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Texas Doctors Shun Insurance, Offering Care For Cash

LAREDO — For 12 hours a day, the waiting room at Dr. Gustavo Villarreal’s family practice is often packed with patients, people who will pay a flat $50 fee for the convenience — or necessity — of a walk-in, quick-turn doctor’s visit. Villarreal’s practice, which does not accept any form of health insurance, has thrived despite its location in a city where nearly one-third of the population lives below the federal poverty line.
At both the state and federal level, efforts are underway to decrease Texas’ sky-high rate of residents without health coverage. But Villarreal is among a rising number of primary care practitioners who have given up on the red tape of filing insurance claims, switching to a cash-based model that is growing in popularity among Texas’ insured and uninsured patients.

Doctors who use this model, which they call “direct primary care,” say they can keep their costs competitive by avoiding the bureaucracy of the health insurance system and the high processing costs — including additional staff — associated with accepting coverage.

“It had always been affordable and possible to maintain a practice with what insurance and patients paid, but about 10 or 15 years ago, you started seeing a decline” in revenue, said Villarreal, who switched his traditional family practice to its current business model in 2012.

Most doctors limit their services to basic or preventive care — treatment their patients can afford without turning to their insurance providers — such as prescribing medicine for colds and infections, treating minor lesions and overseeing long-term care for conditions like diabetes and osteoporosis.

When patients need additional treatment for serious ailments or tests and procedures that cannot be done in-house — MRIs and X-rays, for example — physicians working under the direct primary care model refer patients to specialists and technicians who accept insurance.

While many of his patients are uninsured, Villarreal, who has been practicing medicine for more than three decades, said he also regularly treats patients who have health insurance but are trying to avoid shelling out thousands of dollars to meet high deductibles.

Some health care experts worry that if too many practitioners choose this path, the state could be left struggling to find doctors to accommodate patients with insurance at a time when federal health care reform is making such coverage mandatory for most Texans. So far, efforts to enroll Texans in the federal insurance marketplace — crucial to the success of the Affordable Care Act — have made a small dent in the state’s uninsured population, which has reached 6 million people, according to United States census data. The U.S. Department of Health and Human Services reported that as of March 1, 295,000 Texans had signed up for insurance coverage in the federal marketplace.

“We have to find ways of stretching the current number of primary care doctors to meet that demand,” said Dr. Clare Hawkins, president of the Texas Academy of Family Physicians. “Direct primary care goes in the other direction.”

Insurers say consumers should have flexibility when it comes to their health services, but they warn that not having health insurance leaves individuals unprotected from the hefty price tags associated with unanticipated medical costs. 

“Consumers should anticipate their medical needs,” said David Gonzales, executive director of the Texas Association of Health Plans. “However, when that is not possible, consumers should have financial protection from the unexpected.”

The direct primary care model is not new. Before Congress passed legislation in 1973 that led to the expansion of managed care through pre-paid health plans, or health maintenance organizations, physicians largely operated through this fee-for-service medical model. And the percentage of doctors who have reverted to this approach in Texas in recent years is not huge: 10 percent of Texas physicians do not currently have contracts with health insurers, according to preliminary results from a 2014 Texas Medical Association survey.

Lee Spangler, vice president of medical economics with the TMA, said Texas is seeing an increase in practices like these because they give doctors more flexibility to determine the services they provide and to cut costs for their practices.

“A physician has very little ability to negotiate all policies and procedures that come with insurance contracts,” Spangler said, adding that some insurance companies can even dictate the business hours during which doctors can be paid. “Basically you get rid of all those shackles in terms of having a carrier dictate to the practice how to deliver medical services.”

But it is the business model that proves most attractive to physicians, Spangler said, adding that doctors “want to get out from under what has been stacked up on them.”

Under the current health insurance system, physicians who treat covered individuals submit claims for the services they provide and receive reimbursements to cover their costs. Private insurance providers and government-subsidized health programs like Medicare and Medicaid each have their own rules and regulations for filing claims, including specific timeframes and billing systems.

Health providers who treat poor children and people with disabilities also face heightened scrutiny from state and federal agencies charged with rooting out possible fraud, leaving some providers on edge that they could be subject to unwarranted or costly investigations.

Doctors who have embraced the direct primary care model have done it with a wide range of approaches. And most tout that the costs they’ve cut by forgoing insurance give them the ability to scale back on the number of patients they must see each day to turn a profit.

In Austin, Drs. William and Mason Jones — a father-son team — practice “concierge medicine,” treating patients under a membership model in which patients pay annual fees for access to a variety of services, including unlimited office visits, routine vaccinations and round-the-clock medical assistance by phone.

Mason Jones said his office is a “low-volume practice” that gives him the “luxury of time” to spend with patients. “This works out great for preventive medicine,” he said.

In Corpus Christi, Dr. Coleen Madigan said she only works two days a week, during which she visits with about five patients a day and is able to make house calls. She said this gives her the opportunity to spend as much time with her patients as they require.

In Laredo, Villarreal has had the opposite experience. His business model frees up time for him to see even more patients, he said, without the additional costs to his practice that come from filing insurance claims. He continues to see 40 to 60 patients a day, he said, 20 of whom tend to be new to his practice.

“To me, there’s no other way I would practice medicine,” he said. “You feel like you’re a doctor again.”

Disclosure: The Texas Medical Association and the Texas Association of Health Plans are corporate sponsors of The Texas Tribune. A complete list of Texas Tribune donors and sponsors can be viewed here.

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Cost and Quality Health Industry Insurance States Uninsured