To Cure Insurance Woes, Doctors Try Prepaid Plans

The Wall Street Journal

To Cure Insurance Woes, Doctors Try Prepaid Plans
Some Say Fee System Cuts Costs, Boosts Care; Dr. Wood's Legal Battle
By VANESSA FUHRMANS
October 22, 2007; Page A1

WHEELING, W.Va. -- Vic Wood's walk-in clinic here sees patients six days a week and logs roughly 15,000 visits a year. Its sparsely furnished waiting room is packed much of the 11-hour day with people seeking care for conditions ranging from sore throats to chest pains. Despite the booming business, Dr. Wood and his staff -- another doctor and four physician assistants -- have battled strong head winds to keep the clinic going. Rising administrative costs and flat insurance-reimbursement rates make it tough to cover basic expenses. One in five patients lacks insurance; others are saddled with sky-high deductibles. Last year, Dr. Wood even cut his annual salary by half to help keep the clinic afloat. In an attempt to turn the tide, Dr. Wood is trying a new approach -- one that he hopes will one day sustain his practice. For a monthly fee of $83 per individual or $125 for a family, the clinic provides unlimited primary and urgent care. Those who enroll in the prepaid plan get office visits, lab work, X-rays and as many generic drugs as the clinic can provide.

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Prepaid plans -- and the opposition they face from various industry and regulatory factions -- show how the medical establishment remains at odds over the delivery of basic care. Insurers say that high medical and drug fees force them to police doctors' treatments and rates. Physicians argue that the hassles of processing insurance claims and referrals means less time with patients. At the conflict's root, say health experts, is a medical payment system that tends to reward expensive, procedure-based care over routine, family-doctor visits.

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While specialists' incomes have held steady, family physicians and internists have seen their incomes shrink 10% because of flat or falling reimbursements. Over the past decade, their ranks have fallen dramatically and the number of medical students who are going into the discipline has declined by half, according to the American Academy of Family Physicians. A recent study in the British Medical Journal said that the average American logs barely 30 minutes a year with a primary-care physician -- half the time spent in other developed nations. That helps explain why the U.S. spends much more on health care than its economic peers, yet still fall behind on basic indicators such as life expectancy and infant-mortality rates. Prepaid plans aren't intended to replace more comprehensive coverage. Rather, physicians like Dr. Wood see them as filling an important gap in primary care. His main targets are individual patients with basic medical needs and employers who want to supplement costly, high-deductible plans.

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Unlike traditional insurance, which is priced to spread the risk of high-cost illnesses like cancer across many people, prepaid care is more like a gym membership -- giving people medical access for a fixed cost. To determine his fees, Dr. Wood says he estimated that the average adult would need about 20 itemized services a year -- from blood tests to X-rays. He leveraged his good relationship with the Ohio Valley Medical Center, an area hospital, to get lab work performed at low Medicare rates. He also put together a list of 100 generic drugs that he could buy directly from wholesalers. Drugs for chronic conditions such as high blood pressure he made available at $10 for a month long supply. Patients who needed to be on antibiotics and other short-term, acute-care medicines would get them at no extra charge.


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Prepaid plans have raised concerns among insurers and some regulators that patients might forgo broader health coverage -- or get ripped off. If the approach took off, it might become a competitive threat to insurers' business, especially if doctors can provide prepaid care without having to jump the same regulatory hoops as health insurance. Soon after Dr. Wood began advertising his plan, he received a call and a letter from the state's insurance commissioner saying he was essentially operating as an unlicensed insurer. He was asked to stop offering the service.

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Dr. Wood stopped advertising but took the battle to the state legislature, using a $300,000 line of credit to drum up a lobbying campaign. Some of the funds he used to hire extra staff to fill in for him while he traveled back and forth to Charleston to fight for his cause. A bill that would have exempted him from the state's insurance statutes passed in the state Senate, but eventually died in the House. He found a lucky reprieve in late 2004, when he cornered Gov. Joe Manchin at an election fund-raiser. Intrigued, the governor appointed him to a task force charged with tackling the state's uninsured problem. After more than half a year of meetings, the task force called for a three-year experiment with prepaid care as part of a legislative package. The measure was enacted into law last spring.

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doctor or internist in this town. My PPO doctors are crappy.

a patient have if their problem required a specialist or some serious intervention? THAT'S where the BIG costs are.

I've been very lucky that I haven't had to visit my DR. is many years. However, 2 years ago, I broke my ankle. I went to the ER and although I have decent insurance, my final out of pocket costs reached the max out of pocket costs of $2,500! I never even saw my primary provider, so how would some unforseen incident like that work with this prepaid plan?

for large costs like hospitalization. Then we added office visits and allergy shots and generic antibiotics - and all require paper work with the correct "codes."

The problem with the uninsured is that they don't even go for a simple checkup - blood pressure, diabetes, flu - until things really get bad and then they rush to the ER for heavy expenses.

While this pre-paid is not for everyone, I think that it can have a place in our convoluted health care system.