Medical retainer agreements for routine care won't be considered 'insurance'
Medical retainer agreements between physicians and patients will not be considered “insurance” in Michigan under a recently passed bill signed into law on Jan. 15 by Gov. Rick Snyder. The idea is to ensure that this innovative way for families to obtain routine medical services at lower costs will not be stifled by the extensive state regulatory structure currently imposed on conventional health insurance policies that cover expensive non-routine care.
The rationale for this alternative is that while insurance coverage may be advisable for catastrophic illnesses and injuries, it makes less sense as a way to pay for routine primary and preventative care.
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.
Advocates of this “back to the future” free market approach say that retainer agreements often lead to higher-quality medical care. Advantages can include shorter waits for appointments and physicians being able to provide more time and attention to patients.
“What’s not to like about a very inexpensive relationship that covers all your family’s routine health care needs with no burdensome insurance paperwork, copays and bureaucracy? This can be liberating for doctors too, who are freed up to focus purely on patients’ needs rather than insurance company and bureaucrats’ needs,” said Jack McHugh, legislative analyst with the Mackinac Center for Public Policy. “The new law ensures ‘direct primary care’ arrangements won’t be strangled at birth by extensive insurance regulations that don't make sense for such arrangements. The concept is supported by all sides in the health policy debate, and are even authorized in Obamacare ‘exchanges’ when accompanied by a high deductible insurance policy for serious conditions.”
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.
Senate Bill 1033, now Public Act 552 of 2014, was sponsored by Sen. Pat Colbeck, R-Canton, and Sen. Mike Nofs, R-Battle Creek, and defines a “medical retainer agreement” as “a contract between a health care provider and an individual patient or his or her legal representative in which the health care provider agrees to provide routine heath care services to the individual patient for an agreed upon fee and period of time.”
The measure specifies that to be considered a ‘medical retainer agreement,’ the agreement must:
- Be in writing.
- Be signed by the health care provider or agent of the health care provider and the individual patient or his or her legal representative.
- Allow either party to terminate the agreement on written notice to the other party.
- Describe and quantify the specific routine health care services that are included in the agreement.
- Specify the fee for the agreement.
- Specify the period of time under the agreement.
- Prominently state in writing that the agreement is not health insurance.
- Prohibit the health care provider and the patient from billing an insurer or other third party payer for the services provided under the agreement.
- Prominently state in writing that the individual patient must pay the provider for all services not specified in the agreement and not otherwise covered by insurance.
Under the legislation, routine health care service means screening, assessment, diagnosis, and treatment to promote health or detect and manage disease or injury; medical supplies and prescription drugs dispensed in the health care provider’s office; and lab work including routine blood tests or pathology screening.