in the Boston area, has offered this type of service.

Dr. Salem said the medical center began exploring the idea several months ago to meet patient demand for such services and to fill a void in operations. He said primary care is a losing venture at Tufts-New England, costing the medical center about $70,000 per primary care physician each year. So leaders turned to the idea of a concierge practice as a way to generate revenue.

The practice, tentatively slated to open Dec. 1, will be run by three physicians who will also keep their former patients at the hospital. The goal is to enroll about 300 patients in the first year.

Concierge practices have been criticized for creating a tiered system in which wealthy patients get better care than the poor. But Dr. Salem said the profit-distribution plan will let the new practice help all patients.