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DPC Provisions and Health Savings Accounts (HSAs


To some in Congress, Health Savings Accounts (HSAs) are a four-letter word. While
some say HSAs encourage employees to be more cost-conscious healthcare
consumers, others argue that employees who control their own HSAs may be so cost-
conscious that they delay needed medical care, only to have the system incur greater
costs when conditions worsen.

Regardless of the merits, HSAs are an increasing fact of life for employees of all income
levels in today’s healthcare marketplace. As Health Affairs points out in an article in
October 2015, “Average annual out-of-pocket costs per worker rose almost 230 percent
between 2006 and 2015.” As employers cut back on health care spending, more of
them are offering HSAs paired with high deductible health plans (HDHPs). In 2015, fully
24 percent of all workers were enrolled in HDHPs with a tax-free spending account
(HSA) to pay medical bills that both employers and employees can contribute to. That
number could reach 50% in the near future.

Direct Primary Care Agreements can help mitigate some of the harm that may come
from HSA spending habits, which may lead to undesirable underutilization of primary
care. Unfortunately, under current interpretation of IRS rules, DPC is incompatible with
HSAs. As such, what we are asking for is simply to allow those people who have HSAs
to participate in a DPC arrangement. DPC offers a great primary care benefit to people
of all ages and incomes. Currently DPC is available in Medicaid Managed Care,
Medicare Advantage, and to individuals and employees who don't have HSAs. With
the current incorrect interpretation that IRS has for DPC as some a health plan, fully 1/4
of employees with employer-sponsored coverage are prohibited from augmenting their
coverage with a DPC arrangement regardless of whether the employer pays for it.

The changes we seek address serious issues patients are having as the HSA
prevalence expands. What we seek is a simple clarification to the tax code that DPC is
not a health plan. HHS has already weighed in on this in their rule making on the
Essential Health Benefits and Sec. 1301 (a) (3) of the ACA on DPC Medical Homes. In
the rule HHS recognizes that DPC is a Medical service, not health insurance. The
provisions in S.1989, the Primary Care Enhancement Act, simply harmonize the IRS
interpretation of DPC with that of the ACA to say that DPC is not a health plan. This
would allow people with HSAs to get their primary care from a DPC medical home and
allow HSA funds to be used to pay for primary care services in this innovative monthly
fee model. We think it’s unconscionable to deny this benefit to someone, simply
because their employer chose an HDHP for them.