Direct primary care (DPC) is growing in popularity, particularly as healthcare costs for patients continue to increase. The DPC model is relatively simple – patients pay a monthly membership fee and receive basic primary care services from the DPC physician for that fee. There are no additional visit charges and some DPC practices offer discounted fees for laboratory services and prescription medications. However, DPC patients are not eligible for Health Savings Accounts (HSAs), according to current IRS regulations. That policy may be changing.
The Primary Care Enhancement Act (HR 3708), introduced in July 2019, would allow patients to participate in HSAs and to use those funds to pay their monthly DPC membership fees. Currently, DPC membership fees are considered to be health insurance premiums, so DPC patients are not allowed to use their HSAs to pay those fees without incurring a tax penalty. HR 3708, designed to amend the IRS Code of 1986, was approved by the House Ways and Means Committee in October 2019.
Although widely supported by a range of organizations, including AAFP and the HSA Council of the American Bankers Association (ABA), there is some language in the bill that has been met with concern, particularly by the Association of American Physicians and Surgeons (AAPS).
Indicating that HR 3708 “fails to expressly define DPC arrangements as a qualified medical expense under IRC 213(d),” “unclear language may impede patient access to prescription drugs at near-wholesale pricing,” and that the proposed aggregate cap of $150 “constrains any flexibility the bill might have for allowing agreements with non-primary care specialties,” the AAPS submitted a letter on October 22, 2019, outlining “a number of concerning areas of this bill that we believe improperly limit the design of DPC arrangements eligible for HSA use.”
Previously introduced in 2017, the bill was not acted upon and was cleared from the books. HR 3708 was forwarded to the full House for consideration and approval in October 2019.