As direct primary care practices continue to grow and thrive, DPC practitioners and those interested in the model must keep up with constantly evolving rules and regulations. Federal and state legislation, IRS Policy, and Medicare policy are all relevant topics for the direct primary care community to consider.
One notable piece of policy that impacts direct primary care is the Affordable Care Act. Section 1301 and amendment Section 10104 of the act state that direct primary care along with a catastrophic or high deductible insurance plan fulfills the ACA’s standard of full “insurance.”
Translation: the law allows direct primary care, when combined with a high deductible plan, to compete with traditional health insurance options in health exchanges. DPC coverage alone, however, would result in the patient paying a fine.
Currently, IRS policy is in conflict with HHS ACA essential health benefit rules. In other words, the IRS views direct primary care membership fees as a secondary “health plan.” This means the DPC periodic membership fee is not a qualified HSA expense.
The Health Savings Act of 2016 was recently introduced in an effort to reconcile issues in the tax code for HSA holders. The act clarifies that direct primary care service arrangements shall not be treated as a health plan or as insurance and amends the current definitions of medical care to include periodic fees paid for specific medical services as tax-preferred qualified health expenses. This will help DPC practices as paying the membership fee will become a tax benefit for patients.
Even though Medicare patients are the nation’s highest utilizers of care, most are unable to receive DPC care, unless they receive coverage under a Medicare Managed Care Plan.
Another recently introduced bill, the Primary Care Enhancement Act, hopes to provide a payment pathway for Medicare and Dual Eligible beneficiaries by defining DPC as an Alternative Payment Model (APM). The shift to value-based care and MACRA payment reforms could also lead to a path where DPC providers could provide care for Medicare beneficiaries under an APM.
At the state level, only 16 states have passed DPC legislation that defines direct primary care as a service outside the scope of state insurance regulation. Five more states, including Michigan which has also proposed a pilot project to expand DPC services to its Medicaid population, anticipate passing DPC legislation in the near future.
For any Direct Primary Care practice, keeping abreast of policy changes that impact providers and patients is important to running a successful practice. Here are some useful resources that can help: