As discussed in a recent Wall Street Journal opinion piece from Bobby Jindal and Charlie Katebi, the recently enacted GOP tax and spending law improved the legal standing of direct primary care (DPC) practices, which should further boost the appeal of the model with employers and consumers. The Trump administration can build on this momentum by introducing DPC into public insurance programs and incentivizing it to lower costs beyond primary care.
Even before the new law was approved, DPC was growing. Instead of paying for basic health care with stacks of small-dollar claims, DPC runs on a monthly fee basis. Consumers pay DPC practices directly and in return get a specified level of access to common but important medical services. For instance, a typical DPC practice might charge $125 per month and then provide subscribers with a guaranteed number of ready in-person and telehealth contacts with clinicians, unlimited text communications, preventative screenings and services (including vaccinations), routine diagnostic services, and coordination with specialist practices. The monthly fee displaces the fee-for-service claims for these services, which can often add up to hundreds of dollars for a single office visit.
The appeal of the model is easy to grasp. It has never made sense to pay for routine care on a piecemeal basis (as that incentivizes volume and short consultations). With DPC, the emphasis is on high use of low-cost preventative care which can permanently forestall the need for more costly interventions later. DPC patients have no financial incentive to avoid seeing their doctors, and the doctors can organize their schedules to prioritize time with patients. DPC practices that accept too many subscriptions risk alienating some customers over time.
The GOP tax law gave DPC a boost by putting into federal law what was already obvious, which is that these practices are not insurance plans requiring intensive state regulation. Rather, they are convenient access points for medical services that are relatively low-cost and yet also crucial to maintaining good health. The new law also authorized tax-favored disbursements from Health Savings Accounts (HSAs) for DPC subscriptions, which will make the model even more attractive to many consumers.
Hint Health, a leading private sector DPC facilitator, has been tracking DPC take-up for several years. As of 2021, there were over 0.5 million people enrolled in DPC at approximately 2,100 practices. Employers have been gravitating to the model too, with DPC practices reporting working relationships with over 6,000 sponsoring firms. The average employer working with DPC pays $158 per month for a four-person family subscription.
The new law will further simplify employer DPC enrollment by making it straightforward to pair DPC with high-deductible insurance. Firms can make contributions to HSAs for their workers, which can then be used by the workers to pay for DPC monthly fees. Sponsoring firms can also work with multiple DPC practices to offer their workers an array of primary care options. Workers could then pick the DPC plans they find most attractive based on a combination of their monthly fees and service levels. Competition will push the DPC practices to become even more attractive to their potential customers by holding down their costs and improving the attentiveness and quality of the care they provide.
With DPC now cemented in federal law as a permanent option in the private sector, it is time for the Centers for Medicare and Medicaid Services (CMS) to make it available to public insurance enrollees too.
CMS’s Center for Medicare and Medicaid Innovation (CMMI) has broad authority to test new models of providing care and has initiated a series of experiments examining various ways of improving the way the government pays for primary care. However, it has never initiated a straightforward monthly subscription model covering the entirety of primary care services, or put Medicare and Medicaid beneficiaries in the position of driving the model by offering them multiple DPC enrollment options. That could change if CMS were willing to introduce a test of DPC with the beneficiaries in the driver’s seat. Savings from low-cost and high-value DPC offerings should be shared with the beneficiaries to ensure strong price competition.
A DPC test could be combined with an incentive to avoid the costs of preventable conditions that Medicare and Medicaid would have to pay for beyond DPC fees. DPC practices that keep their enrollees healthy should be rewarded with bonus payments financed from their less successful competitors. The required risk adjustments for fair comparisons should be administered by CMS, not the DPC practices.
Policymakers have been searching for a successful model that can break free from fee-for-service while putting providers in charge of care delivery, not insurance plans. As usual, the private sector has come up with a solution that is market-tested and growing in popularity. The government should take note.