The Affordable Care Act ("ACA") authorizes the innovative payment model referred to as direct primary care, and more commonly known as “concierge medicine.” Under the direct primary care model, patients can access comprehensive coverage of basic healthcare services for a flat monthly fee. Such services generally include guaranteed same-day or next-day visits with no waiting times. Concierge medicine is becoming increasingly popular in states where it is allowed.
Although permitted at the federal level, concierge medicine had not previously been a manageable business model for most Michigan-based primary care providers because direct primary care plans were subject to Michigan’s extensive Insurance Code.
With the enactment of Public Act 522 (the "Act") in December, Michigan established that fixed-fee medical retainer agreements between physicians and patients covering routine healthcare services are not considered to be “insurance” and therefore are exempt from the complex regulations imposed upon conventional health insurance policies.
Michigan’s new law addresses the fundamental legal issue facing providers in a direct primary care setting –that is, to avoid a situation in which a medical provider is essentially underwriting an insurance risk by accepting a predetermined fee in advance of delivering healthcare services. The Act states that a medical retainer agreement is not subject to the Michigan Insurance Code provided that it meets certain requirements. To be considered a medical retainer agreement for purposes of the Act, an agreement must be in writing and must meet the following requirements:
- allow either party to terminate the agreement upon written notice to the other party;
- describe the specific routine health care services that are included in the agreement;
- specify the fee and the period of time covered by the agreement;
- prominently state that the agreement is not health insurance; and
- prohibit the provider from billing an insurer or third party payer for the services provided under the agreement.
While concierge medicine has been off to a slow start in Michigan, it remains to be seen whether the payment model will take off in light of this new legislation. Proponents of concierge medicine believe that it offers a healthcare model that is both more practical and personal for patients, and one that helps offset the economic pressures felt by providers in a fee-for-service environment.