Direct Primary Care and health savings accounts

The direct primary care (DPC) model has benefits for both independent physicians and their patients. DPC practices are run on membership fees, so there is less administrative work for the provider and fewer out-of-pocket costs for patients.

Some DPCs do accept insurance, primarily as a convenience for their patients and to cover procedures or hospitalizations that are not included in the membership fees. In the eyes of the Internal Revenue Service (IRS), however, the membership fees are themselves are not a form of insurance and so patients are not allowed to use Health Savings Accounts (HSAs) to pay those fees.

A bill has been introduced that would revise the IRS ruling. H.R.365 – Primary Care Enhancement Act of 2017 was introduced into the House in January 2017. The bill would amend the IRS code to “permit an individual to pay primary care service arrangement costs from a health savings account.”

In addition, H.R. 365 would “allow an eligible taxpayer enrolled in a high-deductible health plan to take a tax deduction for cash paid into a health savings account, even if the taxpayer is simultaneously enrolled in a primary care service arrangement.” The bill expands the definition of “medical care” to “include periodic provider fees paid to a primary care physician for a defined set of medical services provided on an as-needed basis.”

The bill was referred to the House Committee on Ways and Means on January 6, 2017, but no further action has been taken since.

DPCs enable independent physicians to more actively engage with their patients, as they generally see fewer patients and are less concerned with the paperwork involved in dealing with insurance companies. The independent physician in a DPC practice must balance the financial structure with the benefits involved for both provider and patients.

Elation Health is dedicated to helping DPC physicians succeed. We offer an electronic health record (EHR) system that aligns with the unique goals of a DPC practice. We have also just released our Direct Care Playbook, written specifically to help independent physicians in a DPC launch and sustain a successful practice.