Justin Barclay and I had fun on the radio yesterday discussing the unintended consequences of ObamaCare on the Jay Severin show:
Justin Barclay and I had fun on the radio yesterday discussing the unintended consequences of ObamaCare on the Jay Severin show:
We already have a physician shortage. There will be 30 million newly insureds in 2014 searching for a family practice physician due to ObamaCare. This will make the shortage worse.
The HSA GUY Scott Borden and Mike Breitenbach discuss how physicians can move to a Direct Pay practice so their patients can have greater access to medical care on their talk radio show. Direct Pay is the affordable version of “Concierge Medicine”:
Direct Pay Consulting offers physicians a turn-key transition plan and then educates their patients about how to understand their health insurance options. Switching to HSA qualified plans will save a tremendous amount of money on health insurance and taxes. And those premium savings can help a significantly higher number of patients afford a Direct Pay Physician.
If you are a physician concerned about lower reimbursement fee schedules from insurance companies and having government bureaucrats telling you how to run your practice then you should contact Direct Pay Consulting (913-980-4694). We will help you get back to working for your patients instead of insurance companies!
Mary Pat: What is your background, Scott?
Scott: I am a passionate Health Savings Account (HSA) expert. My background has been in health insurance marketing and management for 23 years. I have been heavily involved with Consumer Driven Healthcare for the past 15 years. I have been both a talk radio show host and guest on hundreds of shows over the past 8 years. I have also been featured on several television broadcasts and been a guest speaker for dozens of organizations.
Mary Pat: Your company is called Direct Pay Consulting and you help primary care practices transition to a Direct Payment Care (DPC) model – will you explain what that model is?
Scott: DPC is where the patient pays the physician directly without any third-party insurance company or government program being involved with the payment or treatment plan. It is also known as Direct Primary Care or simply Direct Pay. This usually involves an annual membership fee and sometimes a per visit fee. There are hybrid versions available where insurance is billed above the annual membership fee, but we know any payment from an insurance company or government entity will include intrusive control over how the physician practices medicine. And it significantly increases paperwork.
The original version known as “Concierge Medicine” started in the late 1990′s in Seattle and has been slowly picking up steam. Both Concierge and DPC allow physicians the time necessary to treat the root cause instead of simply medicating symptoms. Additional benefits include same or next day appointments, less (or no) waiting times, cell phone / email / video conferencing access, coordination of care with specialists and even house calls. Concierge physicians may charge $1,500 – $20,000 or more per year so it may be cost-prohibitive for many Americans. DPC offers nearly the same benefits as a Concierge physician at an affordable rate almost anyone can afford.
Mary Pat: Why do you think now is the right time for this model?
Scott: There are many things currently happening that each point towards DPC as the solution. Together they are turning what would have been a gradual movement into a potential mass exodus.
The first issue frustrating all physicians is decreasing reimbursements. The “Doc Fix” is unlikely this year as Medicaid payments will match Medicare in 2014 meaning the fix would be much more expensive this time. The odds are further reduced by the lack of an election this fall pressuring congress to delay the planned cuts again. Many independent physician practices are being bought by larger hospital groups. Since reimbursements are usually not tied to the amount of time spent per patient, these groups typically pressure physicians to see more patients per day. They have been known to require treatment plans based on maximizing reimbursements instead of better patient outcomes. So unfortunately many doctors today feel like they’re working for insurance companies and hospitals instead of their patients.
Second is the shortage of physicians. Nearly 50% of a primary care physician’s time is spent writing letters and filing claims in order to receive payments from insurance companies. And whatever payments they actually do receive seem to arrive late. Forecasts show that physician access will be significantly worse once the Affordable Care Act (ObamaCare) subsidizes health insurance for 30 million people that will be searching for a primary care physician instead of using the Emergency Room for minor medical needs. This will even further reduce the amount of time available with each patient.
And the most important driver is the pent-up demand from patients. People are afraid ObamaCare will take their doctor away. They already hate being being herded through a system of long waits and limited access, and they know it’s not going to get any better. Many middle class Americans are willing to pay a little more to receive excellent medical care from a doctor they have chosen.
Mary Pat: How can physicians evaluate whether DPC is a good fit for them?
Scott: Physicians who want to spend more time with patients should consider DPC. Physicians being overworked and underpaid should consider DPC. Physicians that don’t want to be told how to run their practice or how to treat patients should consider DPC. Physicians concerned about ICD-10 and healthcare reform should consider DPC.
Although most physicians would like to transition to DPC, very few will be able to without the typical “income dip” that occurs when all insurance and Medicare reimbursements stop.
Well established practices with a large number of loyal patients should consider transitioning immediately. However some physicians are simply wanting to semi-retire without reducing income, so DPC is an excellent option for them too. Every situation is different.
Mary Pat: What is the scope of services you provide?
Direct Pay Consulting provides all of the services a physician needs to convert his/her practice:
Conversion planning and execution
Patient insurance education and guidance
All announcements and ongoing communication
Patient sign-up management
Custom web pages for the doctor
The idea is for the doctor to continue to do what they do best while we manage the conversion and ongoing patient participation. We have partners that can provide services from setting up an office to management of day-to-day operations for those doctors who are breaking away from a group. All of this is completed at fair and reasonable costs.
Mary Pat: Is it scary for physicians to take the “leap of faith” necessary to make the switch over from fee-for-service to DPC?
Scott: Actually I think the scary option would be to remain in the current system allowing insurance companies and government bureaucrats to take over virtually every business and patient decision! Many doctors who take on the conversion as a lone wolf find that it takes much more time than expected. They experience many pitfalls and delays. Many times they are forced to completely stop their practice to allocate the time needed which is very costly. If they don’t have enough patients sign up then physicians are forced to begin the even more difficult process of finding new patients. The idea behind Direct Care Consulting is to have the doctor continue to file insurance until a predetermined number of patients sign up thus limiting the risk.
Mary Pat: What expenses are eliminated when DPC is adopted? What new expenses, if any, arise? Are any staff positions eliminated?
Scott: Each conversion is vastly different. The primary expenses that go away are those related to coding and filing for payment from insurance providers and government agencies. Rarely are there any new expenses. For many practices this can eliminate one or two clerical positions.
Mary Pat: How does it work if physicians want to continue to see Medicare patients? Does the physician have to opt out of Medicare?
Scott: No physician would be forced to opt out, however most DPC physicians will choose to stop taking Medicare. They don’t want anyone (let alone a government agency) dictating how they are to treat patients. Accessing some benefits outside the DPC practice for Medicare patients such as durable medical equipment might be more complicated, but not impossible. Medicare patients may find it more difficult to find physicians willing to accept them in the near future, so Medicare patients could very well become the fastest growing adopters of DPC.
Mary Pat: I’ve heard you are called the “HSA Guy.” What do HSAs have to do with DPC?
Scott: HSA-qualified High Deductible Health Plans (HDHP) offer the catastrophic protection everyone needs at a significantly lower cost than low deductible co-pay health insurance plans. I call HSA-qualified plans “DPC friendly” since they are not allowed to have office visit co-pays which wouldn’t be accepted by a DPC physician anyway. This insurance premium & tax saving tool allows many middle income patients to transition to a DPC practice without breaking their budget. HSAs make DPC affordable for (almost) anyone.
Mary Pat: Why did you transition from 20+ years of health insurance consulting into Direct Pay Consulting?
Scott: Last year I had no idea how much pent-up demand there was from both physicians and patients for DPC. Then I was approached by Dr. Douglas Brooks who has been a long time talk radio show listener that was ready to go Direct Pay.
But Dr. Brooks’ wife wasn’t convinced. She was concerned about the dreaded income dip that normally accompanies quitting insurance and Medicare cold-turkey. She was especially concerned since Dr. Brooks was already one of the top 1% compensated primary care physicians in the country. But Dr. Brooks was so fed up with the various hospital groups he had worked for that he was willing to go for it. He asked me for my help and we put together a business and marketing plan.
I felt we needed 1,000 patients to sign up in order to replace his salary. He reached that level in three months. Let’s just say Mrs. Brooks is no longer concerned. I now know this level of success is extremely rare. I’m not sure it has ever been done before. Ignorance is bliss. The biggest reason he was able to transition so quickly is because he is a very popular physician with a large number of loyal patients. Many of them attended one (or both) of our seminars.Our insurance office fielded hundreds of phone calls from his patients along with dozens of appointments, helping them understand why they should switch to HSA- qualified plans. Dr. Brooks estimates 40% of his DPC patients are now paying his fees with tax-deductible HSA dollars. HSA participation is around 5% nationally.
We know the direct patient contact necessary for a successful transition will limit the number of physicians we are able to work with to a maximum of 10 this year. There are currently less than 5000 DPC physicians. Yet there are over 300 million Americans that want more access to their physician. HSAs and DPC make it affordable for almost everyone.
Scott Borden is the founder of Direct Pay Consulting and can be reached at 913-980-4694 or at SBorden@DirectPayConsulting.com.
In case you missed the Saturday March 16th edition of Moneyline, here you go!
Don’t forget to maximize your 2012 tax deduction by funding your HSA by April 15th.
2012 Maximum HSA Contributions:
$1000 55+ catch-up contributions
Here is proof that Obama has heard the truth about the right way to reform healthcare:
Dr. Carson’s low income / Medicaid proposal:
“Instead of sending it [big pot of government money] to some bureaucracy, let’s put it in their HSAs. Now they have some control over their own healthcare. And what are they going to do? They are going to learn very quickly how to be responsible.”
The real question is what was so important that Obama needed to be texting during Dr. Carson’s excellent HSA explanation?
Here are a few of my initial guesses:
– This just ruined breakfast. What’s for lunch?
– Need a distraction NOW… How about a round of golf with Tiger?
– I hope this guy doesn’t run for president
– Who scheduled this guy?
– FIRE HIM!
So what are some of your guesses?
(the best ones will be posted here)
Here are a couple little known tips that could significantly reduce your taxes for 2012:
1. If you are a small business owner with less than 25 full-time employees and you are paying health insurance premiums for your employees, you could be eligible for a TAX CREDIT of up to 35% of the employer portion of premiums paid in 2012.
2. If you were covered by an HSA qualified High Deductible Health Plan (HDHP) on or before December 1st, 2012 then you have until you file your taxes (or April 15th 2013) to contribute to your HSA and get a 2012 tax deduction.
2012 Contribution limits:
Single – $3100
Family – $6250
Catch up contribution (age 55 or older) $1000 per person*
2013 Contribution limits:
Single – $3250
Family – $6450
Catch up contribution (age 55 or older) $1000 per person*
*If both are 55+ then both have to open HSA accounts for both to participate in catch up contribution
These limits are also stated on the U.S. Department of Treasury website.
These maximum contributions will not be pro-rated if your HSA qualified health insurance plan (HDHP) was either in force all 12 months of 2012 OR if it was in force by December 1st of 2012 AND remains in force all 2013.
Your tax deduction is based on how much you DEPOSIT into your HSA, not how much you spend.
You do not have to itemize to get the tax deduction.
You do NOT have to pay your eligible expenses out of your HSA.
You are required to keep receipts of your eligible expenses in case the IRS audits you. You can choose to reimburse yourself at a later date up to the medical receipts you have accumulated without being subject to 20% penalty or taxable income.
The triple-tax advantages (tax deductible deposits, tax free interest earned, and tax free withdraws for eligible medical expenses) only available with HSAs make them an important tax planning tool that is unmatched when used properly.
Other statistics show that nearly half of the 14 million Americans covered by the required HDHP insurance plans have not established their HSA account, and therefore are not participating in the tax savings they offer. Although OFM Benefits is one of the nation’s premier HSA focused insurance agencies, there are probably some of you that have procrastinated setting up your account.
As many Americans are facing huge health insurance premium increases and revenue decreases, HSA qualified plans are becoming even more popular. The average household pays nearly $16,000 per year for health insurance premiums! We feel HSA qualified plans offer the best value in healthcare today.
If you are self employed or a business owner and would like to receive the premium savings and tax deductions only available with HSAs, please visit www.missionHSA.com
N. Scott Borden
Dave Ramsey’s Endorsed Local Provider (ELP)
Health Insurance Director
OFM Benefits Consulting, LLC
6400 Glenwood, Suite 307
Overland Park, KS 66202
What’s the number one problem facing small businesses today?
Hint… it’s been the same number one for the past 25 years.
HSA qualified health insurance plans are the fastest growing segment in healthcare today because they save money on health insurance and taxes.
Here is a short video explaining the basics of HSAs as heard on “Insurance Talk with Scott & Mike” November 10, 2012.
(Updated 2013 post-election)
The Patient Protection and Affordable Care Act (PPACA, ObamaCare) has been ruled constitutional. And Obama has been re-elected so there is no chance of repeal. What does all this mean for Health Savings Accounts?
HSA qualified High Deductible Health Plans (HDHP) are the fastest growing segment in health insurance today. Over 15 million people have over $17 billion saved in their HSAs. Since unspent HSA funds roll over from year to year, HSA owners have a vested interest in not spending their own healthcare dollars. The more common co-pay plans insulate people from costs which often results in over-utilization. HSAs change this behavior. This is why they are commonly referred as ‘Consumer Driven Healthcare’ plans.
There are some portions of the law that directly affect HSAs. There are several other rules that we have to speculate how they will be implemented. Let’s begin with the direct HSA rulings:
1. The penalty for ineligible withdrawals from an HSA has been increased from 10% to 20%
2. All over-the-counter medications now require a written prescription
That’s it. As long as you keep proper records verifying your HSA withdrawals were for eligible medical expenses (see publication 502) and obtain a written prescription for your allergy medication, pain relievers, etc. then you will not be subject to any penalty at all.
Now for the provisions that will impact HSAs indirectly:
1. INDIVIDUAL MANDATE (2014)
Since ObamaCare requires people to purchase health insurance, most people who are currently uninsured will look for the lowest cost option available. HSA qualified insurance policies are not allowed to have co-pays and have minimum deductibles of $1250 for self-only coverage and $2500 for families which makes them more affordable. This could dramatically increase how many HSA qualified plans are purchased.
2. STATE EXCHANGES (2014)
Exchanges are online portals where people can enroll in health insurance plans and potentially receive government subsidies based on income (up to 400% poverty level). Since HHS Secretary Kathleen Sebelius continues to interpret how these exchanges are to be implemented, this one is far from finalized. Companies will be allowed to offer up to 4 plans on the exchanges (bronze, silver, gold, platinum) each with mandated “Essential Health Benefits”. All exchange qualified small group plans have a maximum deductible of $2,000 for self-only coverage and $4,000 for families. This type of a restriction will increase the cost of HSA qualified health insurance plans over the larger deductibles available today (up to $6,050 for self-only coverage and up to $12,100 for families). But they should still offer a substantial premium savings over co-pay plans.
3. MEDICAL LOSS RATIO (2011)
ObamaCare requires Health insurance companies to pay at least 80% of all collected individual / small group premiums and at least 85% of all large group premiums out in benefits and claims. HSA qualified insurance plans typically cost less while still having similar fixed costs (insurance company marketing, underwriting, and claims processing) which makes MLR a difficult provision for them to comply with. This could limit the number of insurance companies that offer HSA qualified plans on the exchanges. However the elimination of underwriting costs (all plans will be guaranteed issue) and the reduction in marketing costs for the insurance companies once most insurance agents are replaced by exchanges should make all plans MLR friendly by 2014.
Unless Kathleen Sebelius makes an unexpected ruling, HSAs appear to not only survive ObamaCare, but potentially thrive.
So… Health Savings Accounts appear to have a bright future with or without ObamaCare.