If It Talks Like Insurance and Walks Like Insurance: The Curious Case of Direct Primary Care Arrangements

For decades, elite “concierge” practices have been providing easy access to primary care in return for several thousand dollars in retainer fees. Recently we’ve seen the emergence of more affordable versions of this arrangement, with monthly fees that cost far less than the average ACA marketplace plan premium. At first blush, these arrangements, frequently called “direct primary care arrangements” (DPCAs), might seem like an innovative solution to the problem of ensuring access to health care services in the face of rising health insurance premiums, but depending on how they are designed and marketed, they could pose risks for consumers – and the insurance market as a whole.

What is a Direct Primary Care Arrangement?

Simply put, a direct primary care agreement is a contract between a primary care provider (PCP) and a consumer under which the consumer pays a periodic membership fee directly to the PCP and the PCP agrees to provide, at no extra cost, services within the scope of primary care practice, which in some cases includes management of chronic diseases. DPCAs do not typically cover prescription drugs, specialty care services, hospitalization, or other benefits provided by a major medical insurance policy. While many advocates of DPCAs recommend that these arrangements supplement, not supplant, major medical insurance, there is evidence that many patients who choose DPCAs use it as their only source of coverage. Further, some companies have begun marketing DCPAs as “alternatives” to traditional health insurance, sometimes in combination with membership in a health care sharing ministry.

When is a DPCA considered insurance?

An entity that takes on insurance risk is one that bears the risk for an individual’s health care costs and spreads that risk across a larger pool of people. In such a case, state insurance regulators have an interest in protecting consumers from potential fraud and insolvency, and the broader insurance market from an uneven regulatory playing field. Can a primary care practice be considered a risk-bearing entity that should be regulated as insurance? At least one state department of insurance thinks so, arguing that direct primary care arrangements, by providing unlimited visits and charging fees that do not represent the fair market value of the promised services, are pooling risk and conducting the unauthorized business of insurance.

At the same time, advocates of DPCAs wanting to avoid state oversight have successfully pushed legislation that exempts these arrangements from state insurance codes and curtails the ability of state departments of insurance (DOIs) to regulate them. Without state oversight, it is impossible to know the extent to which DPCAs might be engaged in health status underwriting in order to minimize their insurance risk, cherry picking healthy members, or otherwise able to cover costs without exposing consumers to unexpected financial liabilities.

Looking ahead

The increasing popularity of these arrangements combined with state-level legislative efforts to exempt them from regulation could result in two casualties: the ACA-compliant health insurance market and individual consumers. In the wake of repeal of the ACA’s individual mandate, these low-cost arrangements could siphon healthy consumers away from the more comprehensive plans available in the ACA marketplaces, leaving behind a sicker risk pool and further contributing to the rise of health insurance premiums. Second, without state-level protections, consumers who depend on DPCAs for their coverage could find themselves without recourse if they have a complaint or the DPCA unexpectedly goes out of business.

To better understand how different states are handling DPCAs and what kinds of benefits and risks these arrangements pose to consumers and insurance markets, CHIR will be taking a deeper dive into the issue, so stay tuned.


  • Ms. Kona,
    Thank you for this article on the impact the DPC movement is having on the insurance industry. I appreciate the perspective you present.

    As a DPC physician with two years of experience and a private practice physician for almost 10 years prior to my conversion to DPC, I would like to address the two potential casualties you express in your article.

    First, I believe my practice and many other DPC practices of which I am aware have failed to see a strong influx of otherwise well patients as the majority patron. Most of my patients have legitimate medical concerns that need to be addressed. They have found that the health care available to them is either too impersonal or too expensive. Many insured patients now have deductibles so high (an attempt primarily designed to find a lower premium) that all primary care services practically become out of pocket expenses. Generally speaking, the well don’t seek health care, which is what I provide as a DPC physician. The sick show up at my door every day, however.

    Second, health care consumers within DPC practices may have more assurance of obtaining desired medical care than those consumers in traditional, fee-for-service practices. Ultimately, a FFS practice is beholden to the reimbursement requirements set forth in their insurance contracts and exist only so long as the insurance companies are quality payers. At one time while still in FFS, patients covered by BCBS consisted of nearly 65% of my practice. When BCBS made a unilateral move removing my ability to bill for lab work we lost nearly $250,000 in yearly revenue with no recourse. As such, we were forced to change the mode of our practice, not based on patient needs or concerns, but on the demands placed by the true payer.

    Within my DPC practice, I have approximately 440 individual members. Any single payer disruption does not affect my over all ability to offer the quality and type of care I can provide to the other patients. This makes my quality of care extraordinarily stable. As my membership contracts are month to month, as are almost all DPC practices, I am constantly incentivized to keep my costs to a minimum while improving my health care services in order to retain an appropriately sized patient panel. I believe that a free market approach, where services are clearly priced and patients are at liberty to choose alternative options or no care at all, is the most reasonable approach to reduce health care expenditures within primary care while encouraging the highest quality of services to be offered for the patient’s benefit.

    Again, thank you for your article and the perspective you bring. I invite you to reach out to your local DPC practice to get to know how the process works in the life of a patient if you have not done so already. You can find a good list of practices at http://www.dpcfrontier.com/mapper/.

  • Peg says:

    Informative post, Maanasa. Informative comment, too, Mark though I don’t see where it addresses the main point of the post, which is that consumers need to be aware that DPC arrangements often do not include major medical insurance for services outside of the scope of the DPC agreement. Which is just to say, people need to read the fine print before taking this approach. In many ways, it’s as hard as ever for people today to understand what is and isn’t health insurance coverage as well as the nature of the alternatives to traditional coverage.

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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.