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direct primary care

What is direct primary care?

healthinsurance.org health insurance glossary

Direct primary care (DPC) is a healthcare business model in which patients purchase a membership that allows them unlimited access to certain primary care services. The patient pays a monthly fee to the medical office, and can then access care as needed, without paying an additional fee at the time of service.

How does direct primary care work?

Direct primary care practices enroll patients in a membership program, and provide certain primary care services without the patient having to pay anything other than the monthly membership fee. Various additional services can be provided with a fee at the time of service (but often at wholesale pricing), including prescription drugs, imaging, and lab services. Direct primary care practices generally do not bill third-party payers (commercial health insurance, Medicaid, Medicare, etc.), which means that the patient is fully responsible for the cost of any care that isn’t included in the membership fee.

How common is direct primary care?

As of 2022, there are more than 1,700 direct primary care practices, operating in nearly every state in the U.S. On average, direct primary care practices have fewer than 600 patients. So the vast majority of Americans are not utilizing DPC memberships. But the number of direct primary care practices has been steadily growing, and the idea has become more popular with patients over the last decade.

How much does a direct primary care membership cost?

The fees for direct primary care will vary from one office to another. Pricing generally varies by age, with the lowest rates for children ($20 to $75 per month is common) and the highest rates for older adults, who will sometimes pay up to $150 per month for a direct primary care membership.

Discounted rates for couples or families are generally available, or for paying on a quarterly or annual basis instead of monthly. And the rate for children will often vary depending on whether an adult is also enrolling along with the child. A one-time enrollment fee is often charged in addition to the membership fee.

What services are covered with a direct primary care membership?

The specific services that you can receive via a direct primary care membership will depend on the direct primary care office you choose, and the scope of their practice. Many direct primary care memberships include in-person and virtual office visits (and sometimes home/mobile visits), text/phone consultations with the medical provider, wellness visits, nutritional/weight management counseling, sutures, biopsy/excisions, cryotherapy, chronic disease management, sports physicals, etc.

Some direct primary care practices have on-staff professionals who can provide services such as mental health care, acupuncture, chiropractic care, etc. And it’s common for direct primary care practices to offer some basic laboratory and immunization/pharmacy services, albeit with a cost that the patient has to pay in addition to their membership fee.

However, direct primary care practices generally do not offer a full suite of outpatient services, as their focus is on primary care. So things like colonoscopies, obstetrical care, outpatient surgery, vasectomies, imaging (MRI, CT, ultrasound, x-ray, etc.), and specialty medicine do not tend to be covered with a DPC membership. And DPC memberships will not give members access to care provided in other locations, such as the hospital, an outpatient surgery center, or an urgent care clinic.

Is a direct primary care membership a type of health insurance?

No. Direct primary care is not considered minimum essential coverage under the Affordable Care Act. And more than half the states have enacted laws that explicitly exempt DPC from state insurance laws and insurance commissioner oversight.

Do I still need health insurance if I have a direct primary care membership?

Yes. Relying on a DPC membership by itself is not recommended. Direct primary care memberships give patients access to a variety of primary care. But people still need real health insurance in case they end up needing medical care that goes beyond basic primary care.

Having a DPC membership might make you more comfortable with the idea of having a health plan with a higher deductible, or one that counts all services toward the deductible instead of covering things like office visits with a copay. That type of health insurance plan tends to be less expensive, but some people worry that they will avoid going to the doctor if office visits are subject to the deductible.

Combining a direct primary care plan with an ACA-compliant health plan (purchased on-exchange or off-exchange) can be a good way to put those worries to rest. The DPC membership will allow unlimited access to a primary care provider who can take care of the patient’s basic needs. And the health insurance plan will be there as a safety net in case more significant or specialty care is needed.

When you’re shopping for a DPC + health insurance combination, you’ll still want to keep in mind the regular tips on picking a health plan. But the DPC membership will give you a bit of extra leeway, as you won’t need to worry about using the health insurance plan for your routine primary care.

You’ll still want to make sure that the health plan has in-network specialists and hospitals that are conveniently located. And you can check with the DPC practice to see if there is a particular hospital/provider system that they recommend and use for referrals. If so, it may make life easier if you pick a health insurance plan that has that provider system in its network.

But keep in mind that the fees you spend on your DPC membership won’t count toward your health plan’s out-of-pocket costs. So meeting your deductible and out-of-pocket limit will only happen if and when you need care that’s outside the scope of the DPC practice.

It’s also important to note that while you may see recommendations to combine a DPC membership with a health care sharing ministry plan, you still won’t have any actual health insurance with that approach. Health care sharing ministry plans are not health insurance, are not subject to insurance laws and regulations, and do not guarantee coverage for serious health conditions. So if you’re considering a DPC membership, it’s still essential to have real health insurance as well.

What are the pros and cons of direct primary care?

The direct primary care model generally makes it easier for people to see their doctor and have longer one-on-one time with them during appointments. On average, DPC members can get an appointment within one day and visits with the medical provider last an average of 38 minutes. DPC members appreciate being able to receive primary care as needed without any additional costs, and being able to get more one-on-one attention from their medical provider. And providers who have adopted the DPC model report improved job satisfaction, better relationships with patients, and improved quality of the medical care they can provide.

But there are drawbacks to the DPC model. Direct primary care practices aren’t available in all areas, and tend to be clustered in higher-income areas, which exacerbates physician shortages and economic/racial disparities in health care access. DPC enrollees must carefully read the fine print, understand what is and isn’t included in their membership, and maintain health insurance coverage for other medical care they may end up needing. DPCs could also drive the trend toward less-robust employer-sponsored health coverage, with employers opting for higher deductible health plans combined with DPC memberships. And since DPCs are often exempt from insurance regulations and oversight, consumers generally cannot get help from the state department of insurance if they run into difficulties with their DPC membership.

How does a DPC membership affect an HSA?

If you have a DPC membership, you cannot contribute to a health savings account (HSA), even if you also have coverage under an HSA-qualified high-deductible health plan (HDHP). (The only exception would be a DPC membership that only provides preventive care, but that is not a common design for a DPC plan, and would generally not be useful, since non-grandfathered HDHPs already provide zero-cost preventive care.)

This is unfortunate, as DPCs are often marketed as a perfect complement to high-deductible health plans, since they give the person access to various primary care services without having out-of-pocket costs for each visit.

But the IRS does not allow a person with a DPC membership (in addition to an HDHP) to contribute to an HSA, and DPC membership fees cannot be paid with HSA funds. This is because the IRS considers a DPC to be a “health plan” so having one runs counter to the rules that only allow HSA contributions if the person’s only coverage is an HDHP. And the only health plan fees/membership costs that can be paid with HSA funds are Medicare premiums, COBRA premiums, and premiums paid while a person is receiving unemployment benefits (see Publication 969 for details).

In 2020, the IRS proposed regulatory changes that would have allowed DPC membership fees to be classified as tax-deductible medical expenses under Section 213 and allowed employers to reimburse DPC fees under a health reimbursement arrangement (HRA), but the rules were never finalized (note that this proposed rule would not have changed the fact that a person with DPC coverage cannot contribute to an HSA or use HSA funds to pay the DPC membership fees). And in 2021, bipartisan legislation was introduced that would have explicitly allowed DPC memberships to be paid with HSA funds, and allowed a person with a DPC membership (in addition to an HDHP) to make contributions to an HSA. But that legislation has not advanced.

Can employers offer direct primary care memberships to their employees?

Yes. Employers can purchase direct primary care memberships for their employees, and this concept is growing in popularity. The employer can simultaneously switch to a health plan with a higher deductible and fewer services that are covered pre-deductible. The general idea is that the employer’s total costs (for the health plan premium and DPC memberships) will decline, while employees will be more satisfied with their overall benefits package, thanks to the convenience that the DPC membership offers.

But the impact of a DPC membership on HSA eligibility needs to be kept in mind. If the health plan the employer is offering is not HSA-qualified (ie, it’s a regular plan with a high deductible but it doesn’t meet the IRS definition of an HDHP), this wouldn’t be an issue. But if the employer is offering an HDHP and also purchasing DPC memberships for employees, the employees will not be eligible to contribute to HSAs.

Is direct primary care the same thing as concierge medicine?

No. Direct primary care practices generally do not bill health insurance or other third-party payers, and instead rely on members’ fees for their revenue. Concierge medical practices collect monthly fees from their members but also bill the members’ health plans or collect additional fees at the time of service. And the monthly or annual fees to be part of a concierge medical practice tend to be much higher than direct primary care fees.

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