Psychiatrists in direct-pay practices, in which patients must seek their own reimbursement if it is available, say the high quality of care they offer continues to bring patients through their doors from all ends of the economic spectrum.
Just 55% of U.S. psychiatrists accepted any form of insurance during 2009-2010, while nearly 90% of physicians in other specialties did during that period ( JAMA Psychiatry 2014;71:176-81 ). Psychiatrists in cash practices say this is in part because the field is not as good a fit for managed care as other specialties are.
It is also, they say, because certain subspecialties such as addiction treatment are locked into reimbursement models that are rigid and dated; and because clinicians would rather spend time with their patients than on coding and paperwork, even if it means collecting less money or having to offer discounts to patients who find themselves in a tough spot.
“This is about value. And people will pay the money if they feel the value,” said Dr. Mark L. Willenbring of Alltyr clinic in St. Paul, Minn., a cash practice he founded.
Patient advocates are concerned that cash practices create further impediments to access in a mental health care system, that – parity laws and sweeping insurance reforms aside – still suffers from a shortage of providers and high rates of insurance denials for mental health and substance use treatment.
“We can certainly empathize with the rationale for providers doing only direct pay; we just wish it were not so,” said Sita Diehl, director of state policy and advocacy for the Arlington, Va.–based National Alliance on Mental Illness. NAMI’s recent report on parity in mental health care, titled “A Long Road Ahead,” found the dearth of providers accepting insurance to be among the persistent obstacles to access.
A novel addiction model
Dr. Willenbring, a former director of addiction and recovery research at the National Institutes of Health, said his move to a direct-pay clinic came about as a result of what he considered a lack of science-based addiction medicine.
“Research in addictions is astonishing, and there’s lots more we know about the disorders than 50 years ago, but a lot of it sits on the shelf because we don’t have the vehicle to get it to the public,” he said. His Alltyr clinic, now in its third year, began as a demonstration model combining outpatient medical management and psychotherapy to people with alcohol and substance use disorders at varying stages of severity.
“Insurance companies have boxes they want to put you in. They have a box for substance use treatment that says ‘rehab.’ And they have a box for a mental health clinic. But what I’m doing is neither. And I’m a subspecialist; I don’t want to be paid the same as they guy down the street doing 5-minute med checks. Finally, with insurance, I couldn’t do what I want to do. I couldn’t experiment.”
Dr. Willenbring said direct pay has allowed him to build an addiction treatment model that is an alternative to traditional rehabilitation. “What’s the treatment for bipolar disorder? You put the patient through ‘the program’? No, you try one thing, and if it doesn’t work you try something else. And you don’t blame the patient if it doesn’t work.”
Direct pay helps keep his costs to patients and bureaucracy to a minimum, he said. He charges $495 for a 90-minute initial evaluation, with fees between $95 for 45 minutes with a licensed addiction counselor to $300 with a psychiatrist. “You have to remember: Many of our patients have spent tens of thousands of dollars before coming here,” usually on rehab, he said. Most spend between $2,000 and $3,000 a year at the clinic, less than the $5,000 annual cash outlay required by many high-deductible insurance plans.
Also, he said, “I negotiate with patients. I ask what they can afford. I’m seeing one patient for $50 a visit because that’s what they can pay.”
The Alltyr clinic collects outcome data that helps him to better understand which approaches are working, he said. “My goal is to demonstrate that we can have better outcomes and far better patient satisfaction at substantially less cost than current treatment,” and direct pay is making the effort possible, for now, Dr. Willenbring said.
On an absolute level, his practice is not more costly than under a managed-care model, he added. “I also work part time for one of the large health organizations in a half-day clinic. They take all insurance, but if patients have to pay cash they pay more there than in my clinic.”
Dr. Willenbring said he hopes that some version of his treatment approach will be adopted by health care organizations, allowing it to reach more patients. Treatment for alcohol and substance use disorders can be started in primary care, and patients can be referred to specialists as needed, as is the case with treatment for asthma or depression, he said. This will be particularly important for patients with public insurance, he added.
Ms. Diehl of NAMI agreed that current managed care models do not leave much room for innovation. “There needs to be some kind of acknowledgment that psychiatry is an evolving practice. For acknowledgment of innovation and validation you have to scale up from one practitioner doing something that works, to a small exploratory study, and eventually you get something like cognitive-behavioral therapy where you say, ‘OK, this is robust.’ ”
Trust and continuity
Direct-pay psychiatrists strongly defend their model as placing patient confidentiality, trust, and continuity of care at its center.
The European psychoanalysts who found refuge in the United States around the time of World War II were the first to institute private, office-based practices – a model that psychiatrists, who formerly worked mainly in hospitals, soon adopted, said Dr. Rodrigo A. Muñoz, who has been in private practice in San Diego since 1977 and is a former president of the American Psychiatric Association.
“These were patient-oriented people who truly believed in their practice and expected that this would be their life,” Dr. Muñoz said. But within decades, “all sorts of people came to intervene in psychiatry – government, insurance companies, employers, and the big physicians’ groups. A lot of money came to intermediaries who gained control over large chunks of the practice.”
Although Dr. Muñoz accepted insurance, including Medicaid, for decades, he no longer does. “The HMO people have tried to reduce office practice to 15 minutes for medication. I cannot practice that way,” he said. “My sessions are between 30 minutes and an hour,” he said, and include medication checks, psychotherapy, and detailed progress notes. “I am very interested in many areas of the patient’s life – family, work, plans, many other things, and I take my time. If my decision is between accepting insurance and seeing the patient for less money, I will take less.”
Dr. Muñoz says he does not have a waiting list and sees as many as 30 new patients a month. Direct pay allows him to keep overhead and fees as low as possible, and to maintain a level of discretion that his patients appreciate. He once clashed with Medicaid auditors on recording patients’ cultural backgrounds, because his mostly-Latino patients felt sensitive about what the information was being used for.
“I now have the practice I want to have. I believe I’ve got what every psychiatrist wants – a good relationship with my patients. Because you have to recall that many people come against their will. You’re treating them because you believe they have symptoms, and they may not agree. Sometimes I’m the fellow who tries to put them in the hospital.” Trust of patients, and their families, he said, is key.
Most patients on public insurance, meanwhile, “are destined to go to a clinic where the costs are much lower and supported by state subsidies,” Dr. Muñoz said. “They may see several practitioners – whoever is available that day at the clinic.”
Bridging the gap
“When psychiatrists go into psychiatry they are not simply going in to manage medications. You have to find out what’s going on with the patient’s life to make the best use of the medication. It’s not like primary care where there’s a clear path forward. You have to have a conversation. And health plans have not worked that into their actuarial and financial models,” said Ms. Diehl.
“Effective psychiatric practice includes psychotherapy and medication management,” Ms. Diehl continued. “On the other hand, this costs a lot to the system. We found that the average 45-minute treatment visit costs $250 out of pocket, and an initial evaluation can be upwards of $600. Not many people can pay that,” she said.
Dr. Lee H. Beecher, a psychiatrist recently retired from a direct-pay practice in St. Louis Park, Minn., said the private-pay model, done correctly and transparently, is accessible to most patients.
“I’m not talking about this as a model for the rich or celebrities. My clientele consisted of people from all backgrounds,” he said, and his fees – about $250 for a 50-minute session that included medication checks and psychotherapy – were always posted online. “I would tell patients what my costs were and why I do what I do, and they were satisfied with that,” he said. With a roster of 3,000 patients, Dr. Beecher managed his practice with only one support staff member.
Dr. Beecher, like Dr. Muñoz, said he felt the main advantage of direct pay to be the patient relationship. “Psychotherapy is developing a personal narrative. Who am I in the world? What am I doing? What is the plan gonna be? Good psychotherapy helps the patient rationalize his or her own position,” he said. “Meanwhile, so many of my colleagues in psychiatry are struggling with this question of, what am I doing? Who am I working for, the patient, or the CEO of a health care organization?”
Dr. Beecher said many of his colleagues stopped taking insurance “because we were becoming slaves to coding, trying to coordinate everything so that we could get paid, then we wouldn’t, and we were arguing with the insurers – it was just awful,” he said. Switching to direct pay “re-established psychiatry as a legitimate and valuable service with the patient as the center of the doctor’s attention.”
For her part, Ms. Diehl said NAMI’s report “shows that consumers face huge barriers to psychiatric care and scrimp on necessities in order to pay for it. Direct pay resolves some problems but creates others. We need a middle ground,” she said.
Dr. Beecher acknowledged that the poorest patients are denied the level of care that even the most reasonable and accessible direct-pay practice can offer. With his patients who had Medicaid, he did what he could to bridge the gap. Medicaid does not reimburse direct-pay appointment fees, but prescriptions written by direct-pay providers are paid for, and Dr. Beecher would intervene to make sure patients received the right medications. He also connected with their primary care physicians, explaining drug choices, and provided patients with copies of their notes to allow them to share them with other providers.
A more lasting and innovative solution to help low-income patients access direct-pay quality care would be to “support waivers and experiments in the states that would give patients access – maybe even with a debit card” to funds that can be used for direct pay, Dr. Beecher said.
Enormous sums of public money are going into health care organizations, he said, but “the way it’s now designed is a top-down system deciding what the benefits should be, how they’re administered, who’s getting the money. None of that allows the patient to be the driver of the system.”
Waivers for direct pay “could get the power in the hands of the patient,” he said. “There’s a lot of resistance to doing it. But it works.”
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