Key Takeaways
- DPC practices must comply with state-specific requirements. A DPC arrangement may fall outside insurance regulation only if it satisfies the requirements that apply in the state where the practice operates.
- The membership agreement establishes the DPC relationship. The agreement should clearly explain the fees, services, exclusions, termination rights, and other terms that govern the arrangement.
- Federal rules can still apply to DPC practices. Medicare, HSA eligibility, HIPAA, and fraud-and-abuse laws may affect how a DPC practice structures and operates its membership model.
What Legal Requirements Apply to Direct Primary Care Practices?
Direct primary care (DPC) provides physicians with an alternative to traditional fee-for-service billing, but it does not exempt them from healthcare laws. The legal requirements for a DPC practice come from a combination of state laws, insurance regulations, federal healthcare laws, and rules governing the physician-patient relationship.
There is also no single set of DPC requirements that applies in every state. Some states have enacted laws specifically recognizing DPC agreements and establishing the conditions under which they are not treated as insurance. Other states may take a different approach.
Physicians should evaluate the specific legal requirements that apply to their DPC arrangement rather than assuming that a membership model is automatically exempt from regulation.
State Laws Governing Direct Primary Care
State law is one of the most important considerations for a DPC practice. Many states have statutes addressing direct primary care agreements. These laws may establish requirements concerning the written agreement, fees, covered services, termination, renewal, and disclosures to patients. Some also expressly state that a qualifying DPC agreement is not insurance.
For example, Texas law expressly addresses direct care agreements and provides that certain agreements between a physician or healthcare provider and a patient for primary care services are not insurance if they meet the statutory requirements. Texas law also establishes requirements concerning the agreement and disclosures to patients.
In Wisconsin, direct primary care arrangements also require attention to the state’s insurance laws and the specific terms of the physician-patient agreement. Physicians should evaluate whether the arrangement falls within applicable statutory provisions rather than assuming that a recurring fee automatically places the practice outside insurance regulation.
These differences make the terms of the membership agreement particularly important. Physicians should review the agreement, services provided, fees charged, required disclosures, and patient communications together to determine whether the DPC model complies with the law applicable to the practice.
DPC Membership Agreement Requirements
The patient membership agreement is a central part of the DPC model. It establishes the business terms between the practice and the patient and should clearly explain what the patient pays and what the practice provides in return.
Depending on the applicable state law and the practice’s model, the agreement may address:
- Membership fees and payment schedules
- Services included in the membership
- Services excluded from the membership
- Additional charges for services outside the membership
- Family or household memberships
- Contract duration and automatic renewal
- Cancellation and termination
- Refunds
- Missed appointments and administrative policies
- Laboratory testing, medications, or other items included in the fee
- The relationship between the DPC membership and health insurance
The membership agreement is not the same as a consent to treat, HIPAA documentation, or other patient forms. Each document serves a different purpose.
Jackson LLP’s healthcare attorneys advise on direct-pay transitions and draft membership agreements for DPC and concierge practices. This includes addressing fees, covered services, exclusions, termination provisions, and other terms specific to the practice’s model. We provide free consultations.
When Is a DPC Arrangement Considered Insurance?
A major legal issue for DPC practices is whether the membership arrangement could be treated as insurance under state law.
A typical DPC model involves a patient paying a recurring fee directly to a physician or practice in exchange for a defined set of primary care services. Many state laws specifically recognize these arrangements as something other than insurance when certain conditions are met.
An arrangement treated as insurance could be subject to insurance licensing and regulatory requirements that do not apply to a qualifying DPC agreement.
Physicians should be careful about how they structure both the services and the payment arrangement. The membership agreement and patient-facing materials should accurately describe what the membership covers and what it does not.
The practice should also avoid suggesting that a DPC membership is a substitute for comprehensive health insurance when it is not. Depending on the state, specific disclosures may be required.
The same review should extend to cash-pay healthcare disclosures and policies so that the practice’s website, agreements, and patient communications are consistent.
Medicare Requirements for DPC Physicians
DPC physicians who treat Medicare beneficiaries must also consider Medicare requirements. A physician who participates in Medicare generally cannot simply replace Medicare billing with a DPC membership fee for Medicare-covered services. Physicians who want to provide covered services to Medicare beneficiaries outside the Medicare program generally need to follow the federal opt-out process.
An opted-out physician must file an affidavit with Medicare and enter into a private contract with each Medicare patient, subject to applicable exceptions. The private contract establishes that the patient will pay for the services out of pocket and that neither party will submit the services for Medicare payment.
Medicare opt-out requirements are separate from the DPC membership agreement. A physician should not assume that a standard DPC contract automatically satisfies Medicare’s private-contract requirements.
Physicians should determine their Medicare participation or opt-out status before deciding how Medicare beneficiaries will be treated under the DPC model.
Federal Healthcare Laws Still Apply to DPC Practices
Direct primary care does not exempt a practice from federal healthcare requirements. Depending on the practice’s structure and activities, physicians may need to consider HIPAA, Medicare requirements, fraud-and-abuse laws, and federal tax rules.
Physicians should review relationships with other healthcare organizations for potential Anti-Kickback Statute and fee-splitting concerns. These issues may arise when a DPC practice works with a management services organization (MSO), laboratory, pharmacy, imaging company, employer, or other outside organization. The membership model does not eliminate federal fraud-and-abuse considerations.
Federal tax law also affects DPC practices. Beginning January 1, 2026, individuals who qualify may contribute to a health savings account (HSA) while enrolled in a qualifying DPC arrangement and may use HSA funds tax-free to pay DPC fees. Physicians considering HSA-compatible DPC memberships should review the specific federal requirements rather than assume that every DPC arrangement qualifies.
What Happens If a DPC Practice Does Not Meet These Requirements?
Failing to satisfy applicable DPC requirements can create problems beyond the membership agreement itself.
Depending on the issue and jurisdiction, a practice could face questions about whether its arrangement constitutes insurance, whether required patient disclosures were provided, or whether its agreements comply with state law. Medicare violations can create separate consequences for physicians who do not properly follow participation or opt-out requirements.
Problems can also arise when the practice’s written agreement does not match its actual operations. Physicians should review the complete DPC model rather than the membership contract alone. The services offered, fees charged, patient communications, Medicare policies, business relationships, and advertising should all be consistent with the legal structure of the arrangement.
Let Our Team Ensure You Meet All Direct Primary Care Legal Requirements
Jackson LLP’s healthcare attorneys advise physicians on state-specific DPC requirements, practice structure, Medicare considerations, membership arrangements, and other legal issues affecting direct primary care practices. Contact us to discuss your DPC practice and its legal requirements.
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Frequently Asked Questions About DPC Legal Requirements
Is direct primary care considered health insurance?
Generally, no, but the answer depends on applicable state law and whether the DPC arrangement satisfies the requirements for being treated as something other than insurance. Many states have specific statutes addressing DPC agreements and required disclosures.
Does a DPC practice need a written membership agreement?
Yes. A written agreement should establish the financial and service terms of the DPC relationship. In states with DPC-specific laws, the law may also require certain provisions, disclosures, signatures, or termination rights.
Can DPC physicians treat Medicare patients?
Yes, but Medicare rules still apply. Physicians who opt out of Medicare generally must file an opt-out affidavit and enter into private contracts with Medicare patients for covered services provided during the opt-out period.
Can patients use HSA funds to pay DPC membership fees?
Beginning in 2026, certain DPC service arrangements qualify for HSA treatment. The federal rules distinguish between arrangements whose fees can be reimbursed from an HSA and arrangements that also allow the individual to remain eligible to contribute to an HSA.
Does a DPC practice have to comply with HIPAA?
A DPC practice that is a HIPAA covered entity must comply with applicable HIPAA requirements. Direct payment by patients does not, by itself, eliminate privacy and security obligations.
Do DPC laws apply the same way in every state?
No. State requirements vary. Some states have detailed DPC statutes governing agreements and disclosures, while others may regulate DPC arrangements differently. Physicians practicing in multiple states should review the requirements applicable in each jurisdiction.
