What Is Direct Primary Care?

• High-functioning primary care and prevention services

• Direct agreement between doctor and patient

• Monthly retainer or periodic fee paid by individual, employer, health plan, or other payer

• No third party, fee for service billing

• Significantly reduced administrative costs

• Improved health outcomes

• Medical services: Not insurance or health plan

• Defined in ACA - §1301 (A) (3) and...

• 23 State Laws (e.g. WA 48.150 RCW)

• Medicare/Medicaid Pilot Outlined in HHS Budget

Direct Primary Care in 2017

• 700 DPC Practices in 48 States + DC

• Median fee about $70 per month *

• Better outcomes, patient satisfaction

• Savings of up to 20% *

• Offered through employers, Medicare Advantage, Medicaid MCOs, State Employees Plans

* Journal American Board of Family Medicine , Nov. 2015

Inpatient Admits PTMPY

51

163

49

250

183 187

Control Group (246) Study Group (264)

Pre-Period Post-Period Pre-Period Post-Period Pre-Period Post-Period

Las Vegas Population

3

35%

6%

2%

DPC Creates Economic Value

Inpatient hospital admissions -37% * - Overall reductions in cost of care of up 20% **25.4 % reduction in claims costs + reduction in risk scores reported by employers***

Data Sources:

* Iora Claims Database

** Journal American Board of Family Medicine , Nov. 2015*** Nextera/Digital Globe Case Study June 1 – Dec. 31, 2015

Why?

• Significantly Reduced Administrative expenses – No claims

• Reduced overall health costs through better primary care utilization

• Predictable fixed costs for employers/payers

Policy Issues:

State Insurance Laws

• Laws define DPC outside insurance regulation in 23 states.

• Legislation may be needed to bring DPC to Medicaid – 1332 Waivers

• States weigh in with Congress on waivers/other issues

• State employees plans use of DPC

Tax Code - HSAs

• DPC not a qualified medical expense {IRC 213 (d)}

• IRS considers DPC a “health plan” {IRC 223 (c)}: DPC disqualifies HSAs

• Primary Care Enhancement Act S. 1358; H.R. 365 clarifies tax code for both issues

Medicare Medicaid/VA

• CMS Pilot Outlined in Trump Budget for FY 2018

• CMS RFI for CMMI New Direction

• Medicare “opt out Issues”

• DPC now offered with Medicare Advantage... Medicaid MCOs

• MACRA payment reforms lead to path as APM?

• VA Choice Program?

1. Washington – 48-150 RCW

2. Utah – UT 31A-4-106.5

3. Oregon – ORS 735.500

4. West Virginia – WV-16-2J-1

5. Arizona – AZ 20-123

6. Louisiana – LA Act 867

7. Michigan – PA-0522-14

8. Mississippi – SB 2687

9. Idaho – SB 1062

10. Oklahoma – SB 560

11. Missouri – HB 769

12. Kansas – HB 2225

13. Texas – HB 1945

14. Nebraska – Legislative Bill 817

15. Tennessee – SB 2443

16. Wyoming – SF0049

17. Arkansas – HB 1161

18. Kentucky – SB 79

19. Colorado – HB 17-1115

20. Indiana – SB 303

21. Virginia - HB 2053

22. Alabama - SB 94

23. Maine - S.P. 472

• Laws generally define DPC as a medical service outside of state insurance regulation, offer varying levels of consumer protection

• Restrictive WV and AR laws modified in 2017• MT Bill vetoed by governor. • OR and AZ laws need updates• FL, and GA bills introduced but have not passed• PA legislation just introduced.

DPC Laws Passed in 23 States – 8 New Laws in 2017

NJ State Employees Unions

• Direct Primary Care Medical Home Pilot Program Stared in 2017

• R-Health DPC in Burlington, Camden, and Mercer counties, Trenton Area

• by Sen. Majority Leader Stephen Sweeney (D-NJ); Supported by Gov. Chris Christie (R-NJ)

• Backed by 9 public employee unions

• Voluntary program

• Up to 800,000 police officers, firefighters, and state, county and municipal employees and family members

• Aetna, Horizon Blue Cross TPAs

The Primary Care Enhancement Act

• Bipartisan Bill – H.R. 365 Reps Erik Paulsen (R-MN) and Earl Blumenauer (D-OR) S. 1358 Sens. Bill Cassidy, MD (R-LA) and Maria Cantwell (D-WA)

• Clarifies HSA Provisions regarding DPC in the Tax Code

• DPC is not a health plan under IRC §223 (c)

• DPC is a qualified health expense under the IRC §213 (d)

• Allows individuals with HSAs to pay for DPC services with HSAs.

• Provisions also found in Health Savings Act S. 403/H.R. 1175

CMS Direct Primary Care Initiative – Engaged with CMS on rollout

2018 HHS Budget in Brief Page 62

• DPCC Working with CMS Innovation Center on Design

• Likely to Start in Medicare, but move to Medicaid

• Three or more DPC models could be tested• Small Practice – Flat Fee• Small –Midsize Practice, Flat Fee Shared Savings• Larger Team Based Practice

– Flat Fee with Upside and Downside Risk

• States may have option to allow beneficiary to make direct payment using voucher or HSA-like account

• Policy Issues to be addressed:• Medicare Opt Out• IRS HSA changes needed to ensure balanced

multi-payer mix including employers

www.dpcare.org

For further information contact:

Jay Keese

Executive Director,

(202) 624-1450

jpkeese@cagdc.com