States Move to Exempt Direct Primary Care from Insurance Regulations
In an effort to encourage more consumer-driven health care provider models, a growing number of states are moving to exempt direct primary care (DPC) from insurance regulations.
Classifying DPC as not being insurance means these providers are not subject to insurance regulations that drive up the cost of health care. Direct primary care practices charge a flat fee for unlimited service. The providers can offer lower prices because bypassing the insurance system reduces administrative costs substantially. Members often supplement their care by buying insurance coverage through health-care sharing ministry programs which cover hospitalization and specialty care at a fraction of the price of traditional insurance plans.
According to DPC Frontier, an on-line resource for the DPC movement, 25 states have laws that define DPC as not insurance. This year, insurance definition bills emerged in Arizona, Georgia, Hawaii, Maryland, Minnesota, New Hampshire, South Carolina, and Wisconsin.
The Arizona governor signed into law SB 1105 which addressed ambiguity in previous law by now specifically stating DPC plans are not insurance. Georgia became the 26thstate this year to not define DPC as insurance with the passage of SB18.
Trying It Out
States are also looking to other ways to boost the DPC movement such as allowing DPC practices to dispense medication or launching DPC pilot programs for government workers or for people enrolled in Medicaid.
Adam Habig, co-founder and president of Freedom Healthworks, says the legislative action shows increasing acceptance of DPC as a viable option for consumers. “Mostly these laws provide certainty that insurance regulators will not interfere with DPC practices, as was threatened by insurance officials in several states, like New York, early in the DPC movement,” said Habig. “We now have Georgia, which will put DPC beyond the point where the majority of states will have enacted such legislation.”
By distinguishing DPC from insurance, states allow the industry to be tested in the marketplace, says Habig.“Doctors and patients win, since they can interact free from fear of violating insurance regulations,” Habig said.
Philip Eskew, a physician, attorney, and founder of DPC Frontier, says he is encouraged by the state action this year. “States need to lower legal barriers or risk to market entry, so new DPC practices are more likely to launch,” Eskew said.
These reforms reduce costs for states and providers alike, says Eskew.“Both the practices and the state insurance commissioner's office benefit because now there is less guessing work, and contract audits, if needed, can happen in a streamlined and predictable manner,” Eskew said. “Attorneys that like to draft agreements from scratch in areas with much uncertainly lose the ability to rack up legal fees.”
DPC Frontier offers model legislation on its website with language that defines DPC not as insurance.
Jake Grant (email@example.com) writes from Alexandria, Virginia.
Model State Legislation: Direct Primary Care Agreements, DPC Frontier