Direct Primary Care (DPC)

Direct primary care is an arrangement in which a patient pays a primary care practice a fixed fee at regular intervals, usually monthly, in exchange for primary care services, and the practice does not bill a third-party payer for that care. Federal tax law now carries a definition, at IRC 223(c)(1)(E)(ii), which describes "an arrangement under which such individual is provided medical care (as defined in section 213(d)) consisting solely of primary care services provided by primary care practitioners ..., if the sole compensation for such care is a fixed periodic fee." Whether the arrangement counts as insurance is a question of state law, and state law varies. Oklahoma's statute, enacted in 2015 at 36 O.S. § 4605, provides that "[a] direct primary care membership agreement is not insurance and is not subject to regulation by the Insurance Department," and adds that it is not a medical discount plan either. Because statutes of this kind differ from state to state, the local one governs a particular agreement.

The structure is a subscription for a service, and that is the whole of it. There is no claim, no network, no deductible, no allowed amount and no insurer. A patient pays the practice, the practice provides the care described in the agreement, and where the agreement ends the patient is a cash customer again. Oklahoma's statute captures the arithmetic that keeps this from turning into fee-for-service by another name: the agreement must provide that "[a]ny per-visit charges under the agreement will be less than the monthly equivalent of the periodic fee," and that the direct primary care provider "will not bill third parties on a fee-for-service basis." The same section requires the agreement to be terminable by either party on written notice, treats fees as unearned until the month they pay for has been completed, and requires all unearned fees to be returned to the patient where the patient terminates.

The federal definition is narrower than the market name, and the exclusions are the interesting part. IRC 223(c)(1)(E)(iii) provides that "primary care services" does not include procedures that require the use of general anesthesia, prescription drugs other than vaccines, or laboratory services not typically administered in an ambulatory primary care setting. An arrangement that bundles a wider range of services can therefore be a perfectly good contract and fall outside the tax definition, which matters because the tax definition is what carries the health savings account consequences.

A precise point about who counts as a primary care practitioner. The statute borrows the definition from 42 USC 1395l(x)(2)(A), a Medicare payment provision, but adds "determined without regard to clause (ii) thereof." Clause (i) describes a physician with a primary specialty designation of family medicine, internal medicine, geriatric medicine or pediatric medicine, or a nurse practitioner, clinical nurse specialist or physician assistant. Clause (ii) is the Medicare billing test, requiring that primary care services accounted for at least 60 percent of the practitioner's allowed charges in a prior period. Dropping clause (ii) means the federal definition reaches the practitioner types without importing a Medicare billing-mix test that a direct primary care practice, which by design bills Medicare for very little, would routinely fail.

The health savings account rules changed for months beginning after December 31, 2025. Before that, a direct primary care arrangement was generally treated as disqualifying coverage, so a patient could hold the arrangement or fund a health savings account but not both. IRC 223(c)(1)(E)(i) now provides that such an arrangement "shall not be treated as a health plan" for the eligibility test, subject to a ceiling on the aggregate monthly fee, doubled where the arrangement covers more than one person. That ceiling becomes inflation-adjusted for taxable years beginning after 2026 under IRC 223(g)(1), and the current figures are set out with the high deductible health plan rules. Separately, IRC 223(d)(2)(C)(v) lists a direct primary care service arrangement among the narrow exceptions to the bar on paying insurance premiums from an account, so the fee itself can be paid with account money. Anyone who concluded in an earlier year that the two were incompatible should check the conclusion again.

What it does not do is the part worth stating plainly. A direct primary care agreement pays for primary care. It pays nothing toward a hospital admission, a surgeon, an oncologist, an emergency department visit or a prescription filled at a pharmacy. Because it is not insurance, no state guaranty association stands behind it, the consumer protections attached to health coverage do not apply, and it satisfies no employer or Marketplace coverage requirement. The sensible comparison is not against a health plan but against what the same primary care would cost paid visit by visit, with health coverage carried alongside for everything else.

1. You sign an agreement with the practice setting the periodic fee, the services included, and the term.

2. You pay the fee whether or not you use it, in the way a subscription works rather than the way a claim works.

3. The practice does not bill insurance for the services under the agreement, which is what removes the coding, claims and network machinery from the relationship.

4. Services outside the agreement are billed normally, so a referral, imaging, a hospital stay or a prescription runs through whatever coverage you carry, or through your own pocket.

5. The fee may be paid from a health savings account, and holding the arrangement does not block contributions to one, provided the aggregate monthly fee stays under the statutory ceiling.

A hypothetical. Jonah pays a direct primary care practice $85 a month, which is $1,020 over the year, for unlimited office visits, basic in-office testing and direct messaging with his physician. He also carries a health plan for everything else, and he sees the primary care physician nine times that year. Paid visit by visit at a cash rate of $150, those nine visits would have cost $1,350, so the arrangement saved him $330 and made the ninth visit free at the margin rather than a $150 decision. In a year with three visits the same arrangement costs $1,020 against $450 of cash visits, so it loses $570. The arithmetic turns on how often the practice is used and on what the same care costs locally, which is why the comparison has to be run against cash prices rather than against a premium.

Pros

• The price is known in advance and does not move with utilization, which removes the per-visit decision from routine care.
• The practice is not billing a third party for the covered services, which is the source of the longer appointments and direct access these arrangements are usually bought for.
• Since 2026 it no longer blocks health savings account eligibility, and the fee can be paid from the account.
• A state statute addressing the arrangement can add protections: Oklahoma's treats fees as unearned until the month they pay for is completed and requires unearned fees to be returned where the patient terminates.

Cons

• It is not insurance and covers nothing beyond primary care, so it is an addition to health coverage rather than a substitute for one.
• Because it is not insurance, the consumer protections and solvency machinery that stand behind an insurance contract do not apply to it.
• The fee is owed whether or not the practice is used, so a light year is a loss against cash prices.
• The federal tax definition excludes procedures under general anesthesia, prescription drugs other than vaccines, and non-routine laboratory services, so a broader agreement may fall outside it.
• The monthly fee ceiling for health savings account purposes is a real limit, and an arrangement priced above it costs the account eligibility it was meant to preserve.