Too Many Rules Block DPC – New Report

Federal and state regulations block consumers from participating in direct primary care (DPC) and may explain why so few primary care physicians have a DPC practice, a new report states.

Doctors are missing an opportunity to save money and improve care, write the authors of the June 28 Heritage Foundation report: Chad D. Savage, M.D., a policy advisor to The Heartland Institute, which co-publishes Health Care News, and Lee S. Gross, M.D. Both the authors are owners of DPC practices.

DPC practices can charge consumers as little as $40 a month because they eliminate the middleman of health insurance and providers are not pressured to increase patient volume to stay profitable. These qualities allow them to spend more time with patients and reduce repeated visits.

“Most DPC practices have fewer than 1,000 patients compared to conventional practices, which can have several thousand patients per physician,” the authors write. “By having a more manageable number of patients and by eliminating the administrative burden of interacting with an insurance company for every aspect of routine care, DPCs are able to offer same-day accessibility and extended office visits.”

Cuts Costs

Although DPCs may adjust member fees based on age, the practices do not exclude patients with chronic conditions. DPC also provides imaging, lab services, and medication at cost, which can make needed care more affordable. The authors state actuary studies have found DPC reduces emergency room visits.

In the case of one employer, DeSoto Memorial Hospital, DPC cut health care expenses by $1.2 million, a 54 percent reduction of overall costs.

Federal Government Barriers

One of the biggest obstacles facing DPC is how states and the federal government classify it. Though DPC is a membership-based service, much like belonging to a gym, many state governments and the federal government define or treat it as an insurance plan, which restricts the market for DPC.

Current federal rules prohibit owners of tax-advantaged health savings accounts (HSA) from having more than one insurance plan, thus preventing employees from using their HSAs to pay for DPC. In addition, DPC membership fees are considered “premiums,” which don’t qualify as an HSA expense.

Employees can pay for DPC out of their own pockets, but it’s something they are unlikely to do if the fees cannot count towards a deductible. Additionally, one’s insurance company might not accept referrals from a “non-network” DPC, which could further add to an employee’s time and expense.

The authors point out the Trump administration took steps to clarify the definition of DPC in late 2020 but the rule has yet to be finalized.

State Obstacles, Restrictions

DPC provides only primary care, so members need affordable options to pay for specialists and hospitalization.

Eleven states restrict access to short-term limited duration plans, health insurance designed for healthy individuals.

“Some argue these short-term plans should be banned, as they offer insufficient coverage for those with preexisting conditions,” the authors write. “However, this is irrelevant for patients who use DPC because any chronic ‘pre-existing condition’ is treated and managed by DPC instead of through the plan.”

States may also restrict a physician’s ability to dispense prescription drugs or disallow DPC to be compatible with an Obamacare-compliant plan.

“By taking advantage of Section 1301 (a) 3 of the Affordable Care Act, states can allow insurers to sell QHP (Qualified Health Plans) that ‘wrap-around’ coverage to individuals who obtain their primary care through a DPC arrangement—in the same way that insurers sell high-deductible plans that qualify as ‘wrap-around’ coverage for an individual with an HSA,” the authors write.

Scalability Question

A question remains as to whether DPC is “scalable” in a market serving millions of Americans with complex needs.

“It’s hard to market a monthly fee when healthcare consumers can pop in and out of a telemedicine encounter to get their problems solved,” writes Darcy Nicol Bryan, M.D., a senior affiliated scholar with the Mercatus Center at George Mason University, in an article in Discourse.

Bryan says she does not believe DPC can be sustainable on “a broad national scale.”

“Only the most straightforward and least costly medical problems are sustainable with the DPC model; more complex treatments are far too expensive for most patients to bear the cost,” Bryan writes.

“DPC has grown from several dozen practices to several thousand nationwide,” Savage told Health Care News. “That seems scalable to me.”

Peaceful Coexistence?

Savage says it is unlikely patients would prefer telemedicine to the personal care they can get with a trusted physician under a DPC.

“This doesn’t mean these two practice models could not simultaneously exist,” Savage said. “In a truly free market, patients can choose which way they personally prefer and best suits their own needs.”

Bryan says technology coupled with wearable screening devices could streamline health care.

“Automating the repetitive tasks in healthcare amenable to protocols and algorithms holds promise, freeing providers to focus on the complex and unique needs of their individual patients,” Bryan writes.

“[This] fails to note most of these repetitive tasks are created by the third-party payer system itself,” Savage said. “Thus, DPC has not automated these worthless processes, but eliminated them.”

Savage says it is important to note many physicians left medicine because of the third-party payer system.

“DPC is a much more enjoyable way of practicing medicine,” Savage said. “Wide implementation would reduce early retirement due to burnout.”