By Evan Falchuk

Dr. Val blogs today about cash-only physician practices, as well as other concierge-style practices.

They’re both emerging models of primary care in which the doctor basically opts out of the traditional insurance system. By doing that, doctors typically see fewer patients, spend more time with each patient. They can even make more money per patient, by getting rid of the overhead otherwise tied up in doing medical billing. It sounds great, and it is, for patients fortunate enough to be in a practice like that. But it has its share of critics, who worry that these kinds of practices leave behind those who are less well-off.

But what if a doctor set up a low-cost concierge practice, catering to people without insurance? Wouldn’t that be a great idea?

One doctor tried it, and the state of New York tried to shut him down.

The doctor’s name is John Muney, and he created a program in his practice where patients pay $79 a month and get unlimited office visits, including certain tests and some in-office surgeries. It doesn’t cover treatment or other specialists, and is targeted at people who have no health insurance. The state of New York says that Dr. Muney’s patients actually bought insurance policies from him, and he needed a license for that. In the state’s view, every time he collected the $79 monthly fee — or even solicited people to join — he was breaking state insurance law.

New York is not the only state to look at this issue. Earlier this year, the Maryland Insurance Administration released a report (.pdf) in which it said programs like these might run afoul of state insurance law if fees charged in the program exceeded the “market value” of the services offered. The regulator recommended other restrictions on what services could be offered, and warned that programs that didn’t meet these criteria might be considered insurance. By contrast, in Washington State, there has been a law on the books since 2007 (.pdf) that expressly allows for concierge practices. Interestingly, in the run-up to the passage of that Washington law, it was the state’s largest health insurers who were most vocally opposed to retainer-based primary care practices.

At last report, Dr. Muney was trying to negotiate a deal with the state to let him continue. It will surely be interesting to see how the politics of his conflict plays out — he has called on Governor Patterson and President Obama to help him change the law in New York. While most other states haven’t taken up this issue, given the increasing popularity of this practice model, expect that they will.