Buffalo Business First
Read the ArticleRetainer practice arrangements generally feature a direct contract between a physician (or physician group) and a patient, where the patient pays a periodic fee in exchange for access to a defined range of primary care services. DPC practices charge this periodic fee but differ from traditional retainer practice arrangements in the following ways:
The services covered under a DPC arrangement vary by arrangement but typically include preventive care, basic illness treatment for both acute and chronic conditions, and care coordination.
The primary regulatory compliance consideration in evaluating the legality of a DPC arrangement is whether a DPC practice is engaging in an insurance business by collecting a membership fee in exchange for providing a host of primary care services. If the practice is engaging in an insurance business, it must hold an insurance license and comply with a multitude of state insurance laws. DPC arrangements resemble the basic insurance relationship when an insured pays a premium to an insurer in exchange for the insurer covering the costs of insurable events.
New York law does not specifically address DPC arrangements, but New York has hinted how it would treat DPC arrangements in a 2009 Department of Financial Services (DFS) advisory opinion (OGC Op. No. 09-02-02 2009), which examined whether a New York medical practice that, in exchange for a monthly fee of $79 per month, provided “unlimited visits” for “comprehensive medical services” and “unlimited sick visits” for an additional $10 fee per visit was conducting an unlicensed insurance business.
The DFS concluded that the practice was engaged in an insurance business because the benefits that the practice provided were dependent on the happening of a “fortuitous event”(the need for health care) which was beyond the control of the practice and its patients. As a result, the practice needed an insurance license because the practice bore the risk of loss if the costs to provide services exceeded the monthly fees paid by its patients.
The opinion did not, however, categorically prohibit all such membership agreements in New York State. The DFS noted:
“However, a service plan where there is a prepaid membership fee, and certain services occasioned by the happening of a fortuitous event are offered for an additional fee per service which is discounted from the usual fee, does not constitute the doing of an insurance business, and does not require an insurance license by the Department, provided that the fees cover the cost of rendering the service, including reasonable overhead.”
Until New York passes legislation to exclude DPC practices from “doing an insurance business,” New York providers considering the DPC model should do the following:
DPC arrangements foster increased access to a patient’s primary care physician. Studies indicate that increased access to a patient’s primary care physician may result in improved health outcomes.
Patients should be aware, however, that a DPC membership alone does not ensure comprehensive access to health care, including hospital and specialty care, and does not provide comprehensive coverage for non-primary care types of health care services.
Louis Q. Reynolds is an attorney at Phillips Lytle and member of the firm’s Health Care Industry Team. He can be reached at (716) 504-5785 or lreynolds@phillipslytle.com.
Receive firm communications, legal news and industry alerts delivered to your inbox.
Subscribe Now