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Fitting direct primary care into ACA

Direct primary care is an old idea that is becoming a new industry.

Helped by a clause (Sec. 1301 (a)) in the Patient Protection and Affordable Care Act which requires that direct primary care (DPC) be included in the reformatted insurance exchanges — the only noninsurance offering to be authorized in the insurance exchanges — the industry has a bright future.

To clear up any confusion over individuals with HSAs (Health Savings Accounts) using direct primary care, Sen. Bill Cassidy, R-La., a physician, introduced bipartisan Senate Bill 1989 on Aug. 5, according to the Direct Primary Care professional organization’s website, dpcare.org.

The proposed federal legislation allows individuals with HSAs paired with high-deductible heath plans to pay for DPC services with their HSAs. It clarifies that DPC is a medical service and not a health plan under Section 223 (c) of the Internal Revenue Code relating to Health Savings Accounts. The legislation defines DPC services as qualified health expenses under Section 213 (d) of the tax code. The bill remedies any real or perceived prohibition on individuals with HSAs using DPC, and allows individuals with HSAs paired with high-deductible heath plans to pay for DPC services with their HSAs. The bill also creates a new payment pathway for DPC as an alternate payment model in Medicare and Medicare Advantage plans.

In Nevada, State Sen. Patricia Farley, R-Las Vegas, has proposed legislation to further clarify the federal law.

“We believe that when physicians realize that this is a very safe (regulatory) environment to practice in that same manner (DPC) — we’ll get more primary care doctors here,” said Farley.

Finding the “appropriate” accompanying insurance is an important part of satisfying the requirements of the ACA.

“Penalty A is imposed if you don’t have minimum essential coverage and Penalty B if the employer doesn’t have an insurance plan that covers the MVP (minimum value plan) requirements of affordability,” said Dr. Samir Qamar, CEO and founder of MedLion.

MedLion works with local and national insurance brokers to find those policies.

The following from a MedLion blog summarizes four insurance strategies that employers and insurance brokers/advisers can use to lower health care costs when making DPC a part of the benefits package:

1) DPC + HDHP

Perhaps the most common strategy among solo and regional DPC providers, DPC is paired with High Deductible Health Plans (HDHP). Doing so not only provides employees first-dollar coverage, but also reduces out-of-pocket costs. Without access to covered medical care below the deductible, employees avoid health care due to cost. DPC provides a solution.

2) DPC + MVP

A requirement of the Employer Mandate is to provide employees with a plan that meets “minimum value,’ covering the employer against the dreaded Penalty B. Such plans can also be HDHP plans, and typically have higher deductibles and/or premiums if employee participation doesn’t meet minimum requirements of the insurance carrier. Adding a DPC plan to an MVP plan keeps the employer in compliance with Penalty B, yet adds additional first-dollar coverage that can be used for actual care.

3) DPC + Self Insured Plans

Larger companies with bigger budgets can afford to “self-insure,” although smaller companies are also beginning to join the ranks with robust protective reinsurance added to the plan. In essence, the company assumes and manages the insurance risk, which in turn necessitates effective risk management. DPC is an excellent tool in this case. By providing better access, telemedicine, and more intense primary care, frequency of costly downstream claims, unnecessary specialist referrals and unneeded tests are lowered.

4) DPC + Limited Medical Plans

Limited Medical Plans and Indemnity Plans provide much less coverage than traditional insurance plans, but can be effective when augmented with various kinds of benefits. In this case, DPC is an excellent addition due to no co-pays, unlimited (or higher-limit) primary care visits and high-quality care. Limited Medical Plans on their own typically only partially cover a limited number of doctor visits.

The aforementioned examples of DPC-insurance pairing are merely summaries to spark the innovative employer’s mind and help brokers/advisers realize there are new, cost-effective solutions in existence. The strategies all require a thorough knowledge of employer benefits, the ACA requirements, employer objectives and, most of all, expertise in direct primary care.

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