AAPS Comment to IRS on DPC and HSAs


August 9, 2020

Dear Commissioner Rettig and Deputy Commissioner Lough,

Thank you for this opportunity to comment on the proposed IRS rules titled “Certain Medical Care Arrangements,” REG-109755-19.

AAPS is a membership organization of physicians and surgeons who are mostly in small, independent practices.  Founded in 1943 (and celebrating our 77th year), AAPS defends and promotes the practice of private, ethical medicine.  AAPS has members in virtually every specialty and State.

We would like to state our full support for the detailed comments about the rules submitted by the Docs 4 Patient Care Foundation.

In addition AAPS submits the below comments for consideration:

The proposal includes a number of changes that benefit American patients, including increased flexibility for the use of Health Reimbursement Arrangements (HRAs), Direct Primary Care (DPC), and Health Sharing Plans.

However there is a significant flaw we ask the agency to address before issuing a final rule. It would be a major mistake for the IRS to deem DPC to “constitute a health plan or insurance” as currently proposed by the rule.

DPC is an innovation that is intuitively a perfect fit with Health Saving Accounts (HSAs). Together they help patients maximize control of their care and get the most value for their hard earned dollar.  Instead of aligning these two patient-empowering tools — DPC and HSAs — the IRS proposal to equate most DPC arrangements as insurance drives them further out of reach of Americans who are seeking refuge from the ever increasing cost of medical care in the system dominated by entities looking out for their interests instead of the patients’ interests.

DPC is not insurance. Payments patients make directly to their Direct Primary Care physicians are not made to cover the risk of losses, but are for ongoing care. DPC is not a health plan. There is no middleman and no management of care by bureaucrats.

The IRS should not make the all too common error of conflating coverage with care. Doing so in this instance will continue to perpetuate an illogical, policy driven incompatibility between DPC and HSAs. 

Please urgently consider reversing this problematic aspect of an otherwise beneficial proposal. Giving patients as much flexibility in arranging the care that is best for them and their families is now more than ever of critical importance.

One way this could be done is by deeming that DPC is by definition preventative care and thus compatible with HSA-eligible plans. Making this change is well within the existing authority of the IRS.

We also ask that the definition proposed in § 1.213–1(e) (1)(v)(A), that would limit arrangements to physicians with a specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine be removed. Primary and other regular ongoing care can and is delivered by physicians of many other specialties, for instance endocrinologists who deliver continuing care for patients with diabetes.

This discussion brings to mind a question related to this proposed rule: are Members of Congress who pay an annual fee to receive care from the Office of the Attending Physician considered ineligible to contribute to an HSA? May Members of Congress use funds from an HSA to pay this annual fee? We hope the IRS will illuminate this matter or share any related past guidance the agency has provided to Congressmembers who have asked.

Finally, we would also like to comment on this statement contained in the rule’s preamble: “If the direct primary care arrangement fee is paid by an employer, that payment arrangement would be a group health plan and it (rather than the direct primary care arrangement), would disqualify the individual from contributing to a HSA.”

To our reading, the foregoing sentence appears to add potential for confusion if read literally as written. It appears to incorrectly suggest that any group health plan, including any group health plan that includes a DPC option, would disqualify an individual from contributing to an HSA. The meaning of this statement should be clarified. 

A group health plan does not by itself disqualify an individual from contributing to an HSA and it would be in the best interest of employees if DPC coupled with a group health plan is not deemed disqualifying.

Thank you for your consideration of the foregoing comments.


Jane M. Orient, M.D., Executive Director, AAPS