10/23 Update: The House Ways and Means Committee voted to approve HR 3708 and sent it to the full House for consideration. PLEASE CALL your House Member and ask him or her to VOTE NO on HR 3708 and to support a reintroduction of the original Primary Care Enhancement Act of 2017 (then known as HR 365). For alert with template letter/talking points and instructions for taking action click here.
October 22, 2019
Dear Chairman Neal, Ranking Member Brady, and Members of the House Committee on Ways and Means:
Thank you for the hard work the committee is undertaking to seek solutions for American patients and those who care for them.
We are writing today to share our concerns about HR 3708 which will be marked up on October 23.
Legislation allowing patients the flexibility to use their Health Savings Accounts (HSAs) for Direct Primary Care DPC is needed. However, there are a number of concerning areas of this bill that we believe improperly limit the design of DPC arrangements eligible for HSA use:
1. HR 3708 defines DPC as a “excepted coverage” instead of expressly as medical care. This risks undermining state laws that protect DPC arrangements from overregulation. Although the language does state that DPC agreements must be for qualified medical expenses, the legislation fails to expressly define DPC arrangements as a qualified medical expense under IRC 213(d). Instead the bill designates DPC as “excepted coverage” under the provisions in IRC 223(d)(2)(C) that permit HSA payment for certain types of insurance. These may seem trivial distinctions, but they carry potentially significant policy consequences. Correctly identifying DPC arrangements as medical care under IRC 213(d), and not as disregarded insurance under IRC 223(d), will avoid unnecessary conflicts with state laws exempting DPC from regulation as an insurance product, as well as curbing the potential application of any relevant federal insurance regulation to DPC. To date, 27 states have passed legislation defining Direct Primary Care and removing it from any insurance regulation. Five states have legislative efforts currently under-way.
2. Unclear language may impede patient access to prescription drugs at near-wholesale pricing. While it appears that the language in the bill as written might preserve the ability of patients to obtain their prescriptions from their DPC physician, the wording is not sufficiently clear. Striking the “services specifically excluded” provisions, or at least item (II), prescription drugs, would better serve patients. A 2018 Yale study by Liu et al in the Annals of Internal Medicine reports a finding that DPC patients already know: bypassing insurance often results in lower drug costs. It is imperative to ensure that the bill language does indeed preserve this practice. In addition, allowing some medications to be included in DPC agreements would be welcome flexibility.
3. Another provision impeding the goal of increasing patient options is the $150 aggregate cap on individuals’ use of Direct Primary Care agreements that preserve HSA-eligibility. This aggregate cap constrains any flexibility the bill might have for allowing agreements with non-primary care specialties, i.e. patients who enter into agreement with one DPC practice could enter into an agreement with a second or third physician only to the extent allowed by the amount remaining under the cap. Related provisions in the bill that require separate reporting of DPC fees to the IRS on employees’ W2 forms will increase employer compliance expense and unnecessarily intrude into employee decisions about their benefits. Ideally the cap should be lifted and the W2 provisions removed. Alternately the bill could be changed to allow the use of after-tax dollars for the amount in excess of the cap. If a cap remains in the bill, at the very least, individuals exceeding the cap should not become disqualified from contributing to their HSA. This change could be facilitated by moving the cap out of the bill’s definition of eligible DPC agreements.
4. The provision of the bill limiting the types of specialties allowed to enter into an HSA-eligible direct care agreement harms patient options and restrains competition. For instance, a patient might wish to enter an agreement with his or her endocrinologist for diabetes management care, which would likely be prohibited under the bill as presently written. The provision also potentially increases the regulatory role of HHS since the definition of eligible specialty is tied to Medicare’s definition in Section 1833(x)(2)(A) of the Social Security Act. A solution would require modifying or striking the citation to “1833(x)(2)(A)” and related accompanying language. An alternative, that would have minimal impact to the cost estimate, would be lifting the specialty restrictions for HSA-eligible agreements funded solely from an individual’s HSA account or after tax dollars, not from other tax-advantaged sources like an employer or plan. HSA dollars are supposed to increase patient choice, not limit them.
5. Another needed clarification relates to how physicians opted out of Medicare (as many DPC physicians are) or not otherwise enrolled will designate their specialty, since the specialty designation mentioned in 1833(x)(2)(A) appears tied to Medicare enrollment. This bill should not require enrollment in any federal program.
Thank you for considering the above concerns. In our view, the best solution is to start over with the original language of the Primary Care Enhancement Act of 2017 (then known as H.R. 365). But if the House moves forward with H.R. 3708, the changes outlined above must be addressed, or the bill risks doing more harm than good to patients, your constituents, and to Direct Primary Care practices across the nation. Private, independent DPC offices must remain available to provide affordable high-level primary care to patients and the public.
Director of Regulatory Affairs