What is direct primary care?

In 2023, almost 85% of U.S. adults visited a doctor or other medical professional¹. Yet more than 100 million Americans don’t have regular access to primary healthcare. This leaves a large portion of the population exposed to preventable illnesses².

Having a primary care physician with whom you have a strong doctor-patient relationship is invaluable for ensuring you receive the best healthcare possible. But the high cost of traditional insurance can make it difficult for many people to access consistent primary care, leaving them searching for more affordable options. That’s why many individuals and employers are turning to an alternative: direct primary care (DPC).

DPC is enticing to individuals because it offers more time with doctors for a fixed monthly fee. This enables patients to receive individualized medical care at a predictable cost. But before you subscribe to DPC or offer it as a health benefit to your employees, you must understand how it works.

In this blog post, you’ll learn:

• The concept of direct primary care and the services it offers for health concerns.
• The advantages and limitations of DPC.
• How health reimbursement arrangements (HRAs) compare to DPC for individuals and employers.

What is the meaning of direct primary care?

Direct primary care is a subscription-based healthcare model where patients or employers pay a monthly or annual fee to a physician or medical practice. In exchange, individuals receive access to various personalized primary care services.

A few examples of services that DPC covers include:

• Annual physicals and check-ups
• Routine lab work
• Chronic disease management
• Clinical and laboratory services
• Consultative services
• Comprehensive care management
• Vaccinations

DPC practices typically don't accept health insurance, Medicare, or Medicaid. Instead, they charge a subscription fee that allows patients to typically receive unlimited in-person and virtual scheduled appointments. This allows for comprehensive care with their primary care physician.

DPC practices focus only on routine care. So, many patients combine DPC with healthcare sharing ministries or high deductible health plans (HDHPs). These plans can cover emergencies, hospital stays, or specialist visits to keep surprise out-of-pocket costs low.

What are the advantages of direct primary care?

DPC's preventive method and direct access to medical care make it an attractive option for many individuals and employers. Let’s review some of the benefits below.

Here are some pros of DPC:

1. Patients have enhanced access to care. DPC provides increased patient access to medical care, with extended visits and lower wait times. The monthly fee covers routine visits, so patients can schedule primary care appointments as much as they need without extra cost.
2. It improves doctor-patient relationships. DPC offices serve fewer patients than traditional healthcare practices. This allows doctors to dedicate more time to each appointment for detailed patient medical care. Many DPCs allow patients to call or text their doctors directly. This personalized approach enhances the doctor-patient relationship and can improve health outcomes and patient satisfaction.
3. It focuses on preventive care. DPC providers emphasize preventive care, such as routine physicals and vaccinations. This preemptive approach can help with the early detection of diseases, preventing more severe health issues later on.
4. There are fewer insurance hassles. Since DPC typically doesn’t integrate with health plans, you’ll have no medical claims to file. DPC also eliminates the need for copays, deductibles, and coinsurance. Your subscription fee eliminates these out-of-pocket costs, and insurance paperwork isn’t a factor.

What are the disadvantages of direct primary care?

While direct primary care covers a wide range of healthcare services, it has a few limitations.

Here are some potential downsides of DPC:

1. It doesn’t cover major medical events. DPC won’t cover the additional cost if a patient needs certain medications, hospitalization, major surgeries, or emergency services. Patients who need these items or services must pay for the expense on their own. They can also get a health insurance plan or supplemental benefit to cover the bill.
2. There are out-of-pocket costs for specialists. DPC focuses on primary care services. It won’t cover specialty care, such as a visit to a neurologist. Patients must pay out-of-pocket for this type of care if they don’t have traditional health insurance or a supplemental plan.
3. DPC may not suit individuals who don’t need frequent healthcare. It requires a fixed monthly or annual membership fee to receive patient care. So, it may not be ideal for individuals who only access occasional medical care.
4. There could be high monthly costs. Although the cost covers regular primary care, paying the monthly fee adds up over time. Those with tight budgets may see DPC as a financial burden, especially if they have to supplement it with health insurance.
5. It may not be in your area. Depending on where you live, DPC may not be available to you. In this case, you would have to look for different coverage options, such as traditional health insurance.

What’s the average cost of direct primary care?

Most DPC practices charge a monthly fee ranging from $50 to $150. DPC doesn’t bill insurance companies, so patients pay their doctor directly through these fees.

If you’re an employer, you may offer DPC membership as a health benefit as part of your compensation package. You can cover the subscription fees on your employees' behalf.

Here are a few things that can impact the cost of DPC:

• Location
• Medical services a physician offers
• Additional services outside the standard membership, such as specialized testing
• Age
  • Older patients may have higher monthly fees than younger individuals.
• Membership type
  • Many DPC practices have discounted rates for families.
• The type of practice
  • Some DPC medical offices charge a small fee per visit.

Individuals considering DPC should read their membership plan details carefully to avoid surprise bills. Ask the DPC provider what services and benefits they include in the recurring fee and what they consider to be an additional cost. You should also learn how DPC works alongside traditional health insurance and supplemental benefits.

What’s the difference between direct primary care and concierge medicine?

Although both are subscription-based and require a fee, DPC differs from concierge medicine in a few significant ways.

Using DPC, patients pay their physician directly through a standard fee rather than paying an insurance company. While it’s not mandatory, many DPC patients supplement DPC with a health insurance plan to cover certain out-of-pocket costs.

Concierge primary care physicians offer more services and patient attention than DPC. Concierge medicine also works with health insurance and may bill carriers for certain services. While this model also requires an annual fee, the cost is substantially greater. But in return, doctors can build long-term, personal relationships with their patients.

Learn more about the differences between DPC and concierge medicine in our blog.

What is an alternative health benefit to direct primary care?

Small business owners may find DPC a cost-effective alternative to traditional group health insurance. However, since it doesn’t cover emergency care, you may also have to offer an HDHP or other medical plan alongside it. A DPC isn’t your only option.

A health reimbursement arrangement (HRA) is an IRS-approved health benefit that allows employers to reimburse their employees tax-free for qualified out-of-pocket medical costs. Depending on the type of HRA, your employees’ individual health insurance premiums may also be eligible for reimbursement.

The way an HRA works is simple. The employer sets a defined monthly allowance for their employees to spend on eligible medical expenses. Once an employee makes a qualified healthcare purchase, the employer reimburses them tax-free up to their allowance amount.

Allowance amounts can roll over monthly. But, HRA funds stay with the employer at the end of the year and if an employee leaves the company.

The following are three HRAs that employers can administer with PeopleKeep:

1. Individual coverage HRA (ICHRA): An ICHRA is a flexible health benefit solution for organizations of all sizes that can reimburse employees for individual health insurance premiums and out-of-pocket costs. Applicable large employers (ALEs) can use an ICHRA to satisfy the employer mandate as an alternative to group health insurance. Employees must have a qualifying individual health plan to participate in the benefit.
2. Qualified small employer HRA (QSEHRA): A QSEHRA is a cost-effective solution for small employers with fewer than 50 full-time equivalent employees (FTEs). Employers can design the benefit to reimburse insurance premiums only or premiums plus other qualified medical expenses. Employees must have a health plan with minimum essential coverage (MEC) to participate.
3. Group coverage HRA (GCHRA): A GCHRA, also known as an integrated HRA, is an excellent way to supplement a traditional group health policy. With a GCHRA, you can help employees pay for out-of-pocket medical costs their group plan doesn’t fully cover. Only employees enrolled in the employer-sponsored group health plan can participate.

Many of the health costs DPC doesn’t cover are reimbursable through an HRA. But if you want to offer a more comprehensive health benefit, an HRA will provide more coverage and flexibility for your employees.

Conclusion

DPC offers patients greater personalized care for predictable costs. It may also eliminate the need for individual health insurance for some. But with all its benefits, DPC has limitations. So, before signing up for a DPC membership, consider your and your family’s health and financial needs so you can make an informed decision.

If you’re an employer looking for an alternative to DPC, try a personalized and flexible HRA. PeopleKeep’s HRA administration software can help you manage your health benefits in minutes each month. Contact an HRA specialist to determine which HRA is best for your organization.

1. CDC - Physician office visits

2. Closing the Primary Care Gap