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B200

  • Introduced by: Vemuri S. Murthy, MD, Delegate, for Chicago Medical Society

    Subject: Use of HSAs for Direct Primary Care

    Referred to: Reference Committee B


    Whereas, the healthcare system is constantly changing, and expanding access to quality medical care is a top priority of organized medicine; and 

    Whereas, there is predicted to be a shortage of primary care physicians over the next decade, and some primary care physicians are choosing Direct Primary Care (DPC) as a means to stay independent rather than be acquired or employed by a hospital or health system; and 

    Whereas, Direct Primary Care is an alternative payment model intended to improve access to highly functioning healthcare with a simple, flat affordable membership fee; and 

    Whereas, the defining element of DPC is an enduring and trusting relationship between a patient and his or her primary care provider; and

    Whereas, the goal of DPC is better health outcomes, lower costs, and an enhanced patient experience, where there is no third-party billing; and

    Whereas, Direct Primary Care is often referred to as concierge or retainer medicine; and 

    Whereas, current IRS rules impede individuals with Health Savings Accounts (HSAs) from using these funds to pay for Direct Primary Care or even entering into periodic-fee DPC agreements because the current Internal Revenue Code (IRC) clearly states that HSAs must be paired with a high deductible health plan (HDHP), and Section 223(c) of the IRC also prohibits individuals with HSAs from having a second health plan to cover services not covered by the HDHP; and

    Whereas, current Treasury Department interpretation of the IRC treats Direct Primary Care monthly fee arrangements like a second health plan, rather than a payment for a medical service. Under current policy, individuals with HSAs are effectively barred from having a relationship with a DPC provider, because the DPC agreement makes the individual ineligible to fund the HSA; and

    Whereas, 23 states have passed laws defining DPC as a medical service outside of health plan or insurance regulation, which would address some of the necessary concerns; and 

    Whereas, the Internal Revenue Code (IRC) is unclear about whether monthly payments to physicians practicing under the DPC model are considered a “qualified medical expense,” and when the regulations for HSAs were developed, DPC was not contemplated; and

    Whereas, two parts of the IRC need clarification; first, that DPC medical homes do not constitute a health plan under IRS Section 223(c), and second, that periodic payments to DPC practices for primary care services are to be treated as qualified medical expenses under IRC 213(d); and

    Whereas, on February 27, 2018, the Chicago Medical Society adopted a resolution that supports patients’ use of Health Savings Accounts (HSAs) to access Direct Primary Care providers; the resolution also requests organized medicine to clarify and address the Internal Revenue Code; therefore, be it

    RESOLVED, that the Illinois State Medical Society establish policy that supports patients’ using Health Savings Accounts (HSAs) to access Direct Primary Care providers, to help improve access to all primary care providers, including those who practice in a Direct Primary Care model, for individuals who need primary care services; and be it further

    RESOLVED, that the ISMS policy on patients’ use of HSAs for Direct Primary Care include the following concepts: DPC medical homes do not constitute a health plan under Internal Revenue Code (IRC) Section 223(c); periodic payments to DPC practices for primary care services are to be treated as qualified medical expenses under IRC code 213(d); and be it further 

    RESOLVED, that the ISMS introduce a similar resolution to the American Medical Association June 2018 meeting requesting the AMA to adopt policy on patients’ use of Health Savings Accounts (HSAs) for Direct Primary Care: and be it further

    RESOLVED, that the ISMS resolution request AMA to seek federal legislation that will address and clarify Internal Revenue Codes (IRC) section 223 (c) so that Direct Primary Care medical homes do not constitute a health plan; and that further establish the legality of treating periodic payments to DPC practices for primary care services as qualified medical expenses under IRC code 213(d), thus allowing the use of Health Savings Accounts (HSAs) to help pay for Direct Primary Care and enabling patients to enter DPC periodic-fee agreements without IRS interference or penalty.


    Existing ISMS policy related to this issue:

    It is the policy of ISMS to publicize and promote the Medical Savings Account (including Health Savings Account) concept as a third major area of emphasis, in addition to medical liability reform and antitrust reform, as appropriate. (HOD 1994; Reaffirmed 2012; Reaffirmed 2015-JAN; Last BOT Review 2015)

    It is the policy of ISMS to actively support, through policy and action, the expansion of Medical Savings Accounts (MSAs, including Health Savings Accounts) to include: (1) making MSAs available to everyone; (2) making the MSA program permanent; (3) permitting any size company to offer MSAs to their employees; (4) lowering the minimum deductible; (5) reducing out-of-pocket exposure; and (6) eliminating penalties for surplus withdrawals. (HOD 2001; Reaffirmed 2012; Last BOT Review 2010)

    ISMS encourages its member physicians to be patient advocates by encouraging their hospitals to charge reasonable fees to Health Savings Account patients in keeping with fees the hospitals charge patients covered by Medicare, Medicaid, and managed care companies. (HOD 2004; Reaffirmed 2012; Last BOT Review 2010)

    ISMS endorses the concept that Health Savings Account plans be offered as an option to Medicare participants. (HOD 2004; Reaffirmed 2012; Last BOT Review 2010)

    ISMS endorses the concept that the high deductible health insurance portion of Health Savings Account plans should be paid for with pre-tax dollars, whether purchased by employers, employees, or the self-employed. (HOD 2004; Reaffirmed 2012; Reaffirmed 2015; Last BOT Review 2010)

    ISMS supports legislation that guarantees the right of Medicare patients to independently contract for medical services, for which they are willing to pay, without causing penalty (such as exclusion from the program) to the physicians. (HOD 1998; Reaffirmed 2009; Last BOT Review 2014)


     

  • The commenting period is now over.
    Comment List
    H. Reed Thompson, Jr., M.D. I favor this resolution

    Add 4 words be added to line 3 of the last resolve: "from a Health Savings Account" 

    legality of treating periodic payments to DPC practices for primary care services as qualified medical expenses under IRC code 

    Add the 4 words to read

    legality of treating periodic payments from a Health Saving Account to DPC practices for primary care services as qualified medical expenses under IRC code 

    Just to clarify that the fee for participating in the DPC must come from an HSA


    Apr 11, 2018 at 7:54 p.m.

    Robert F. Hamilton, M.D. I favor this resolution

                Excellent resolution. HSAs have grown rapidly since their inception in 2003. There are now about 30 million HSA plans in this country. They have been shown to save money and change patients’ behavior, but do not withhold treatment that patients and their physicians consider important. Patients tend to spend more money on judicious outpatient testing and treatment, and much less on hospitalization.

                You might consider amending the Resolution by including Health Reimbursement Arrangements (HRAs) along with HSAs. These are negotiable arrangements between employees and employers. The money belongs to the employers, not the employees. I don’t have current data on the effect of HRAs on health care costs, but they also have cost-effectiveness incentives.  I don’t know if HRA funds can be used to pay for Direct Primary Care, but I assume not. It should be fairly easy to obtain a valid legal opinion on this point.

                Flexible Savings Accounts (FSAs) are the “use it, or lose it” plans, in which the patient’s incentive is to spend any unspent funds before the end of the year, rather than saving money. I would not favor including FSAs in this Resolution.

     

    Robert F. Hamilton, M.D.

    Past-Trustee

    District 6   



    Apr 12, 2018 at 1:17 p.m.

    David W. Miller, M.D. I favor this resolution

    Agreed.

    Apr 20, 2018 at 9:19 p.m.

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