We look at disaggregation through the lens of direct primary care, plus the rise of the TPA and ASO markets.
Background to Billing Codes
The majority of contemporary issues within US primary care tie back to a dated business model and a transactional process fraught with complexity that leaves actors on all sides – from patients to physicians and employers to health plans – frustrated and spending a disproportionate amount of time in a state of dispute.
Why should Americans have to choose between quality patient outcomes and affordable care? Shouldn’t these two factors be united?
Each year in the United States, healthcare insurers process over 5 billion claims for payment. But for decades, declining reimbursements, rising overhead costs, and increased rejection of claims from third-party administrators have led primary care physicians to feel as though they must be in a constant battle for equitable payment when it comes to the services they provide.
Today, the standard primary care business model has physicians spending more than half their time on administrative tasks. Further, this model spends a third of their office overhead on items related to coding and billing.
Primary care practices use current procedural terminology (CPT) codes that the AMA regulates to conduct billing. The code set includes thousands of codes used to describe tests, surgeries, evaluations, and other medical procedures performed by healthcare providers. These codes tell the payer – including commercial payers, Medicare, and Medicaid – to reimburse certain healthcare providers’ procedures.
CPT codes work in conjunction with International Classification of Diseases (ICD) codes, a list of codes intended for the classification of diseases and a wide variety of signs, symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or disease. These code sets combine to tie specific symptoms to specific procedures and determine the reimbursement of each claim.
In the early years of the EHR, the complexity of coding and submitting claims became so extreme that some doctors faced the dilemma of their overhead exceeding their office revenue. Today, the collateral effects of this ongoing battle of billing codes continue to impact both the delivery of care and the time available for physicians to spend with patients.
Many take different approaches to attempt to mediate this issue – some more innovative and ethical than others.
Common Disputes: Upcoding & Overbooking
For the last few years, two specific concerns dominate billing code disputes in the US healthcare industry: upcoding and scheduling techniques.
Upcoding is when a doctor or other health care provider provides a particular service but lists a billing code for a more complicated or lengthy procedure that pays more on the claim. Upcoding may involve a care provider finding more issues to treat during a visit than necessary or sought by the patient. The practice has trickle-down effects that are detrimental to the care system as a whole.
Proper coding is the basis of our current medical profession, and it puts doctors in a position to maximize revenue per visit to keep their practices functioning. In some cases, this pressure is not purely financial, with salaried primary care physicians (not wholly-owned by the MD) often encouraged to upcode by their employer.
A common complaint by Americans regarding primary health delivery is frequent delays in receiving care. In many cases, this links to the use of scheduling techniques to scale office billing.
Due to the strain on expenses, primary care physicians regularly overbook their schedules to maximize the amount of money they can make in a day. Each visit has a unique code, so the more visits added in a day, the more money a facility makes. However, the code per visit revenue model and low margins do not support priority-based scheduling, which should integrate into any primary care setting to accommodate varying urgency or severity levels. Hiring more physicians to maintain appointments may seem like a plausible solution, but financial and time constraints related to physician billing do not make this solution viable for many primary care offices.
The Impact of COVID-19 on Telehealth + Virtual Care Billing Codes
The onset of COVID-19 drastically accelerated the digitization of healthcare and the introduction of functional telehealth already underway.
As the early days of the pandemic forced most providers to conduct non-essential visits virtually, emergency measures broke down some of the long-standing barriers associated with accessing virtual care.
Historically, payers cover less for telehealth visits than in-person visits, yet appointments are still taking doctors the same amount of time and costing the same overhead. There are also significant barriers to accessing telehealth covered by health plans on the patient side, with numerous restrictions in place around eligibility and circumstances.
And yet, through the introduction of emergency measures, several key changes to telehealth billing were implemented, including a Medicaid and Medicare parity. Physicians are currently paid the same rate for telehealth services as in-person visits, regardless of diagnoses.
As non-essential visits are conducted virtually due to the pandemic, many primary care physicians substantially decreased their overhead costs. Most offices managed to reduce over two-thirds of overhead costs while running virtually. For many doctors, this is their first exposure to alternative operating models and the potential that lies in radically changing the way primary care is delivered.
Some of the other critical regulatory changes around accessing telehealth includes:
- Allowing beneficiaries living in any geographic area to receive telehealth services
- Allowing beneficiaries to receive telehealth visits from their homes
- Allowing telehealth videoconference visits to be delivered via smartphone
- Removing the need for a patient to have a pre-existing relationship with a provider to receive care
While the AMA has pushed for adequate reimbursement for telehealth visits across the board, the billing process itself is more difficult to compartmentalize.
In September 2020, the AMA introduced two new billing codes. Code 99072 provided care providers with the ability to bill for additional supplies, materials, and clinical staff time, over and above those usually included in an office visit. CPT code 86413 covers laboratory tests that provide quantitative measurements of SARS-CoV-2 antibodies instead of a qualitative assessment (positive/negative) of SAR-CoV-2 antibodies.
These new codes aid primary care physicians financially in adapting to COVID-19 related expenses, but they still don’t address underlying market challenges.
The Rise of Direct Primary Care
In the traditional care system, providers operate as businesses that charge for services in a predominantly fee-for-service marketplace. When the market for services collapses, so do health care providers. While COVID-19 led to massive spikes in the access of some health systems and types of care, access to other health services, including primary care, declined significantly.
Within the current standard business model for primary care, providers are financially dependent on delivering a consistent volume of services to patients at all times. This dependency leaves them acutely susceptible to external factors and market fluctuations on a day-to-day basis.
The way some primary care practices are adapting to these long-standing challenges is by finding sustainable methods to help their practices thrive, which includes a shift to Direct Primary Care (DPC) models.
DPC practices are not new to COVID-19, but they are a relatively recent phenomenon, originating within the last twenty years. This alternative to traditional primary care functions like a subscription model, where patients or employers pay monthly, quarterly, or annual fees to access a particular set of services as needed.
Since its inception, getting DPC covered by health plans is one of its biggest holdups, despite being promoted by the AAFP as an alternative business model for providing primary care in the United States. With most employers already opting out of traditional health plans in favor of a self-insured model, DPCs are still gaining traction. This service model caters to the patients and employers in a timelier and financially accessible way.
Enter the TPA and ASO
Fed up with the cost and lack of transparency of traditional health plans, between 60-80% of US companies have already incorporated or adopted some variation of self-funded health benefits over the last few years.
In search of a solution, employers are adopting and utilizing services from Third Party Administrators (TPAs) and Administrative Services Only plans (ASOs), two of the more common self-insured solutions.
TPAs are not insurance providers. They are the facilitators of employer-funded healthcare benefits. The work between TPAs and their clients is ongoing and very personalized. They usually have regional expertise and can customize benefits solutions to client companies’ specific needs, sometimes even catering to the individual needs of employees.
In general, TPAs work directly with a network of providers and larger health systems to piecemeal custom benefits packages for employers at lower rates than traditional health plans. The TPA bears responsibility for implementing and administering the plan on an ongoing basis.
Alongside the TPA is the rise of the ASO, Administrative Services Only. An ASO is a form of partial insurance in which a company funds its employee health benefits, but a major health plan issues them.
In both the TPA and ASO model, the administrator helps the employer create a customized benefit plan for its self-funded employees. The employer is the risk-bearing entity instead of a health plan paying the fees. Stop-loss insurance is used to de-risk the employer in the event of unexpected or extenuating circumstances with high healthcare costs associated with them, such as an employee suffering a major medical emergency or accident.
Despite the employer needing to carry more risk with self-insured models, there is a significant movement in the direction of self-insurance. The flexibility, localization, transparency, and, in many cases, reduced costs are primary motivators for the change. Further, because TPAs and ASOs are personalized, claims are often processed and finalized in shorter periods, thus providing more financial stability to all parties in the transaction. These advantages can mean substantial savings for employers and a morale boost for employees disheartened by a history of high deductibles and a lack of clarity around their care plans.
Closing the Gap: Primary Care in the New Era
With greater employer control (and risk) comes greater responsibility. Employers seek solutions that provide real, meaningful value to their employees in the self-insured model, while reducing overall costs. Primary care physicians are foundational to striking this balance.
Good primary care settings form patient-physician relationships that are positively cost-effective to employers. From early diagnosis to minor procedures like suturing, the cost of having these concerns addressed through primary care is exponentially lower than going directly to a specialist or hospital ER.
Many employers recognize that better preventative care and harm reduction are components of effective primary care and can significantly reduce future care costs.
Vast amounts of research demonstrate that an established relationship with a primary care physician can lead to a massive reduction in the life-long cost of care. DPC advocates claim this is especially true for primary care practices not compensated via fee-for-service. In such cases, the quality of care itself centers on a longstanding relationship rather than a billing code tied to a specific diagnosis and procedure.
As more employers shift to self-insured models, DPC will become more common.
Today, employers leveraging traditional health benefit plans who want to break the barrier to accessing primary care created by high deductibles incorporate DPC as an additional, self-funded benefit. This move often involves combining a traditional high-deductible health plan (HDHP) and health savings account (HSA) with DPC through a TPA or ASO.
The evolving regulatory dialogues that are occurring right now signal a changing landscape of healthcare in the United States. The expansion of DPC combined with the rise of the TPA and ASO markets is a foundational component of this change.
With five billion insurance claims filed each year in the United States and thousands of different payers, providers, and administrators in the mix, the extent of healthcare’s disaggregation is growing. All indications suggest the market is ripe for disruption and reform– both technological and economic.
Bob Bausmith, Executive Technology Advisor and former interim Chief Innovation Officer to Blue Cross & Blue Shield of Kansas City, predicts that the pivot towards highly customized healthcare solutions focused on transparency for patients and employers will rapidly accelerate over the next few years.
As the United States trails behind other developed nations as far as the cost of care per capita and overall population health, we circle back to the question, why should Americans have to choose between quality patient outcomes and affordable care?
The answer is: they shouldn’t, and hopefully soon, they won’t.
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 Dean Sperry (Consultant at Accelerate Innovation) in discussion with the author, January 30, 2021.
 Bob Bausmith (Executive Technology Advisor and former interim Chief Innovation Officer to Blue Cross & Blue Shield of Kansas City) in discussion with the author, Feb 1, 2021.