July 10, 2018
Dear Chairman Brady, Ranking Member Neal, and Members of the House Committee on Ways and Means,
We are writing today concerning bills that will be marked up by the committee on July 11.
Overall, we are thankful for the committee’s dedication to expanding the flexibility of Health Savings Accounts (HSAs) for the benefit of American patients. As the Administration expands non-ACA insurance options, it is crucial that HSA flexibility also be extended to the greatest degree possible. “The fundamental purpose of HSAs is to reduce the price of health care …. HSAs successfully reduce prices – and that benefits everyone who uses medical care, including people without HSAs,” writes Scott Atlas, MD, of the Hoover Institution.
While we applaud the Committee’s goals to increase HSA options, we see a few problem areas in the bills under consideration:
1) The replacement language for H.R. 365, the Primary Care Enhancement Act, (now known as H.R. 6317) would improperly limit the design of Direct Primary Care (DPC) arrangements eligible for HSA use.
- As we read it, the new bill language requires that care included in eligible DPC arrangements be constrained to certain CPT codes. Physicians would apparently have to make sure they weren’t providing services under the agreement not included in the prescribed codes, or else patients would be precluded from using their HSA to pay for the arrangement, and further, would even be prohibited from making contributions to their HSA. We see this provision creating significant compliance burden for doctors and potential unanticipated tax liabilities for patients. It would also impede non-primary care specialties from adopting similar HSA-compatible models.
- Another provision in the bill would require that the monthly fee be the “sole compensation” for such primary care. This also appears to place improper federal constraints on the ability of physicians and patients to tailor DPC arrangements to optimally fit the needs of both parties. DPC design should not be micromanaged from DC.
- Certain ancillary services, like “laboratory services not typically administered in a primary care setting” would be allowed outside of the agreements, but would not be allowed in the agreements. And conversely laboratory services typically administered in an ambulatory primary care setting might be expected to be bundled in to the agreement, although contradictory language in the bill confuses this question. Who would determine which services are “typically administered” or not? According to the bill, the Secretary of the Treasury in consultation with the Secretary of HHS: “shall issue regulations or other guidance regarding the application of this clause.” Top down control of details of a DPC arrangement in this manner is not in the best interest of patients.
- The bill would cap DPC monthly agreements at $150 per person and $300 per family. While most DPC agreements are already well below this individual limit, Congress should not open the door to government control over prices for care paid from HSAs. HSAs already have a built-in incentive for patients to economize. It’s their money after all. So there isn’t a legitimate purpose for the cap, except perhaps as a gimmick for scoring the cost of the bill. HSA rules currently don’t discriminate between a $20,000 knee replacement or the $50,000 replacement; both would be HSA eligible. So why should Congress dictate prices for DPC and make a $151/month plan ineligible while a $150/month agreement remains eligible. HSAs encourage price shopping, so let the market do its job.
- The bill improperly defines DPC as a “Service Arrangement” rather than a qualified “Medical Expense.” See https://www.dpcfrontier.com/blog/2018/7/12/house-ways-means-committee-vote-update for a discussion of the consequences of this error.
In light of the above concerns, including contradictory language and drafting errors in the bill, we respectfully request that the committee approve H.R. 365 as written, instead of the flawed replacement language.
2) H.R. 6311 would remove age restrictions on the purchase of more affordable “Copper plans.” We support this, with one additional change. The bill as written exacerbates a flaw in ACA requirements for these plans. Copper plans currently provide no benefits until the enrollee’s annual out of pocket limit has been reached, except that the plan must cover “at least 3 primary care visits.” The required primary care benefit in these plans increase costs and impede patient choice of Direct Primary Care and other independent physicians. Moreover, the requirement is bad policy as it essentially forces primary care to be handled in-network — great for the insurance companies but not for patients’ ability to keep their doctors. This flaw could be easily remedied by striking 42 U.S.C. 18022(e)(1)(B)(ii) or exempting Copper plan enrollees who are contracted with a DPC physician or otherwise prefer to pay out of pocket for their primary care.
3) H.R. 6305 allows HSA-eligible plan design to include pre-deductible coverage for primary care at employer clinics or “retail clinics” defined as a healthcare facility located within a supermarket, pharmacy, or similar retail establishment.
AAPS objects to this provision as it improperly legislatively disincentivizes patients from seeking higher quality care at the facility of their choosing, for instance from their independent family doctor. HSAs are supposed to increase patient choice, not constrain it. Tax law should not be used to hand out advantages to special interests in this way. While increasing the flexibility of how HSAs harmonize with other health benefits is a laudable goal, it should not be done in a manner that pushes patients away from their preferred and trusted physicians.
To avoid placing independent physicians at a government-created competitive disadvantage to employer run or corporate “retail clinics,” (often staffed by non-physicians), H.R. 6305 could be modified to allow employers to fund care for “qualified items and services” from independent physicians, whether through a Direct Primary Care agreement or fee for service, without jeopardizing employees’ ability to make tax-advantaged HSA contributions. Arrangements that include dispensing of prescription drugs should also not be precluded from eligibility as a qualified item or service.
Thank you for this opportunity to offer suggestions for improving the bills under consideration. If we can be of further assistance, please do not hesitate to reach out at any time.
Jane M. Orient, MD
Association of American Physicians and Surgeons