Legal Considerations For Direct Care Practices
Finding a Lawyer
Selecting a lawyer is a critical step as incorporating your business and ensuring compliance with applicable regulations will be a key step. To save fees, map out a schedule or statement of work prior to engaging legal counsel, and set a budget in advance. To find counsel experienced in direct care models, physician advocacy organizations like the AAFP or Direct Primary Care Coalition can be helpful resources. The best source for legal advice will be recommendations from physician colleagues, which are most likely to yield legal counsel that regularly encounters issues relevant to direct care practices.
According to The Cooperative of American Physicians (CAP), direct pay physicians have “better medical professional liability loss experience than a typical family practice/internal medicine physician.” In fact, because DPC doctors have fewer claims than regular physicians, they can receive a nearly 50% discount on the cost of their malpractice insurance. With significantly lower malpractice premiums, DPC physicians can more easily obtain such insurance to protect their practices against potentially damaging lawsuits.
Direct Care Policy
There are currently a number of policies at the state and federal level that that could impact direct care physicians. The proposed policies relevant to direct care currently under U.S. Congress consideration include the Health Savings Act of 2016 and the Primary Care Enhancement Act. These acts would enable direct care membership fees to qualify as HSA expenses, opening up a broad new patient base for direct care practices.
Currently, IRS policy is in conflict with HHS ACA essential health benefit rules. The IRS views direct care membership fees as a secondary “health plan.” This means the direct care periodic membership fee is not a qualified HSA expense. Likewise, even though Medicare patients are the nation’s highest utilizers of care, most are unable to receive direct care, unless they receive coverage under a Medicare Managed Care Plan.
In the Affordable Care Act, Section 1301 and amendment Section 10104 state that direct care along with a catastrophic or high deductible insurance plan fulfills the ACA’s standard of full “insurance.” So a patient that receives direct care will be exempt from the individual’s mandate’s penalties for a lack of insurance.
At the state level, only 16 states have passed direct care legislation that defines it as a service outside the scope of state insurance regulation. As more and more legislation is passed, direct care practices will likely be able to provide care for their patients more freely.