Add one to the list of possible future amendments to the Patient Protection and Affordable Care Act: revisiting Section 1301(a)(3) that recognizes Direct Primary Care/Medical Home plans as qualified health plans sold in the state exchange marketplace.
Direct Primary Care (DPC) is paid directly – as the name suggests – by patients to primary care providers and not by insurers or managed care plans. Direct primary care payment is typically effected via basic monthly fee (as well as additional charges for some procedures and tests) that includes direct access to doctors and other primary care providers. Table 2 of this California Healthcare Foundation paper lists several DPC providers and their fees.
As author Dave Chase notes, there are potential downstream medical utilization cost savings from early preventative primary care intervention. Section 1301(a)(3)’s direct linkage of DPC to a “medical home” suggests an added benefit of keeping patients more connected with a primary care provider who can follow a patient over time and help coordinate referrals and care from other providers. The DPC primary care model also fosters economic incentive for primary care physicians to help alleviate concerns of a post-ACA primary care doctor shortage to handle the influx of newly insureds.
In order to be a qualified individual health plan sold on the exchange marketplace under Section 1301(a)(3), a DPC/Medical Home plan must be a health plan that includes primary care as well as nine other essential benefits. This applies to qualified health plans sold through exchanges as well as those sold outside the exchange marketplace. The primary care requirement however isn’t compatible with DPC because as noted previously, the patient – not a health plan or insurance – pays primary care services directly out of pocket via DPC fees. Plus plans must fall into one of the four metal tier actuarial values (AV) specified in the ACA ranging from bronze (60 percent AV) to platinum (90 percent AV), values predicated on both primary and higher cost care.
The appropriate form of insurance for a DPC patient is catastrophic coverage currently exempt from the metal tier AV requirements under Section 1302(e) but limited to young people under age 30 or those exempt from the individual coverage mandate because of financial hardship or coverage costs exceeding eight percent of income. It’s the right type of coverage for DPC because as the name implies, it is designed not for relatively low cost primary care but rather big dollar costs such as hospitalizations and surgeries. Referred to as “wraparound” coverage, it picks up where DPC leaves off. It acts as a true insurance product in that these costly services are typically accident-related or otherwise unexpected.
Section 1302(3) should be amended to include those enrolled in DPC arrangements in addition to the so-called “young invincibles” and recognized as meeting the ACA’s individual responsibility requirement to have some form of health coverage. The current limits on out of pocket costs for individual plans at Section 1302(c) would probably work well for DPC “wraparound” coverage. However, since DPC patients are by definition paying primary care costs out of pocket, catastrophic DPC plans should include only a flat high dollar deductible. Finally, to provide greater incentive for individuals and families to enroll in DPC/Medical Home plans, the ACA should amend the Internal Revenue Code to make 50 percent of DPC fees paid in a calendar year tax deductible for all taxpayers.
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