Washington state bill offers safe harbor for retainer practices

A new bill proposed by the Washington State Office of the Insurance Commissioner would create a safe harbor for most physicians who operate retainer practices in the state.

That would allow them to offer patient care for a monthly or annual fee without having to follow many of the regulations that govern insurance companies.

While physicians may look at the bill as a matter of common sense, the legislation was born out of years of discussion between doctors and state regulators.

"We are very pleased we were able to reach a point in hammering out a safe-harbor bill," said Bob Perna, director of health care economics for the Washington State Medical Assn. "Physician practices came up with a different revenue model and in no way thought they would fall under the regulatory arm of the insurance commissioner."

HMOs in Washington are required to keep $3 million in reserves to protect customers in the event of insolvency, said Stephanie Marquis, a spokeswoman for Insurance Commissioner Mike Kreidler. Under the proposed bill, however, retainer physicians would not have to meet this requirement.

Instead, they would be required to keep patient fees in a trust account so a portion of the funds could be returned to the patient should the retainer agreement be terminated early. Retainer physicians also must send an annual letter to the insurance commissioner certifying that they are in compliance with the law, Marquis said.

The bill, which was passed overwhelmingly by the state House of Representatives and was waiting for a vote by a Senate committee at press time, attempts to define retainer practices in the context of health insurance. While physicians likened it to any service for which you would pay a monthly fee, insurance regulators said they needed to have a mechanism to protect patients because the doctors were accepting payment in advance.

"They're still accepting risk, but we see it as minimal risk compared to a commercial insurer," Marquis said.

The bill very well could be a test case for how retainer practices around the country could be protected, said Garrison Bliss, MD, a Seattle internist who operates a retainer practice and serves as president of the Society for Innovative Medical Practice Design, the national retainer physician organization.

"I don't know of any formal legislation anywhere else," Dr. Bliss said. "This is an acknowledgement on the part of the government that things are so broken that they're willing to look at innovations."

The bill has drawn opposition from the Assn. of Washington Healthcare Plans, which says that if the insurance commissioner feels that physicians are providing insurance, there should be no secondary regulations for them.

"We would expect our insurance commissioner would utilize the same requirements for anyone who comes into the state and practices insurance," said Sydney Smith Zvara, executive director of the association.

With annual fees in the $20,000 range last decade, retainer practices started as a niche service for the wealthy. But the movement started to pick up steam a few years ago as physicians started charging fees that were more accessible to the middle class. For about $100 a month in many practices, patients generally receive same-day and extended appointments, 24-hour cell phone and e-mail access, and primary care services.

Retainer practice models are generally divided among those that do not accept insurance and those with fees that cover only additional services not covered by an HMO contract, such as longer appointments and cell phone access.

The Washington bill would apply only to those practices that do not submit insurance claims, so their monthly fees would cover all primary care and extra services. Physicians said more discussion is expected on how to define and regulate practices that still maintain insurance contracts while providing retainer services.