Lawrence family physician helps get Congressional bill introduced to clarify tax issue about Direct Primary Care medical practice model

Earlier this month, Rep. Erick Paulsen of Minnesota introduced H.R. 365, also known as “Primary Care Enhancement Act”, to the U.S. House to “amend the Internal Revenue Code” related to “direct primary care service arrangements”. This bill is aimed at clarifying tax treatment of Health Savings Accounts (aka. HSAs) in payment to physicians operating in the “direct primary care” (DPC) model of practice. This law would also apply to “flexible spending accounts known as FSAs”.

One of the first Direct Primary Care practices in the nation, NeuCare Family Medicine, was started by family physician Dr. Ryan Neuhofel in Lawrence in 2011.

In the “direct primary care” model patients contract directly with a physician under a membership or retainer agreement with flat-rate monthly fees -- similar to a gym membership -- to provide medical services outside of the traditional health insurance system. Although providing traditional medical services, there has been some questions by the IRS whether these fees were considered an “eligible medical expense” under the language of the original Health Savings Accounts legislation.

“Although it’s very clear I am providing medical care that should be an eligible expense, I’m hopeful this legislation will clarify the HSA and tax issue for our patients.” Dr. Neuhofel reports. Neuhofel travelled to Washington D.C. with the Direct Primary Care Coalition and American Academy of Family Physicians in early January to help garner support for HR 365. Kansas Rep. Lynn Jenkins signed on as a co-sponsor to the bill shortly after Neuhofel's visit with her. 

Neuhofel reports Direct Primary Care generally and HR 365 have gathered broad bipartisan support despite the fierce partisanship on other health care policy issues relating to the future of the Affordable Care Act. “Nearly everyone, regardless of party, agrees that primary care in America must be improved if we are to fix the larger problem of exploding healthcare costs,” Neuhofel opines. Also, DPC practices have helped ease the burden for many patient with high deductible health insurance plans. 

By many estimates the direct primary care model is growing rapidly around the country -- some estimate as high as 1000 physicians nationwide. Several DPC practices have opened in the region in the past few years. Neuhofel helped to form an organization called tje Midwest Direct Primary Care Alliance to help support physicians in similar practices in the Kansas City area. Neuhofel’s practice, NeuCare, is near full capacity and he is looking for second physician to join him sometime in 2017.