One of the nation’s biggest proponents of the “direct care movement” in the United States stopped by ‘The Sean Hannity Show’ this week, warning those who support co-operative healthcare that a new Senate bill poses a major risk to the low-cost plans.
Dr. Josh Umbehr has spent over a decade launching hundreds of “concierge service” healthcare programs across the country, but new legislation passed days ago creates a threat towards the alternative options.
“There’re now hundreds of these co-ops that he’s developed around the country. Now they’re at risk because of a bill that passed in the Senate,” said Hannity.
“There was a bill that came out of the Ways and Means committee that isn’t great for supporting the direct care movement and patients overall […] We’re hoping to fix it in the Senate, and I think there was a bit of lobbying in the background by more corporate groups,” said Dr. Umbehr.
Listen to Dr. Umbehr below:
Call Congress and let your voice be heard at 202-224-3121.
Response to OMB Inquiry on Alignment with Administration Objectives and Impact on HHS Policy and Operation of:
H.R. 6199 Section 3, “Treatment of Direct Primary Care Service Arrangements”
Provisions formerly known as the Primary Care Enhancement Act (PCEA) are now Section 3 of H.R. 6199, the Restoring Access to Medication and Modernizing Health Savings Accounts Act of 2018. The legislation is expected to move on to the Senate after passing the House this week and is intended to make innovative Direct Primary Care (DPC) arrangements HSA eligible.
Generally, the PCEA aligns with stated goals of HHS and the Trump Administration of promoting healthcare choice and competition, increasing price transparency, and lowering premiums, medical, and drug costs. DPC arrangements, especially those offered by independent physicians, are proven to increase access to low-cost, high-quality care and drive down spending system-wide.
The legislation is however not perfect as elements conflict with department and administration policies and potentially add to HHS regulatory responsibilities. Here are eight areas of concern:
- As written, the bill perpetuates current obstacles consumers face using their HRA or FSA for a DPC arrangement, which is contrary to HHS and administration goals of increasing patient choice. Granting maximal compatibility between DPC and all consumer directed tool like HSAs, HRAs, and FSAs is especially crucial for ensuring a successful launch of expanded Association Health Plans and Short Term Limited Duration options.
Specifically, 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 it 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.
To correct this, “223(d)(2)(C)” on Page 6, line 3 of the Rules Committee Print 115-82 could be changed to “213(d)(1).” And “(v) any direct primary care service arrangement” on lines 7 and 8 could be changed to “(E) any direct primary care service arrangement.” Alternately, similar language in the original PCEA, H.R. 365, creating IRC 213(d)(12), could be used.
In addition, 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. Making this change will better serve the Administration’s goal of reducing regulatory burden, especially for the DPC practices operating as small businesses.
- Also contrary to the Administration’s directive to reduce regulatory burden is the section of the bill directing Treasury, in consultation with HHS, to issue regulations or other guidance regarding “services specifically excluded as primary care.” This section of the legislation prohibits certain procedures and diagnostics, and all prescriptions (except vaccines), from inclusion in DPC arrangements and delegates some authority to Executive Branch agencies to regulate the scope of the limitations. Such authority would create an unknown amount of additional burden on HHS resources as well as improperly limit the flexibility of physicians and patients to include services that are otherwise qualified medical care under 213(d). A solution would be to strike the entire “services specifically excluded” section. It is unneeded in light of other provisions in the bill and the self-regulation inherent to patients spending their own funds from an HSA.
- Independent DPC physicians often offer patients access to prescription drugs at wholesale cost resulting in substantial savings to patients. It appears that the language in the bill as written would preserve the ability of patients to obtain their prescriptions in this way, aligning with the Blueprint to Lower Prescription Drug costs. A Yale study by Liu et al released this week 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. The suggestion above to strike the “services specifically excluded” provisions, or at least item (II), prescription drugs, would better align the bill with the HHS Blueprint. Any pressure brought to bear that serves to unwind the predominance of PBM-controlled prescription benefits will help HHS achieve the President’s mission of reducing drug costs for American patients.
- Another provision impeding an Administration 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. To better align with Administration goals, the bill could be changed to allow the use of after-tax dollars for the amount in excess of the cap. Individuals exceeding the cap in this manner should not become disqualified from contributing to their HSA. This change could be facilitated by moving the cap out of the definition of DPC in the bill (see item #1).
- Similarly, to improve DPC agreement flexibility and increase patient options, consideration should be given to removing the provision defining that a DPC agreement is eligible only “if the sole compensation for such care is a fixed periodic fee.” While it may be proper to limit the billing of plans for care provided under a DPC agreement, this provision, as written, can be read as prohibiting additional fees paid by patients who desire extra services like home visits. The Ways and Means committee stated that the provision is geared towards disqualifying “concierge” arrangements but it could also be read as preventing flexibility in DPC agreement design, contrary to the Administration’s efforts to encourage innovation and limit red tape.
- 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, contrary to goals set by the Trump Administration. 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.
Another needed clarification that would fall to HHS is the manner in which 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.
- A final suggestion for how the Administration could resolve the above issues in conflict with its goals—in parallel with or in lieu of uncertain or problematic Congressional action—is to direct Treasury to correct a flawed interpretation of statute issued by former IRS Commissioner Koskinen in 2014. Commissioner Koskinen incorrectly deemed that DPC agreements are a gap plan instead of qualified medical care under 213(d). Reversing his opinion, particularly for DPC arrangements paid from individual HSA accounts and not paid as a plan benefit, is within the existing authority of the Department of Treasury and would be a helpful action freeing patients to use their own HSA funds for medical care from the doctors of their choice.
- This administration supports competition and the innovation and expansion of small businesses in every sector and should be aware of two other provisions.
The first is H.R. 6199 Sec. 4 which permits HSA participation irrespective of pre-deductible coverage for certain primary care services administered only at on-site and “retail clinics,” but not at independent physician offices. Mega-entities, like the forthcoming CVS-Aetna, and Amazon, who have plans to administer health benefits and also provide medical services, will disproportionately benefit from this change as written. The provisions in Sec. 4 would hand a competitive advantage to these larger entities to use against smaller independent competitors and to impede competition and patient choice of physician.
Secondly, Sections 7 & 8 of H.R. 6311 (a companion to H.R. 6199), make catastrophic “Copper Plans” HSA-eligible and lift the age restrictions on enrollment. While these are generally steps in the right direction, the changes, as written, exacerbate a flaw in ACA requirements for these plans. Copper plans currently provide few pre-deductible benefits 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. This is contrary to the goal of increased competition and supporting small businesses.
Moreover, the required benefit 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 own 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. Otherwise the provisions are an obstacle to the continued growth of innovative small businesses, independent Direct Primary Care and other independent physicians who continue to save their patients thousands of dollars and provide excellent care, attention and access.
Thank you for consideration of the above concerns about aspects of the PCEA that need some work in order to best achieve the objectives HHS and the Trump Administration have laid out for empowering patient access to low cost, high quality care and cutting regulatory burden.
Call Congress and let your voice be heard at 202-224-3121.