Emerging EB Business Insights
How DPC Can Lower Costs and Boost Your Return on Premium
JULY 2, 2024
Small businesses often switch from fully insured health plans to level-funded plans for better cost control — and a potential return of funds when plans run better than expected. However, because of certain challenges with traditional healthcare, level-funded plans may not see the anticipated return.
While routine healthcare and chronic condition management are established methods to improving overall population health — significantly reducing long-term costs and the impact of large claims on a level-funded plan — traditional healthcare can often be cost-prohibitive to employees in several ways:
- Office hours that require time spent away from work for medical appointments
- High out-of-pocket expenses associated with traditional fee-for-service clinic models
- Shrinking availability of walk-in and acute care clinics, as retailers like CVS and Walmart close locations and reduce staff in communities across the country
Employers looking to optimize savings with a level-funded plan should consider adding a direct primary care (DPC) arrangement to encourage routine care.
The Benefits of Direct Primary Care
DPC is an alternative primary care model that can provide more affordable care options and remove barriers that might prevent employees from accessing routine and preventive care. Under a DPC arrangement, the employer or employees pay a fixed cost to a healthcare provider for an unlimited amount of care.
While DPC comes in many different forms and pricing models, the fee typically covers all or most primary care services, including office visits, telemedicine consultations and basic lab tests. Some DPCs take a more innovative “on demand” approach, providing more flexible telehealth or virtual care with the added convenience of home visits for services that cannot be provided virtually. Many also provide pharmacy access, offering zero-dollar copays for commonly prescribed medications.
Compared to a traditional care model, the flexibility and cost savings provided by a DPC can have a significant impact on a level-funded health plan by reducing overall healthcare costs for both employers and employees:
- Lower the cost to access healthcare services, no out-of-pocket expenses, and convenient care options make employees more likely to access primary and chronic care services
- Routine physician engagement for preventive and chronic condition care reduces the need for expensive hospitalizations and emergency room visits, and can lead to better health outcomes over time, reducing the impact of high-cost claims
- Unlike certain telemedicine or drop-in clinic services, many DPC arrangements facilitate patient-physician relationships for ongoing engagement, similar to a traditional care arrangement
- The fixed per-employee fee makes healthcare a more predictable expense for employers by reducing the wide-ranging costs of traditional fee-for-service care
- DPC providers typically utilize RNs and nurse practitioners to reduce the cost of providing care
Lowering the overall cost of care may offset the cost of covering a DPC service for your employees.
How USI Can Help
USI Insurance Services has developed tools and resources to help small to midsize employers compare plan design and contribution strategies, and identify opportunities to spend less and optimize benefits. We work with clients to identify their needs and determine appropriate solutions and services:
- Level-funded analysis — USI evaluates whether level funding is a good fit for your organization based on employee demographics and health status
- Regulatory compliance — We can provide resources from our compliance attorneys to help determine if a DPC arrangement is appropriate for your company’s needs
- Direct primary care assessment — We evaluate the spectrum of care services available to your organization from national and local vendors, leveraging our nationally networked resources
Implementing a DPC arrangement is one of several ways to control costs and optimize your benefits offering. Contact your local USI benefits consultant or email ebsolutions@usi.com to learn more.
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