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Managing Medicare's Costs

Medicare and concierge medicine

A primary care clinic sends a letter to its patients informing them that they will have to pay a yearly $2,000 retainer fee if they want to continue to see clinic doctors. The letter adds that those who pay the fee and remain as patients will have around-the-clock telephone access to their doctors and can schedule as many office visits as they wish at no additional cost.

Concierge medicine comes in various forms, all of them with a business model that requires higher fees for enhanced services. Most concierge doctors are primary care physicians, internists, and family practitioners. Because primary care doctors are paid less per patient than are specialists, in order to survive financially they must often choose between concierge medicine and having high-volume practices that allow little time for detailed attention to patients.

A 2009 New York Times article reported that concierge practices charge fees that range between $1,500 and $25,000 a year (for a family). Fees at the low end of this scale are primarily for maintaining access to physicians, while high-end fees cover additional services such as annual physicals, lab tests, and x-rays. Concierge practices cannot, however, legally charge for services like annual physicals if the services are already covered by a patient’s insurance.

The exact number of concierge physicians is unknown. There have been estimates as high as 5,000 and as low as 2,000. Either way, while there are still relatively few doctors who practice concierge medicine, it is an accelerating trend. One hint as to its growth potential was Procter and Gamble’s acquisition 14 months ago of a small company named MDVIP, which provides administrative and other centralized services for concierge doctors.

At the time, newspaper reports indicated that P&G believed MDVIP could sustain greater-than-20% annual growth rates for several years, as increasing numbers of doctors switch to concierge medicine. And in fact, as of November 1, 2010, MDVIP had grown by more than 30 percent during the prior 12 months.

Although MDVIP is the largest, it is not the only professional association of concierge physicians. And of course there are some concierge doctors who do not belong to any concierge organizations.

Not only doctors are starting to request added fees in exchange for greater convenience and improved service. A number of hospitals have converted portions or all of their facilities to private rooms. Since Medicare and most other types of insurance pay only for semi-private rooms, patients who choose private rooms pay a surcharge.

Even emergency rooms are starting to dip their toes into concierge waters. A Los Angeles Times article last week reported that a few ER’s now allow patients, for a small fee, to call ahead, reducing their wait times once they arrive.

Policy analysts question the underlying fairness of concierge or boutique medicine, which if it expands widely has the potential to create a two-tier healthcare system that will further restrict many people’s access to care.

Yet most retirees’ immediate questions have less to do with policy than with their personal finances, as they seek to balance affordability with a desire for high-quality, individualized medical care.

Over time, concierge fees can have great financial impacts on people’s healthcare costs. Younger retirees who pay annual $1,500 retainer fees are likely facing another $35,000 to $45,000 in healthcare costs over their remaining lifetimes – amounts not included in the already scary estimates of retirement healthcare costs.

On a positive note, Health Reform will begin make modest changes to the pay imbalances between primary care doctors and specialists, perhaps slowing the move to concierge practices. And Medicare Advantage plans as well as some employer plans, usually HMO’s, prohibit doctors from charging additional fees for access or other concierge services.

In the meantime, some retirees will receive letters saying they will have to begin paying annual retainer fees if they wish to continue seeing their present doctors. When those letters arrive, most retirees will face difficult decisions of whether to leave trusted doctors or pay new, added fees.

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