JEFFERSON CITY, Mo. (July 10, 2015) – Last week, Gov. Nixon signed a bill into law that will help promote freedom when it comes to medical services.
Passed by a wide margin in both Houses this year, House Bill 769 (HB769), sponsored by Rep. Keith Frederick, states that medical retainer agreements – in which the person pays in advance for services to be specified later – are not “insurance” under the law. As a consequence, such programs are not subject to state insurance regulations.
The new law defines a medical retainer agreement as “a contract between a physician and an individual patient or such individual patient’s legal representative in which the physician agrees to provide certain health care services described in the agreement to the individual patient for an agreed-upon fee and period of time.”
The law’s text also expressly states that this agreement is “not insurance” and entering into one is “not the business of insurance.” Supporters say this is an important part of an overall strategy to fight back against increasing government control over health care.
According to Michigan Capitol Confidential, medical retainer agreements helps both the physician and patients minimize costs, since there is no third party footing the bill, thus lowering the price for services. The result is cheaper basic medical services, which proponents of Obamacare promised but obviously failed to deliver. Jack Spencer writes:
Under medical retainer agreements, patients make monthly payments to a physician who in return agrees to provide a menu of routine services at no extra charge. Because no insurance company stands between patient and doctor, the hassles and expense of bureaucratic red tape are eliminated, which have resulted in dramatic cost reductions. Routine primary care services (and the bureaucracy required to reimburse them) are estimated to consume 40 cents out of every dollar spent on insurance policies, so lower premiums for a given amount of coverage are another potential benefit.
……Medical retainer agreements, which are also sometimes referred to as “direct primary care,” “concierge medicine,” “fixed fee agreements,” “retainer medicine,” “membership medicine,” and “cash-only practice,” can vary widely in their structure, payment requirements, and form of operation. In particular, they can differ in the level of service provided and the fee charged.
Under Obamacare, regulations define such programs as a primary care service and not a health insurance plan, and current IRS policy treats these monthly fee arrangements just like another health plan.
Such direct primary care offers better incentives to lower costs compared to one paid for through an insurance plan, according to Concierge Medicine Journal (emphasis added).
Most of our doctors make money by billing the insurance company for each visit. How much they charge is defined by two factors: 1. A menu of billing codes set by the American Medical Association called CPT codes and, 2. Prices negotiated with insurance companies for each CPT code (usually +/- a percentage of the Medicare reimbursement rate). CPT codes are scaled based on the complexity and severity of the patient / disease treated. Because reimbursement is only available when care is delivered, doctors have the incentive to deliver as much care as possible, and will naturally (and perhaps subconsciously) prioritize those procedures and consultations that yield the highest reimbursement rates. In short, the sicker you are, or the more frequently you need to visit, the more money the doctor makes. Contrast this with a direct primary care model, where a single fixed fee is paid per patient, regardless of how sick the patient is or how many times they will visit the doctor. Insurance reimbursement codes (and the administrative expense of administering insurance billing and coding) are not part of the equation. Under this scenario, the doctor actually makes more money when you’re well than when you’re sick. This introduces the incentive to deliver treatment that will have the best long-term outcome, regardless of its near term cost or whether the treatment or therapy is reimbursable by insurance.
Such a system uncontrolled by government regulations is essential in allowing individual freedom when it comes to people’s medical decisions. While some states are fighting to effectively nullify Obamacare, allowing people to contract through medical retainer agreements unfettered by insurance regulations will open the market for more people to participate. It will help set the price for services based on both demand and what people are willing, and able, to pay.
In this way, a free marketplace will help de facto nullify the federal program as much as state legislation, making it a crucial part of our strategy of defeating Obamacare.
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