Direct primary care ‘at an inflection point’ as doctors, patients, employers catch on

Direct primary care (DPC) is nearing an inflection point, driven by new tax incentives, employer demand and a wave of state laws, said the head of a national coalition representing direct primary care physicians.

Part of that momentum traces back to a change in federal tax policy, though more political action is needed to ensure patients have direct primary care among their options for health care, said another health policy analyst.

Jay Keese, executive director of the DPC Coalition, and Heather E. Meade, principal at Washington Council Ernst & Young, spoke during a conversation moderated by Stephanie Quinn, senior vice president of external affairs and practice experience at the American Academy of Family Physicians (AAFP), during the Primary Care for America event earlier this month.

They focused on the policy side of medicine with some recent history about direct primary care, along with current findings and future developments that bode well for DPC as a practice model.

"I really do believe we are at an inflection point," Keese said.

Getting involved in DPC

Keese described direct primary care as a contractual relationship between a physician and a patient. The patient pays a flat monthly fee directly to the doctor, outside of insurance billing, in exchange for ongoing access to primary care.

Keese recalled encountering the model in 2009, as the Affordable Care Act was nearing passage, when a Seattle physician running a direct primary care clinic described how it worked. That conversation eventually led to a provision in the Affordable Care Act recognizing direct primary care as distinct from insurance, Keese said, and the years since have been spent passing state laws that harmonize with it.

AAFP became an early partner, Keese said, viewing direct primary care as one of the models most likely to help small, independent practices survive alongside larger networks. Because payment flows directly between doctor and patient, Keese described direct primary care as the most risk-based form of primary care in the country, with the physician carrying full performance risk for the relationship.

A bipartisan idea facing a partisan label

Keese and Meade said they approach the issue from opposite sides of the political aisle but share a common frustration: that direct primary care has increasingly come to be seen as a partisan cause. Meade said the barriers facing DPC's expansion have made its growth politically coded in a way she doesn't think it deserves, with many Democrats associating the model with health savings accounts, a Republican-aligned policy tool, rather than viewing it as a more neutral question of access to care.

“I think that's a real misnomer, and I think something that Jay and I will be continuing to have those conversations on the Hill,” Meade said.

Keese said that association is relatively new. His organization spent roughly a decade telling Democratic lawmakers that health savings accounts and direct primary care weren't necessarily linked, he said. That connection only became legally accurate this year, after the Internal Revenue Service finalized regulations in January implementing the Health Savings Account provision in the budget bill known as HR 1. That provision in HR 1 allowed patients to use health savings account dollars to pay for direct primary care, Meade said.

Confused with concierge medicine

A more persistent misconception, shared across party lines, is that policymakers confuse direct primary care with concierge medicine, Keese said.

Both direct primary care and concierge medicine offer patients a personal relationship with a doctor paid for outside fee-for-service billing, Keese said, but the two are fundamentally different. Direct primary care covers a service the Affordable Care Act and Medicare both require insurers to treat as covered care, while concierge medicine typically charges for something insurance doesn't cover, such as an executive physical. HR 1 helped draw that line more clearly, Keese said, in part by capping the cost of a direct primary care agreement at $150 a month, a limit meant to keep the arrangement distinct from concierge-style pricing.

Tax code and access

Whether the tax code changes amount to a fairness issue or an access issue, both goals point in the same direction, Meade said. Most Americans get coverage through employer-sponsored plans, shaped heavily by federal tax rules, so expanding access to direct primary care requires adjusting those rules, she said. Employers are increasingly finding the highest-value care in direct primary care arrangements, Meade said.

Keese pointed to the Primary Care Enhancement Act, the provision behind the recent tax code change, as an example of how slowly that process can move: it took more than a decade to pass, he said. He suggested Medicare and Medicaid could be the next targets for similar changes, pointing to employers who have already adopted direct primary care as a model for what those programs might learn.

Employer savings

Large employers that have built direct primary care or similar direct-contracting relationships into their benefits are reporting significant savings, Meade said. Premiums for large employers are rising well beyond a 7% figure cited earlier in the day by federal officials, in some cases by as much as 20%, she said, while employers with direct primary care or direct-contracting arrangements in place are seeing double-digit savings in those populations.

The Purchasers Business Group on Health, which represents 40 of the country's largest employers, recently compared cost and quality data across five large member companies and found that direct-contracting arrangements, including direct primary care, won on both measures every time, Meade said. Much of that momentum is coming from employers rather than insurers, she said. Large companies are increasingly approaching physicians directly, in some cases extending direct contracting beyond primary care into specialty practices and hospitals, because insurers haven't built similar arrangements at scale.

Growing the primary care workforce

Direct primary care is also drawing new entrants into the field, Keese said, citing physicians fresh out of medical school as well as doctors nearing the end of fee-for-service careers who see the model as a reason to keep practicing. Keese also argued that primary care is generally over-measured relative to what it can report on, and said the movement favors tracking downstream cost and quality data rather than adding upfront reporting requirements. Conversations with the Centers for Medicare & Medicaid Services on that approach have been productive, he said.

Progress in the states

State legislatures have moved faster than Congress on direct primary care, Keese said. He described a personal experience in which an insurer denied a cardiology referral from his direct primary care physician because that doctor wasn't in the insurer's network. Iowa passed a law this year allowing any primary care provider to make a referral regardless of network status, Keese said, and similar bills are advancing elsewhere. More than 35 states now have laws clarifying that direct primary care agreements aren't insurance, placing them under medical board oversight rather than state insurance regulation. Keese's group is now pushing states to lift restrictions, such as those in Texas and Massachusetts, that prevent direct primary care physicians from dispensing medications directly to patients, which he said improves adherence.

What's next

Asked what they're watching over the next year, Meade pointed to a broader, bipartisan conversation in Congress about health care affordability, plus a narrow bill in California that would allow a demonstration project for direct contracting with a large employer group. Keese pointed to ongoing conversations with the Centers for Medicare & Medicaid Services about incorporating direct primary care into Medicare and Medicaid.

Keese questioned what patients are really getting for a $27,000 insurance product that doesn't guarantee access to a preferred primary care provider.

“I think if you ask the question, would you rather have health insurance or would you rather have a primary care relationship with a primary care doctor that knows you and knows your family? Which of those things brings you more value?” he said. “I think there's very little question that while you need both, the thing that brings you the value, again, is having that entry point into the system be with a primary care doctor that you've chosen that knows your family, that knows you, that knows your history.”