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Another Concierge Medicine Perk for Patients: Saving Money

S.Z. Berg

NEW YORK (MainStreet)—For years, experts have been predicting the transition of primary care doctors away from high patient loads and low reimbursements from health insurers to the potentially more lucrative and less time-consuming practice of concierge medicine.

Concierge doctors provide same-day appointments and 24/7 direct cell phone access. The national average annual fee is $1,612 to $1,800, according to the American Academy of Private Physicians.

Not all of these doctors seem to be reaping the financial benefits. Rather, they're reducing their workload. The average annual income for all internists in the United States is $191,520, according to the Bureau of Labor Statistics. A recently released three-year analysis of concierge and direct primary care doctors by the Concierge Medicine Research Collective found that the doctors who they surveyed from December 2009 to December 2012 earned between $100,000 and $300,000 a year. However, concierge doctors generally have a cap of between 300 and 600 patients, much less than the typical 2,000-plus patient load.

But some of these concierge doctors do increase their income when they switch from a traditional practice to a concierge practice. Practices that use management companies with a concierge business model have less overhead and their doctors tend to earn more, according to Sarah K. Bloch, vice president of operations at Total Access Medical, which handles business dealings for seven doctors. Total Access Medical doctors earn between $200,000 and $475,000 annually, she says.

Some patients, too, are reaping the financial benefits of concierge medicine. Total Access Medical doctors charge patients between $2,000 and $2,800 annually but don't charge their insurance. Not only does that save the patients on co-pays or the percentage of the bill that they are responsible for paying, but it also can save on high premiums.

Bloch says that some of their patients lower their premium costs by a switching to a high deductible health insurance plan to cover visits to specialists, labs, and hospitalizations. The doctors or their support staff do the legwork to find the cheapest lab or medical facility in accordance with a patient's health insurance coverage, Bloch says. She and others say that patients, due to the additional time these physicians have to spend with them, have fewer emergency room visits and fewer visits to specialists, which she says means fewer repeat tests. These are all cost savings for patients, which Bloch says can exceed $7,000 annually.

Many concierge practices, however, do charge for office visits in addition to the annual fee that they charge patients. Others have different business models. A spokesperson for Diamond Physicians says its annual fee, which starts at $95 per month, covers the doctor's time. Any procedure, such as wart removal, is charged to insurance, which means patients must pay their deductibles and co-pays or coinsurance. However, there's still money to be saved in a practice like this. Uninsured patients are charged only 5% to 10% of the cost of the same procedure performed in an urgent care center or emergency room.

Further, others affiliated with concierge medicine of point out that for patients in professions that bill high hourly rates, such as attorneys, there's also a savings in time, because appointments at concierge practices typically run on time.

Whether or not the annual fee is tax deductible is a tricky question. It all depends on what the fee covers, which varies from practice to practice. Some business models use the fee for preventive tests, some use it for the doctor's time in making diagnoses, and some charge it as a premium for access into their concierge practice.

"The deductibility of a medical concierge -- either as a medical expense or under an HSA [health savings account] -- is highly dependent on the type of expense ... being deducted," says Vincenzo Villamena, a CPA and managing partner of the firm OnlineTaxman.com. "The real question is whether an expense is primarily for medical care or is merely beneficial to general health, such as a premium to get easy access to a doctor," he says.

It boils down to this: if you receive an actual service from the fee, such as a physical, then it is deductible, and you can use funds from your HSA to pay for it, Villamena says. However, if it "is merely for the privilege of having access to a doctor, ... then it is not deductible," he says.

"The medical practice should provide the break down between the charge for service and for other amenities," says Michael D'Addio, a CPA and principal at Marcum LLP, who thinks that "many concierge practices are moving their billing practices so as to provide support for deductibility."

Of course, in order to qualify, you must itemize your deductions and meet the threshold for deducting medical expenses, says Howard Hammer, a CPA at Fiske & Company. The AGI floor as of January 1, 2013, is 10% of adjusted gross income (AGI) for taxpayers under age 65, up from 7.5%, and 7.5% of AGI for taxpayers age 65 and older. For married couples where one taxpayer is age 65 or older, the 7.5% AGI applies.

Written by S.Z. Berg, author of College on the Cheap, for MainStreet

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