Doctors’ Flat Fee Plans Give Insurance Regulators Headaches

Veteran doctor John Muney says his flat-fee, $79-a-month medical practice is a formula for making health care affordable and patient-friendly. But New York regulators see it as self-styled insurance and have told him to shut it down.

The dispute, which emerged this month, reflects a rising issue in what is sometimes called “retainer” medical care. At least two other states have grappled with whether to consider such arrangements insurance, reaching different conclusions.

The question could become more pressing as jobs disappear in the ailing economy, taking many workers’ traditional health insurance plans with them.

The debate “makes no sense to me. … I feel that my flat-rate memberships provide a great service,” Muney said at a press conference Wednesday. He is negotiating with the New York Insurance Department to try to keep the service at his five AMG Medical Group centers around the city.

There are no definite numbers on how many of the nation’s more than 1 million MDs and osteopathic physicians have flat-fee arrangements, some of which are known as “concierge” or “boutique” practices. But their popularity is mounting: Boca Raton, Fla.-based MDVIP Inc., which provides extensive preventive care for $1,500 a year, has grown into a 300-physician, 100,000-patient network in nine years, president Darin Engelhardt said.

Supporters say flat-fee plans let doctors strip away insurance company costs and red tape to make everyday medicine more accessible and less hectic. Critics fear they siphon much-needed primary care doctors from insurance networks and raise questions about equity — especially models that promise to make doctors more available to the fee-paying patients. The American Medical Association says retainer practices raise ethical concerns but also expand health care options.

Muney, a former surgeon, started offering the $79-a-month plan last year. About 50 patients have signed on, not yet enough for the plan to break even; the rest of AMG’s more than 7,000 patients use traditional insurance.

The monthly fee buys unlimited office visits, including certain tests and in-office surgeries and even a prescription-discount card. It doesn’t cover treatment requiring hospitalization or specialized care.

That’s fine with patient Matthew Robinson. He has a one-person architectural business and no health insurance, which could run hundreds of dollars per month. AMG’s arrangement has let Robinson, who is in his 50s, catch up on checkups and routine tests. Otherwise, he says, “I’d play Russian roulette,” skipping physicals and hoping nothing serious went wrong.

AMG’s Web site declares the arrangement isn’t insurance, but the Insurance Department says it meets the definition: charging a regular fee to provide a benefit in case of an unforeseen event, such as an illness or injury. Insurers are required to submit to a licensing process that examines their finances and capacity to deliver what they promise.

“It’s not just a technical requirement to bust his chops — it’s to protect consumers,” said Troy Oechsner, the agency’s deputy superintendent for health. “I applaud innovation, but we also have got to do it in a way that protects consumers.”

The department told Muney in a Feb. 2 letter to end the monthly fee service. His lawyer has since proposed adding $33-per-visit charges for all but preventive care; a department spokesman said the agency wouldn’t comment on the ongoing discussions.

Other states have split on similar questions. The Maryland Insurance Administration concluded last month that offering unlimited office visits for a single fee might constitute an unauthorized form of insurance, though retainer practices offering more restricted services did not.

But the Washington state insurance commissioner’s office concluded several years ago that such arrangements didn’t amount to insurance, because they concerned only primary care, spokeswoman Hilary Young said.