H.R. 3708 The Primary Care Enhancement Act Advances to the House Floor
The Primary Care Enhancement Act, a bipartisan bill by Reps. Earl Blumenauer (D-OR), Devin Nunes (R-CA), Brad Schneider (D-IL), and Jason Smith (R-MO) passed the House Ways & Means committee unanimously by voice vote on Wednesday, October 23, 2019. This is a good step forward in passing the Primary Care Enhancement Act and we are excited about its momentum! We will keep you posted on developments, and we still anticipate our Senate champion Dr. Bill Cassidy (R-LA) will introduce the bill in the Senate shortly.
The House passed HR 6199 Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018, which included language from the Primary Care Enhancement Act sponsored by Rep. Eric Paulsen (R-MN) and Earl Blumenauer (D-OR), by a vote of 277-142. The language still contains a $150 per member per month ($300 for family plans) limitation to keep the pre-tax amount down. These changes were added to the bill to bring the revenue score down, and even with them the Joint Committee on Tax has scored the package at a cost of $1.8 billion over ten years. CPT codes,however, were eliminated from its passage. This clears the way for millions of Americans with HSAs to have great access to affordable primary care from a DPC doctor of their choice. While not perfect this will allow almost all DPC practices to see patients with HSAs and allow their fees to be paid from the HSA. We will continue to work on perfecting the language as the process moves forward in the Senate. Thanks to all who contributed to this important effort. It’s a great step forward for patients and America’s health care system.
The Primary Care Enhancement Act, a bipartisan bill by Rep. Eric Paulsen (R-MN) and Earl Blumenauer (D-OR), passed the House Ways & Means committee by a roll call vote of 26-12 on Wednesday, July 11, 2018. There were also 10 other pieces of tax/health legislation considered. The markup is the first step in passing the Primary Care Enhancement Act and as usual, there have been some compromises to the bill to keep the score down. The language has been reintroduced as H.R. 6317, and contains a $150 per member per month ($300 for family plans) limitation to keep the pre-tax amount down. While not perfect this will allow almost all DPC practices to see patients with HSAs and allow their fees to be paid from the HSA. These changes were added to the bill to bring the revenue score down, and even with them the Joint Committee on Tax has scored the package at a cost of $1.8 billion over ten years. We will continue to work on perfecting the language as the process moves forward but this is a huge first step and we are excited about its momentum!
JCT Description of H.R. 6317, “To amend the Internal Revenue Code of 1986 to provide that direct primary care service arrangements do not disqualify deductible health savings account contributions, and for other purposes"
Amendment in the Nature of a Substitute to H.R. 6317, “To amend the Internal Revenue Code of 1986 to provide that direct primary care service arrangements do not disqualify deductible health savings account contributions, and for other purposes”.
DPC Coalition Response the CMS
Center for Innovation Direct Contracting Models
H.R. 365 | S. 1358:
The Primary Care Enhancement Act
The Primary Care Enhancement Act (H.R. 365 and S. 1358 ) is a bipartisan bill which expands access to high-functioning primary care services for Americans of all income and age levels. The legislation clarifies to the tax code to remove a major federal regulatory barrier keeping patients, providers and employers who use Health Savings Accounts (HSAs) from using innovative Direct Primary Care (DPC) medical homes to improve health outcomes and reduce costs.
Today, IRS rules prohibit individuals with HSAs paired with high deductible health plans (HDHPs) from having an agreement with a DPC provider.
IRS incorrectly interprets DPC arrangements as health plans under Section 223(c) of the Internal Revenue Code; furthermore IRS says the law is unclear whether or not primary care services e are qualified health expenses under Section 213(d) of the code, if services are paid for with a capitated periodic fee rather than fee for service.
The Primary Care Enhancement Act clarifies the tax code, making it clear that patients with HSAs paired with HDHPs have access to great primary care with a DPC medical home.
Department of Health and Human Services (HHS) regulations already define DPC medical homes as primary care services – HHS rules note that they are an important delivery reform being defined in state laws.
Current IRS policy inappropriately interprets DPC arrangements as a form of health plan—despite other interpretations in state and federal law.
As long as IRS interprets DPC as a health plan, simply having an agreement with a DPC provider bars an individual from funding an HSA.
IRS rules also need to be clarified to allow fees for periodic fee-based DPC to be paid for using HSA funds.
IRS regulations are clear: HSAs must be paired with an HDHP, and the HSA holder may not have a second health plan.
Twenty-three states have passed defining DPC outside of state insurance regulation and many others offer guidance which concurs that DPC Medical Homes are medical services, not health plans.
DPC is currently offered in exchanges, with self-insured employers, unions, in Medicare Advantage and Medicaid MCOs.
Individuals with HSAs are the only people with health coverage who are barred by federal regulations from having a DPC provider.
Some in Congress support HSAs but some do not. Regardless of your opinion of HSAs, this change is a matter of fairness to the growing number of patients who already have HSAs, allowing them to access the same high functioning primary care arrangements that those without HSAs may have.
As of 2015 about 24% of all coverage includes an HSA paired with an HDHP. That number is rapidly growing as premium costs rise for employers and in exchanges. As DPC can remedy some of the concerns with HSAs by forcing behaviors that encourage regular primary care visits, better health outcomes and appropriate spending of HSA funds result.
If employers who have HSAs in their benefit mix can’t offer DPC to their employees, it will be difficult for practices to grow and offer enhanced primary care access to patients anywhere but in the individual market.
Representatives, please Co-Sponsor, H.R. 365, the Primary Care Enhancement Act introduced by Reps. Erik Paulsen (R-MN) and Earl Blumenauer (D-OR).
Senators, please Co-Sponsor the S. 1358, Primary Care Enhancement Act introduced by Senators Bill Cassidy, MD (R-LA) and Maria Cantwell (D-WA)
Affordable Care Act: Direct Primary Care Medical Homes
The Affordable Care Act (P.L 111-148) recognizes DPC as a delivery reform and allows DPC Medical Homes to offer coverage in health insurance exchanges in combination with a wraparound insurance policy provided by a qualified health plan (QHP). Working together, the two must satisfy all other essential health benefits requirements under H.R.3590. DPC practices provide all primary care in a monthly fee arrangement. The QHP is used for hospitalization, specialty care and other more costly services.
Federal Exchange Rules
HHS proposed rules on affordable health care exchanges on July 15, 2011, which clearly state that: “direct primary care medical homes are not insurance.” The exchange rules (CMS–9989–F) became final without modification on March 12, 2012. Section B, Part 156 (g) §156.245 on the treatment of direct primary care medical homes should clear the way for state insurance regulators to recognize DPC medical homes as a benefit that can be offered within the exchange but is not subject to risk or capitalization requirements of insurers or HMOs. This is an important distinction.
Tax Treatment of Direct Primary Care with Health Savings Accounts (HSAs)
There is currently a lack of clarity in the tax code about how Direct Primary Care (DPC) agreements should be treated vis-à-vis Health Savings Accounts (HSAs). The Internal Revenue Code (IRC) clearly states that HSAs must be paired with a high deductible health plan (HDHP). Section 223(c) of the IRC also prohibits individuals with HSAs from having a second health plan to cover services not covered by the HDHP. Current Treasury Department interpretation of the IRC treats DPC monthly fee arrangements like a second health plan, rather than a payment for a medical service. As such, under current policy, individuals with HSAs are effectively barred from having a relationship with a DPC provider, because the DPC agreement makes the individual ineligible to fund the HSA. However, 23 states have passed laws defining DPC as a medical service outside of health plan or insurance regulation. Regulations promulgated by HHS under the ACA, likewise define DPC correctly as a primary care service, not a health plan.
Furthermore, the code is unclear about whether monthly payments to physicians practicing under the DPC model are considered a “qualified medical expense.” As such, under Sec. 213(d) of the IRC, employees might not be able to use their HSA funds to pay physicians using the DPC model. The growing number of employers who offer their employees HDHPs paired with HSAs have had significant difficulty being able to offer DPC as a health benefit.
Clearly, when the regulations for HSAs were developed, DPC was not contemplated. IRS definitions should be updated so that the tax code is synchronized with other relevant state and federal laws.
Two parts of the Internal Revenue Code (IRC) need clarification to permit individuals who hold Health Savings Accounts (HSAs) to get high functioning Direct Primary Care:
DPC medical homes do not constitute a health plan under IRC Section 223(c), and;
Periodic payments to DPC practices for primary care services are to be treated as qualified medical expenses under Sec.213 (d).