Legislative Testimony: LB 817, Direct Primary Care

Chairman Scheer and Members of the Banking, Commerce and Insurance Committee, my name is Jessica Herrmann, and I am the Director of Legislative Outreach testifying today on behalf of the Platte Institute for Economic Research. Thank you for this opportunity to speak in support of LB 817.
 

Insurance-based primary care has grown increasingly complex, inefficient and restrictive. Currently, 40 percent of all primary care revenue goes to claims processing.[1] The average wait time to see a family physician is 19.5 days,[2] after which the patient spends roughly 8 minutes with the physician.[3]

The traditional fee-for-service model of health care delivery has driven frustrated physicians and patients to seek alternatives. Direct primary care is a product of these frustrations.
 

The hallmark of this innovative model is its transparent, uncomplicated and inexpensive method of payment. Patients know what they are paying for upfront, and doctors are not forced to deal daily with private health insurance companies on behalf of their patients.
 

Several recent studies demonstrate that direct primary care produces better health outcomes and cost savings for patients.
 

Qliance Medical Group, which operates direct primary care clinics in Washington State, found their patients experienced 35 percent fewer hospitalizations, 65 percent fewer ER visits, 66 percent fewer specialist visits, and 82 percent fewer surgeries compared with benchmark data for the region.[4]

Patients at Access Healthcare in North Carolina, a direct primary care clinic and Cardiovascular Center for Excellence, spend 85 percent less out-of-pocket and receive an average of 35 minutes per visit with the physician.[5]

According to the American Journal of Managed Care, which researched direct primary care practices in 5 states, decreases in preventable hospital use resulted in $119.4 million savings, or $2,551 per patient, in 2010 alone.[6] Essentially, patients in direct primary care clinics saved more than the annual cost of membership, which ranges from $1,500 to $1,800 annually.

Direct primary care would also help alleviate Nebraska’s physician shortage by incentivizing medical students, residents, and retiring doctors to enter the primary care field. It is widely acknowledged in the medical field that most primary care is plagued by a high administrative burden and low patient satisfaction. Many medical students are deterred by the lack of practice autonomy in primary care today. These students, who are predominantly millennials, are put off by the micromanaging of insurance companies associated with the primary care profession.

The physician shortage could get even worse in the immediate future if we do not create a sustainable model for primary care. A 2012 Urban Institute study of 500 primary-care doctors found that 30 percent of those aged 35 to 49 planned to leave their practices within five years mainly due to the time spent coordinating care for patients.[7]

Rather than focusing exclusively on whether Nebraska will have enough primary care providers to serve the current population, we should be studying how to innovate and reverse this trend.

Nebraska is well-poised to adopt this model of alternative payment delivery. LB 817 would add Nebraska to the growing list of states creating a predictable regulatory environment for providers and patients. Kansas and Missouri already provide this certainty for physicians, and Nebraska would become more competitive with our neighbors by offering rewarding opportunities for providers and more affordable health care options for patients.

Direct primary care is an innovative free-market model that would give Nebraskans more choices and control over their own health care without a cost to the state.

Thank you for this opportunity to testify today, and I ask that you advance this bill out of committee. I am happy to answer any questions.