What is DPO?
Health insurance companies have created literally dozens of plans over the years, HMOs, PPOs, high deductible, medicare advantage, FSA, all designed to control costs for the consumer, but in reality only saved money for the insurers. Premiums have never gone down and out-of-pocket expenses have escalated. It’s time for a new health plan: the DPO, or Direct Pay Option.
Benefits of DPO
More and more employers have sought to lower the cost of paying for healthcare and since half of Americans get their insurance through employer-sponsored plans, there is a pressing need for an alternative. The solution is in plain sight, to offer a DPO, where employees can pay out of pocket, directly for care, without having to go through insurance. Not all healthcare is prohibitively expensive. Routine care, cancer screening, even procedures can be affordable and far below the price of a monthly premium. Doctors can charge less for direct pay patients because there is significantly less overhead involved in processing an insurance payment. Using insurance for every encounter is unnecessary, and drives the costs higher. Insurance was intended for the big stuff, like childbirth or cancer treatment, but when it is used to cover a telemedicine visit that reimburses a doctor only $20, it no longer makes sense.
Transitioning To DPO
For employers, lower utilization translates into lower premiums or even rebates. Part of the Affordable Care Act includes limiting the margin insurance companies are allowed to retain. The so-called medical loss ratio is set at 80-85%, leaving the smaller balance for insurance company overhead. If employees received medical care outside insurance, the loss ratio would decrease along with the premiums. Considering nearly all plans require deductibles or copays, the transition to direct pay is not difficult and there are added benefits of avoiding insurance approvals or network restrictions. In short, it will be a welcome relief.
A DPO requires price transparency. Doctors, hospitals, pharmacies would all have to agree to a fair price. But why wouldn’t they? Immediate guaranteed payment is a far better business model than spending significant time and money fulfilling insurance requirements for the promise of a future higher payment. Not to mention the costs associated with securing the data needed to process a claim. All of these overhead expenses melt away in a cash model, and if a patient does require advanced, expensive treatment, like a targeted cancer therapy or surgery, that goes beyond the federally mandated maximum out of pocket expense ($8550 per individual, $17,100 per family), then, and only then, could insurance be used.
How Will DPO Work For Me?
Networks become irrelevant in a DPO. There are no restrictions when the price is agreed upon and the payment is direct. All that is required is that any participating provider have a transparent price set with a reference point. Like wireless technology, people would not be tethered to the rules determined by their insurance-based plan. This is particularly relevant for a permanent remote workforce, living far away from their office. The DPO is a reasonable addition to health care plans and platforms like UBERDOC, provide easy access to a nationwide network of direct pay physicians.