BILL ANALYSIS �
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 1320
AUTHOR: Harman
AMENDED: March 28, 2012
HEARING DATE: April 25, 2012
CONSULTANT: Rubin
SUBJECT : Retainer practices.
SUMMARY : Defines a "retainer practice" as a person who is
licensed to practice medicine and contracts with patients to
provide primary care services, as defined, at least in part
based on a periodic fee and prohibits a retainer practice from
being subject to regulation as a health care service plan
(health plan) by the Department of Managed Health Care (DMHC) or
as a health insurer by the California Department of Insurance
(CDI).
Existing law:
1.Requires the Medical Board of California (MBC) to issue
licenses to holders of physician certificates and holders of
doctor of podiatric medicine certificates who are engaged in
the professional practice.
2.Provides for the licensing and regulation of health plans by
DMHC under the Knox-Keene Health Care Service Plan Act of 1975
(Knox-Keene Act) and provides for the regulation of health
insurers by CDI.
3.Defines a health plan as either:
a. Any person who undertakes to arrange for the provision
of health care services to subscribers or enrollees, or to
pay for or to reimburse any part of the cost for those
services, in return for a prepaid or periodic charge paid
by or on behalf of the subscribers or enrollees or
b. Any person, whether located within or outside this
state, who solicits or contracts with a subscriber or
enrollee in this state to pay for or reimburse any part of
the cost of, or who undertakes to arrange or arranges for,
the provision of health care services that are to be
provided wholly or in part in a foreign country in return
for a prepaid or periodic charge paid by or on behalf of
the subscriber or enrollee.
Continued---
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4.Defines an insurer as the person who undertakes to indemnify
another by insurance and defines health insurance as an
individual or group disability insurance policy that provides
coverage for hospital, medical, or surgical benefits.
This bill:
1.Declares the intent of the Legislature to define the term
"retainer practice" in a manner that ensures patient safety
and allows the model to operate efficiently and unencumbered
by unnecessary state government regulation.
2.Declares that a retainer practice is not a health plan subject
to regulation by DMHC under the Knox-Keene Act, and that a
retainer practice is not a health insurer subject to
regulation by CDI.
3.Defines a retainer practice as any person who is licensed to
practice medicine by MBC and contracts with patients to
provide primary care services, in whole or in part, based on a
periodic fee.
4.Defines "primary care services" as medical services for which
no specialty is commonly required, and specifically excludes
acupuncture, chiropractic, dental, emergency, hospital, and
vision services
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1.Author's statement. According to the author, California needs
a multipronged approach to make health care services more
readily available and affordable to the many residents of the
state who lack adequate access to those services. Retainer
practices represent an innovative, affordable option that
could improve access to medical care as well as free up
emergency rooms for actual emergency care rather than for the
primary care needs of those without access to care. California
law lacks a definition for "retainer practice" which creates
some confusion with regard to their regulation. SB 1320 states
that retainer practices are not insurance companies or health
plans, and that they should not be regulated as such. SB 1320
also defines a retainer practice as any person licensed to
practice medicine by the MBC and contracts with patients to
provide primary care services, in whole or in part, based on a
periodic fee.
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2.Background. According to an August 2005 report by the United
States Government Accountability Office entitled "Concierge
care characteristics and considerations for Medicare" (GAO
report), concierge care, also called retainer-based medicine,
is an approach to medical practice in which physicians charge
their patients a membership fee in return for enhanced
services or amenities. The report was mandated by the Medicare
Prescription Drug Improvement and Modernization Act of 2003
and was borne out of federal concern for how the recent rise
of this approach might affect beneficiaries of Medicare, the
federal health insurance program for the aged and some
disabled individuals.
An April 2008 article in the Journal of Health & Life Sciences
Law on "Concierge medicine: legal issues, ethical dilemmas,
and policy challenges" (JHLSL article) reports that the
concept of retainer practices evolved out of physician
frustration from the confluence of decreased physician
reimbursement, increased practice costs (including higher
malpractice premiums), and greater administrative burdens
imposed by both Medicare and private insurers. According to an
October 2010 report of the Medicare Payment Advisory
Commission (MedPAC report), retainer practices originated from
a Seattle-based practice in 1996 and have since grown rapidly.
The report adds that retainer-based medicine advocates
describe the change to this model of practice as having a
large impact on physician satisfaction and stress and that the
vast majority of physicians interviewed described wanting to
spend more time with patients as their primary motivation for
becoming a retainer-based physician.
The report described three models of retainer practice based
on the types of services that are provided, but noted that
even within the three main models there is a great deal of
variation in practice management, services offered, fees
charged, and acceptance of insurance. In the first model, "fee
for extra services," a patient pays an annual fee to be part
of a physician's patient panel, and the patient receives an
annual physical in exchange for this fee, but continues to pay
for office visits other than the physical. In the second
model, "fee for care," the patient pays a fee that covers all
primary care provided by the physician; patients do not pay
per-visit fees and physicians typically do not charge Medicare
or insurance. In the third, "hybrid" model, physicians
continue to see non-retainer patients, while charging a fee to
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some of their patients for increased services.
According to the JHLSL article, the greatest policy concern
expressed against retainer practices is that as this form of
practice becomes more prevalent, it may create a multi-tiered
system of health care, with lower-income patients having
decreased access to primary and other types of care as the
result of fewer primary care physicians being available for
those who cannot afford to pay retainer fees.
3.Retainer practice characteristics. The GAO report surveyed 112
physicians in retainer practices in October 2004 and found
that the annual membership fee for a person to join a retainer
practice varied from $60 to $15,000, with the most frequently
reported fee being $1,500. For the MedPAC report, 28
physicians in retainer practices were interviewed and fees
ranged from $600 to $5,400, with most in the $1,500 to $2,000
range. In exchange for these fees, patients were part of
panels that were much smaller than non-retainer patient
panels. Retainer physicians responding to the GAO survey
reported having, on average, 490 patients, compared to an
average of 2,716 patients the year prior to starting their
retainer practice. The panels were even smaller for the
physicians interviewed for the MedPAC report, with averages of
250 patients compared to 2,265 patients prior to starting a
retainer practice. According to the reports, the extra time
physicians had to spend with patients as a result of having
smaller patient panels enabled them to offer services such as
same- or next-day appointments for nonurgent care, extended
office visits, 24-hour cell phone access, periodic preventive
care physical examinations, wellness and nutrition planning,
smoking cessation services, and more patient education.
According to the MedPAC report, because the field of retainer
medicine is so new, there have not been extensive studies to
compare patient outcomes between retainer care and standard
care.
4.Retainer practices and Medicare. Retainer practices have
prompted federal concerns about how the model might impact
Medicare. The GAO report was conducted with particular
attention to concerns that retainer fees may constitute
additional charges for services that Medicare already pays
physicians for and that retainer practices may affect Medicare
beneficiaries' access to physician services. The MedPAC report
discusses how retainer physicians who wish to see Medicare
patients have two basic options: either take the formal step
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of opting out of Medicare entirely, or maintain a relationship
with the program but take the steps necessary to stay within
the restrictions imposed by Medicare's billing. Those who do
not opt out of Medicare are subject to the program's billing
limits: participating physicians agree not to charge the
patient any amounts beyond the Medicare fee schedule amount,
while nonparticipating physicians must limit any extra billing
(balance bills) to no more than 9.25 percent of the Medicare
Fee Schedule amount received by participating physicians. Any
billing above this limiting charge can be prosecuted under the
False Claims Act. The question for retainer practices is
whether retainer fees are extra charges and in violation of
the balance billing rules. In response to questions on this
issue, the Health and Human Services Office of the Inspector
General (OIG) issued an "OIG Alert" to retainer physicians
about such fees in 2004, stating that extra payments are
allowed only when services are not covered by Medicare, and
clarifying that services such as coordination of care with
other providers, comprehensive assessment and plan for optimum
health, or extra time spent on patient care could potentially
be considered covered as part of Medicare services; they are
not enough in and of themselves to justify charging a retainer
fee.
5.The Affordable Care Act. According to a February 24, 2011
article in CaliforniaHealthline, beginning in 2014, the
Patient Protection and Affordable Care Act (ACA) will allow
retainer practices to market their coverage alongside
traditional health plans in health insurance exchanges. The
ACA includes the model in its definition of a "qualified
health plan." Since the California Health Benefit Exchange
(Exchange) will be open to all qualified health plans, any
retainer practice that meets the requirements outlined by ACA
and subsequent regulations will qualify to be purchased
through the Exchange. Qualification could potentially be
accomplished by coordinating with a high-deductible health
plan that ensures coverage for emergency services and other
essential health benefits mandated by the ACA that are not
provided by retainer practices.
6.American Medical Association (AMA) opinion. In December 2003,
AMA adopted Opinion 8.055 on retainer practices for the AMA
Code of Medical Ethics. According to the Opinion, retainer
contracts are consistent with pluralism in the delivery and
financing health care but raise ethical concerns that warrant
careful attention, particularly if retainer practices become
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so widespread as to threaten access to care. AMA advocates
that particular attention be paid to:
a. Honesty, transparency, and lack of coercion in the
contracted agreement;
b. Not promising more or better diagnostic or therapeutic
services when promoting a retainer practice;
c. Facilitating the transfer of nonparticipating patients
when transitioning to a retainer practice, in accord with
medicine's ethical mandate to provide for continuity of
care;
d. Honest billing for reimbursement under a retainer
contract and observance of relevant laws, rules, and
contracts; and
e. The professional obligation to provide care to those in
need, regardless of the ability to pay.
1.Prevalence of retainer practices. The 2005 GAO report
identified 146 physicians with retainer practices nationwide,
including 26 in California, the most in any state. The 2010
MedPAC report found 756 retainer-based physicians nationwide
and 157 in California, while noting that this should be
considered a lower limit and that most experts estimated the
number of retainer-based physicians in the country to be
between 1,000 and 2,500. Some estimates are considerably
higher; for example, a March 23 2012, article in The Wall
Street Journal quotes the American Academy of Private
Physicians, a trade group, as estimating that 4,400 physicians
now run retainer-based practices, with about 1,000 changing
their practice within the last year. According to the MedPAC
report, four metropolitan statistical areas (MSAs) in
California ranked in the top 20 in the country for most
retainer practices: Los Angeles (1), San Francisco (13), San
Diego (15), and Riverside-San Bernardino (20). The highest
ratios of retainer physicians to population in California are
found in Santa Barbara and Ventura, ranking them as the MSAs
with 5th and 13th highest ratios in the country.
2.Other states. Washington and Oregon have recently enacted
laws addressing retainer practices. Washington's law, enacted
in 2007, includes a number of consumer protection measures and
requires retainer practices to provide a disclaimer indicating
that retainer agreements do not constitute comprehensive
health coverage and to submit annual statements to the office
of insurance. A December 2009 report to the Legislature
indicated that from 2007 to 09, overall patient participation
nearly doubled to 8,093 patients, which represents less than
one-tenth of one percent of the total population, the number
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of providers increased from 21.5 to 29, monthly fees grew from
$85 to $135, and the Insurance Consumer Hotline received no
complaints regarding any of the state's 10 retainer practices.
Oregon's retainer practice law was signed in 2011 and contains
many measures similar to those in the Washington law,
including prohibitions on a retainer practice being controlled
by a health carrier, patient discrimination, double billing,
and false advertising. Retainer practices must provide a
written disclaimer to prospective patients, and be certified
by the Department of Consumer and Business Services.
3.Policy questions and concerns.
a. Need for the bill. The author states that California
law lacks a definition for "retainer practice," which
creates some confusion with regard to their regulation.
However, it is unclear where this confusion lies - with
consumers, physicians, retainer practices, plans and
insurers, or regulators? What problems are being caused by
the lack of a definition? The term "retainer practice" is
intended to be defined in a manner that ensures patient
safety and remains unencumbered by unnecessary state
government regulation, raising the question: what is
necessary for state government to regulate in order to
ensure patient safety?
b. Consumer protection. Currently, DMHC and CDI protect
consumers of health plans and health insurance by
regulating against various occurrences. This bill prohibits
regulation as a health plan or insurer, leaving open
questions about who patients should turn to if they
encounter fraud or abuse; an inability or unwillingness of
the provider to provide contracted services in a timely
fashion; frequent or large increases in retainer fees;
financial insolvency of the provider; false advertising in
the terms of an agreement or the conduct of a direct
practice business; or discrimination based on health
status, race, religion, national origin, disability,
economic status, education, or sexual orientation. Should
patients that contract with retainer practices be afforded
protection or recourse from these possible events beyond
currently available mechanisms such as MBC, medical
malpractice law, and small claims courts, particularly if
retainer practices will be in the Exchange with health
plans and insurers?
1.Oppose. Health Access California (HAC) writes that retainer
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practices give consumers a false sense of security that their
health care needs will be covered when in fact, as defined by
this bill, these practices will have no regulation and provide
no assurance that contracted physicians must provide or cover
a comprehensive range of necessary care. HAC states that
California provides regulation of health plans and insurance
products to protect health care consumers from the physical,
emotional, and financial trauma that can ensue from inadequate
health coverage and that this bill would circumvent all of
these protections and put consumers in danger.
SUPPORT AND OPPOSITION :
Support: None received.
Oppose: Health Access California
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