DPC Alliance Member Statement on HR3708

This is a quick member update regarding one of the ongoing lobbying efforts to change the Internal Revenue Code of 1986 (“US Code”) to clarify the use of HSAs for DPC fees.

In preparing an update regarding HR3708, the DPC Alliance Board found itself split, both in our interpretation of the bill and in determining the appropriate response to best represent the interests of our members. Given the value our community places on transparency, and to resolve our internal impasse, the Board decided to share our disparate positions, as each reflects the varied opinions of our membership. Our Vice President-Elect, Dr. Vance Lassey offered that our DPC tribe is uniquely able to disagree agreeably and keep this movement growing forward. 


The Primary Care Enhancement Act of 2019 (HR3708) was introduced to the House Committee on Ways and Means on July 11, 2019. This is a bipartisan bill that was co-sponsored by 2 Democratic and 2 Republican members of the House. The stated objective of this prospective legislation is: “To amend the Internal Revenue Code of 1986 to allow individuals with direct primary care service arrangements to remain eligible individuals for purposes of health savings accounts, and for other purposes.” 
Under the current regulatory environment, patients cannot use HSA dollars to pay for the periodic membership fees of DPC practices. This is why HR3708, and other efforts to change the US Code, are a primary focus of the DPC movement. 

Key Provisions: 

  1. Recharacterizes direct primary care as “Service Arrangements” under Section 223(c)(1) of the Internal Revenue Code of 1986.

    • It states: “A direct primary care service arrangement shall not be treated as a health plan...” for the purposes of being defined as a service arrangement.  

  2. Clarifies that direct primary care service arrangements are treated as medical expenses under Section 223(d)(2)(C) of the US Code. 

  3. Defines direct primary care service arrangements as, “an arrangement under which such individual is provided medical care... consisting solely of primary care services provided by primary care practitioners ... if the sole compensation for such care is a fixed periodic fee.”

    • HR3708 places a $150 per person per month cap on what can be paid toward a direct primary care service arrangement.

      • This cap will be indexed to inflation moving forward so the cap will grow proportionate to the broader economy.

    • Specific services will be excluded under this definition:

      • Procedures that require the use of general anesthesia.

      • Prescription drugs (other than vaccines).

        • This limitation applies to bundling prescription drugs in your membership fee. As currently written, HR3708 allows DPC physicians to dispense medications in their practices (based on state law around provider dispensing). With HR 3708 prescription medications must be “sold” as an ancillary service. HR3708 does not change a physician's ability to sell medications as a separate charge as is current practice for many DPC clinics. 

      • Laboratory services not typically administered in an ambulatory primary care setting.

The DPC Alliance’s Response 

The members of the DPC Alliance board were divided upon whether or not the Alliance should support, oppose, or remain neutral regarding the ongoing development of HR3708. There was unanimous agreement that the bill, as presently written, presents challenges to some aspects of DPC. To strengthen HR 3708, the DPC Alliance Board of Directors recommends the following changes and clarifications:

  1. State that DPC fees are a "qualified medical expense" under US Code 213(d), and not under a more vague categorization of “service arrangement” under Section 223(d).

  2. Make it clear that a patient may use an HSA to purchase prescription medications on a fee basis (outside of DPC bundled fees) from a DPC practice.

  3. Remove or change the $150 cap. HR 3708 places a $150/member/month cap on DPC fees under Section 223(d). We do not believe that price should be a defining feature or legal definition of a DPC practice. The DPC Alliance recommends removing this price cap altogether. But, if such a cap is required for budgetary reasons, this limit should be an expense cap (maximum deduction) under 213(d).

Ultimately, the debate amongst our Board centered on what the best strategic approach would be to ensure that DPC patients can legally use their HSAs to pay for DPC membership fees.  Below we summarize the positions our Board has discussed regarding HR 3708 for the benefit of our members further understanding.

1. Actively oppose HR3708 in present form.

Approximately half of the Board (seven of the thirteen members) voted that the DPCA should issue a letter in opposition to HR3708 as it is currently written. This position was based on the following concerns: 

  • HR3708 is no longer necessary given the recent issuance of the Executive Order on Price Transparency, which directed the Treasury to provide regulation to clarify that DPC services are eligible medical expenses under Section 213(d) of the US Code. 

  • HR3708 directs the Secretary of the Treasury, with input from the Secretary of HHS, to issue regulations and guidance regarding the implementation of this HSA fix for DPC. This provides an unnecessary opportunity for HHS to be engaged in the rules-making process.

  • The lack of progress in making the improvements recommended by the DPC Alliance and other DPC stakeholders since the introduction of the 2018 version of this legislative language indicates a lack of interest in addressing these critically important issues.

2. Provide member education but abstain from advocacy efforts

And just shy of half of the Board (six of the thirteen members) voted that the DPCA should abstain from active lobbying efforts and focus on keeping our members up to date and well-informed on policy matters. Some of these Board members were wary of engaging in anything that would be perceived as lobbying by policy makers given the fact that the Alliance is, by its bylaws, not a lobbying organization. Furthermore, some members of our board feel the DPC movement is well represented by two extremely effective lobbying groups: DPC Action and the DPC Coalition

Other Board members had a more favorable interpretation of HR3708. They raised the following points:

  • HR3708 complements the recent Executive Order. Each addresses separate components of the Tax Code to clarify the use of HSAs for DPC patients. It may be unwise to assume that the Treasury will act on the Executive Order to the specific interest of the DPC movement when DPC. Additionally, by codifying the HSA fix into law it is less likely to get undone by future administrations. 

  • The introduction of HR3708 represents the beginning of the deliberative legislative process. The DPC Coalition, DPC Action, and interested DPC physicians will all have the opportunity to lobby for the appropriate updates to the language of the bill. 

  • Regardless of whether or not HR3708 passes, the Executive Order already directs the Secretary of the Treasury to develop regulations to enable HSA use for DPC fees. We should maintain our focus on educating policy makers through channels made available by both DPC Action and the DPC Coalition. 

Next Steps

We encourage each and every one of you to review the full text of the bill, which can be found here, ask questions, and decide for yourselves. Because the language of HR3708 is identical to the version that was introduced in 2018 (HR6199) you can find an effective summary from Phil Eskew on his post at DPC Frontier, linked here. Please note, we will update this post with the appropriate link to the respective guidances from both the DPC Coalition and DPC Action as soon as they are available.

As always, we’re here to help and answer questions (or concerns) as they arise. Our goal is to empower all of our members to move forward to serve their communities with cost-transparent, patient-centered healthcare and to advocate and educate regarding the opportunities that make this possible.