DPCs: CONGRESS AND HSA: The Simple DPC HSA Fix Isn’t So Simple

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“There is irony that the national leaders in price transparency are the first ones met with federal price caps.” ~Dr. Lee Gross
by Lee S. Gross, M.D., Founder & Sr. VP Epiphany Health, President, Docs4PatientCare Foundation

Recently, Congress began working on a fix to the Direct Primary Care (DPC) HSA issue. This has created angst and division within the DPC community. To understand, first you must understand why there is an HSA issue at all.

In the Affordable Care Act, Section 1301(a)3 allowed DPC medical homes to be sold in combination with qualified health plans as long as the two together satisfied ACA plan standards. Following, Health and Human Services (HHS) issued federal rule CMS-9989-F declaring that “direct primary care medical homes are not insurance”.

How did DPC, then, come to be considered a health plan, despite HHS regulations clearly stating it isn’t? When employers wanted to integrate DPC with a high deductible health plan, IRS issued contradictory advice that DPC was a second health plan.

In 2014, IRS Commissioner John Koskinen issued a clarification letter that has served as IRS policy on DPC ever since. In it, he declared his opinion that DPC was a second health plan. This not only disqualified one from using HSA dollars from paying for DPC, mere membership in a DPC practice disqualified one from even contributing to their HSA.

Since that time, many have attempted to overturn this opinion through legislation or administrative action. The Primary Care Enhancement Act (PCEA) had been introduced in Congress on several occasions. The simple DPC HSA fix never saw a congressional hearing, despite growing bipartisan support.

In 2018, the PCEA was finally scheduled in the Ways and Means Committee. Just 48 hours before the hearing, the widely supported PCEA was replaced with a strike-all amendment and substituted for a completely new bill (HR6199), which had never been seen or vetted.

A quick analysis of this bill by DPC docs was startling. This “simple fix” was suddenly no longer simple, and it wasn’t really a fix at all.

Drafters attempted to narrowly define “primary care” to exclude specialists and concierge practices. Unfortunately, they tied it to the ACA’s definition of primary care, which was originally intended to define eligibility for bonus payments to PCPs, not as a comprehensive definition of primary care.  Most primary care practices today would fall outside that definition.

DPC agreements could only include services represented by codes for “evaluation and management” office visits (CPT 99211-5). That means that Pap tests, wellness exams, simple in-office testing, strep tests, urinalysis, EKGs or any office-based procedures would need to be excluded.

It is precisely the bundling of those value-added services that gives DPC the cost advantage that employers are looking to harness.

The bill fixes the wrong Internal Revenue Code (IRC). Instead of making DPC an eligible health care expense under IRC 213(d), it makes DPC an exempted health plan under IRC 223(d). That creates conflict in the 25 states that passed legislation declaring DPC is not a health plan.

It also gives insurance commissioners, in the states without DPC laws, opportunity to regulate DPC as health insurance.

The bill goes on to cap DPC charges at $150 per month. While that price point may be palatable for most, it establishes the first-ever legislated caps on physician fees. There is irony that the national leaders in price transparency are the first ones met with federal price caps.

HR6199 also precludes DPC practices from including prescription medications other than vaccines. Bill drafters were unclear if that means practices cannot dispense medications, cannot accept HSA dollars for them, or can’t include them in the contract.

There was success in removing the restrictive primary care definition and CPT coding requirements prior to House passage. HR6199 is now awaiting action in the Senate.  We are hopeful that it will move following mid-terms and we will continue to work with lawmakers to correct these flaws. We look forward to celebrating passage of a good HSA DPC bill.