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West Virginia doctor's retainer practice under investigation

The physician has stopped signing up new patients to the program that directed patients to an insurer for individual policies for uncovered services.

By Mike Norbut — Posted April 5, 2004

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A West Virginia physician who has started a retainer practice with a twist he says "will get health insurance out of primary care" is being investigated by the state's insurance commission for possibly selling insurance in violation of state law.

Vic Wood, DO, who specializes in ambulatory medicine and runs Doctors Urgent Care, a clinic in Wheeling, W.Va., offers unlimited appointments and x-ray services to patients for a monthly fee, in typical boutique medicine style. He also directs them to an insurance company that writes individual policies for care he can't offer, including hospitalization, outpatient testing, prescriptions and visits to specialists. He does not collect a commission from the insurance company. The total package, he says, covers the patient without the need for an HMO.

"I estimate about 20% of health care costs come from third-party markups," Dr. Wood said. "Doctors add another five to 10% in billing cost. That's 30% I can cut in administrative fees."

As proof, he points to his own clinic. Rather than offer traditional insurance to his employees, he gives them free primary care as if they were members, and pays for individual policies for those who need it.

Dr. Wood's health care costs for his 12 covered employees dropped from $64,000 last year to $30,000 this year, he said. For a business with 12 employees that actually would pay either $83 per month for an individual or $125 per month for a family for primary care services, Dr. Wood estimated costs would drop from $64,000 to $44,000 per year.

Also, because it's an individual policy, it's portable, he said. If a person leaves a job, he or she can still be insured and continue to visit the clinic for care. And if a company is financially limited from covering retired workers, those people still would have the option to continue their own coverage, he said. "People love it," he said. "Businesses love it."

The state insurance commission's investigation, however, has precluded Dr. Wood from signing up any businesses for the program. The retainer model, which Dr. Wood started last fall and requires patients to sign a one-year contract, is being reviewed in light of a state definition of prepaid medical services.

The state requires a person to be licensed and appointed by the company to sell insurance. What the insurance commissioner is trying to discern, however, is whether Dr. Wood is technically selling insurance, said Lynette Maselli, a spokeswoman for the West Virginia Insurance Commission.

Maselli said the office advised Dr. Wood to stop the program while officials looked into it, but declined to comment on the details of the investigation. Dr. Wood said he is "sort of on pause mode," on advice from his attorneys, having stopped signing up new patients but continuing to care for people who already have signed an annual contract.

"This may end up in court before it's all over," he said.

Although they have grown in popularity among physicians around the country, retainer practices also have run into insurance commission roadblocks in some states. In Washington, for example, the insurance commission began an intensive review last summer of retainer practice business models to see if charges for additional services and charging for care that might not be rendered in a prepaid format was legal. Outrage from patients who prefer retainer practices, however, has slowed the commission's progress in rendering opinions.

Dr. Wood initially called the West Virginia Insurance Commission to ask for an opinion about his idea.

Regardless of the way the law is interpreted, Dr. Wood feels he has hatched an idea that could help bring down costs and deliver more care to the uninsured. He said he only hopes the program gets a chance.

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External links

Description of Dr. Wood's retainer model (link)

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