The Careful Concierge: Concierge Medicine Attractive, But Possibly Risky

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Law Feature - June 2008


Tex Med. 2008;104(6):33-38.

By  Crystal Conde
Associate Editor

Imagine seeing only a handful of patients each day, being able to spend enough time with them, and focus on prevention. Now imagine never filing claims with health care payment plans or government payers.

This scenario isn't a dream for some primary care physicians.

They've found a different way to practice medicine and get around Medicare cuts, decreasing reimbursement, increasing patient loads, and bureaucratic hassles. By offering an enhanced suite of services that includes house calls, same-day appointments, 24-hour access to physicians, preventive health and wellness advice, and coordination of specialist care, they can spend more time with their patients and provide what they describe as more in-depth, higher quality health care.

This concept has a name: concierge medicine. In this approach to practice, patients typically pay physicians a yearly membership or retainer fee for access to services not covered by insurance. The model is popular among family physicians because it allows them to scale back their patient loads, provide greater one-on-one attention, and focus on preventive care - not just treat the sick.

Some physicians stop taking insurance altogether after switching to a concierge medicine practice; others continue to contract with plans, which can be risky.

Four Texas physicians learned that the hard way this year when UnitedHealthcare kicked them out of its network for charging a fee for concierge services. United says its contracts prohibit physicians from charging a "membership fee" or other fee for United's members to access physicians for covered services.

United spokesperson Cheryl Randolph says the doctors in question charged additional fees for physical exams, wellness plans, house calls, and 24-hour access, services that the health plan covers. (See " Know Your Managed Care Contracts .")

Austin attorney Joseph Geraci, JD, says physicians considering switching to concierge medicine should have an attorney review their insurance company contracts and help them determine the contractual limitations on what they can charge patients. Attorneys can also help physicians determine how to terminate their contracts with health care payment plans.


Contemplating Medicare

Mr. Geraci says the safest way for physicians to transfer to a concierge medicine practice, from a compliance standpoint, is to terminate all health care payment plan contracts and opt out of Medicare.

Cutting all ties with health plans and government payers also is the most economically risky way to make the transition, he says.

Of the 112 concierge physicians surveyed in 2005 for the U.S. Government Accountability Office (GAO) study "Physician Services: Concierge Care Characteristics and Considerations for Medicare," 85 reported they still billed patients' health insurance plans for covered services. Of them, 79 reported they billed Medicare.

About one-fourth of respondents reported not having filed any claims to their patients' health insurance plans or Medicare. About three-fourths were Medicare-participating physicians, and about one-fifth had opted out of the program as of 2004.

Federal authorities have weighed in on liability risks to physicians receiving assignment of benefits from Medicare. In 2004, Acting Principal Deputy Inspector General Dara Corrigan warned physicians of potential penalties, including exclusion from Medicare and other federal health care programs, for billing Medicare patients for services already covered by the program.

The Department of Health and Human Services' Office of Inspector General (OIG) made an example of a Minneapolis internist who it alleged violated his assignment of benefits when he asked patients to pay an annual fee of $600 under a "Personal Health Care Medical Care Contract." The patient-physician contract outlined services offered as coordination of care with other providers, a comprehensive assessment and plan for optimum health, and extra time spent on patient care.

OIG said Medicare reimbursed some of these services but didn't specify which ones. The physician resolved the allegations by paying an undisclosed settlement amount to OIG and agreeing to stop offering the contracts to his patients.

The following year, in 2005, the GAO study detailed the legal basis for the OIG's action. It said physicians who accept an assignment of benefits from Medicare cannot charge beneficiaries beyond Medicare limits under the Civil Monetary Penalties section of the Social Security Act.

Limits on what physicians may charge their Medicare patients depend on the relationship between the physician and the Medicare program - participating, nonparticipating, or opted out - and the type of service provided. (See " Limits on Physician Charges for Medicare-Covered Services .")

The American Medical Association issued guidelines on concierge medicine in 2003 to address the economic, ethical, and legal implications of the practice. The principles include a way for patients to opt out of the concierge model without financial penalty, physician assistance in finding another doctor for patients who don't wish to participate in concierge medicine, and honesty in billing third-party payers. To obtain a copy of AMA's guidelines, e-mail .


Making the Transition

William Jones, MD, founder of Concierge Family Medicine in Austin, recognizes the monumental leap of faith physicians take when they do away with managed care altogether. He says they place their lives' work on the line.

He switched to a concierge model of practicing medicine four years ago. His son, Mason Jones, MD, joined the practice last year.

The elder Dr. Jones has been in practice for 35 years. In the early 1990s, he practiced under a managed care model but says he stopped when administrative burdens took the joy out of his job.

Six years ago, he gradually terminated all of his managed care contracts over an 18-month period.

"The sky didn't fall when I did that," he said, referring to his patients' willingness to pay cash at the time of visits to continue to see him.

About 80 percent of Dr. Williams Jones's 3,000 patients chose to change doctors, leaving him with about 600 truly active patients who he says can be counted on to come in on a regular basis and who generate the stable revenue stream that sustains a primary care practice.

After he fully transitioned to a cash-only business, he attended a meeting of the Society for Innovative Medical Practice Design, formerly the American Society of Concierge Physicians. The idea of charging an annual fee for service, rather than asking patients to pay for each service at each visit, appealed to him.

"It really puts the joy back in practicing medicine," Dr. William Jones said.

He says converting to a cash-only practice before evolving into a concierge model is a good way to test the waters. It allowed him to find out how many patients were willing to pay up front for services, and it gave him a safety net that would allow him to return to managed care if many patients were unwilling to switch.

Both physicians have opted out of Medicare. They don't have individual contracts with patients, but those older than 65 sign a private contract that stipulates they won't submit claims to Medicare for any medical services they receive from the practice. Younger patients who have private insurance can file claims themselves.

Dr. William Jones and Dr. Mason Jones each have a client roster of 600 patients they see throughout the year.

"We get paid for performance, but not by the insurance company; it's by the patients," Dr. William Jones said.

The annual retainer fee varies by age and enrollment status designation. Rates range from $1,200 to $2,000 for single adults. Couples' fees range from $2,300 to $3,900.

Services include ample time with the doctor, same-day appointments, immediate cell phone access to the doctor 24/7, and prompt access to specialists and state-of-the-art care.

Some physicians choose to continue a traditional practice and accept insurance while gauging their patients' interest in signing on for concierge care. San Antonio internists Michael Lozano, MD, and Mitchell Curry, MD, opened IMPACT Physicians of Texas PA last year. They co-owned a small hospitalist group prior to their most recent endeavor.

Their goal is to convert 300 patients to concierge care, terminate all managed care contracts, and opt out of Medicare. Dr. Lozano says 10 percent of his patients have verbally committed to change to concierge care.

"We're interested in being successful for our patients and in pioneering the whole concept and being on the cusp of this new territory," Dr. Lozano said.

Currently, all of the physicians' patients receive concierge services at no additional charge, and both physicians continue hospitalist work to supplement their incomes during this growth and transition period.

The physicians predict it will take about two years for them to set up a concierge medicine.

"This whole concierge concept is so new. I think as Medicare continues to cut reimbursements and doctors start to close their panels to certain insurances and Medicare, people will start to think outside the box. Then the concept will take off," Dr. Curry said.

The 2005 GAO study reports a small number of physicians located primarily on the East and West coasts practice concierge medicine. A majority of the 112 survey respondents were primary care physicians.

Mr. Geraci says the reality is that primary care doctors benefit from the concierge model most.

"They need the extra income because they're the ones seeing the biggest reimbursement cuts. The powerful groups are the ones that can negotiate better rates. Those bigger groups don't have the incentive to go concierge," he said.

When Drs. Lozano and Curry decided to open a concierge medicine practice, they had their lawyers draw up a physician-patient contract that outlines what services the retainer fee covers. The physicians plan to offer a tiered pricing menu that varies based on the level of service a patient desires. The more comprehensive the care, the higher the fee will be.

Dr. Lozano says that prices for concierge medical services in the San Antonio area range from $1,000 a year to $4,000 a year. Services include same-day or next-day appointments, house calls, accompaniment by a doctor to appointments with other physicians, and wellness advice, among others.

Both physicians agree that going the concierge medicine route will enable them to spend more one-on-one time with patients while focusing on quality care.

"The system has gotten to a point that if doctors want to open a practice and spend time with patients, they can't do it," Dr. Curry said. "We're mandated to care for 20 to 40 patients a day in the office just to meet overhead, pay rent, pay employees, and get by. To me, I can't practice medicine that way."

Crystal Conde can be reached at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by e-mail at  Crystal Conde .




Know Your Managed Care Contracts

Austin attorney Joseph Geraci says that if avoiding health care plan termination is absolutely essential, physicians transitioning to a concierge medicine model may want to contact their health care plans first. Before doing so, he advises physicians to have a plan in the event the insurer has a policy that prohibits physicians from charging any type of retainer or membership fee.

According to Mr. Geraci, framing the issue and understanding contractual rights are essential before any such conversation.

The following is information from CIGNA, UnitedHealthcare, and Blue Cross and Blue Shield of Texas regarding concierge medicine and contractual obligations.

CIGNA spokesperson Gwyn Dilday says the company hasn't objected to participating physicians offering CIGNA patients the option of joining concierge programs as long as patients unable or unwilling to join the program continue to have access to the physicians. She warns that CIGNA "will terminate the contracts of participating providers who have indicated to us that they are willing to accept as patients only those CIGNA participants who agree to pay the concierge program membership fee."

At press time, Ms. Dilday had not been able to determine whether CIGNA has terminated any contracts with physicians who provide concierge medicine services.

Contact CIGNA for more information about its concierge medicine policies by calling (800) 882-4462.

Blue Cross and Blue Shield of Texas (BCBSTX) spokesperson Margaret Jarvis says the company generally doesn't support physicians charging BCBSTX subscribers fees beyond copayment and coinsurance. She says BCBSTX physician contracts support physicians treating BCBSTX members in the same manner as all other patients. In other words, concierge service practices must be applied uniformly to all patients.

"If a provider charges additional fees to the entire population of patients in the same manner for noncovered services, and the BCBSTX member agrees to pay for the noncovered service prior to receipt of that service, then that is appropriate," she said. "We expect the same access and availability guidelines will apply to all BCBSTX members."

Contact a BCBSTX network representative with any questions. Phone numbers are on the  BCBSTX Web site .

UnitedHealthcare spokesperson Cheryl Randolph says two Florida physicians have been terminated from its network in addition to the four Texas physicians. She says the United contract stipulates that physicians will not charge members any additional fees other than the applicable copay or deductible.

Contact United at (866) 842-3278.

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Limits on Physician Charges for Medicare-Covered Services

Physician Status

Medicare-Covered Services

Limits on Physician Charges


Medically necessary items or services and specific preventive or other benefits.

Medicare fee schedule amount for participating physicians. The beneficiary may be charged applicable deductible and coinsurance only.


Medically necessary items or services and specific preventive or other benefits.

Reimbursement claimed directly from Medicare: Medicare fee schedule amount for nonparticipating physicians, which is 95 percent of the amount for participating physicians. The beneficiary may be charged applicable deductible and coinsurance only.

Reimbursement not claimed directly from Medicare: No more than 115 percent of the Medicare fee schedule amount for nonparticipating physicians. The beneficiary may be charged this entire amount and may be reimbursed 80 percent of the fee schedule amount for nonparticipating physicians.

Opted out

None, except when emergency or urgent care is provided to a beneficiary with whom the physician does not have a contract.

No statutory limits apply. The amount of payment is determined by contracts between physicians and patients.

Source: GAO analysis

Note: Medicare requires doctors to put in writing that a proposed service is not covered in order for the beneficiary to make an informed decision about whether to receive services.

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