DPC's Federal Tax Break Took Effect in January. The Definition That Came With It Excludes Prescription Drugs Other Than Vaccines.

Three days apart this month, two direct primary care physicians published essays about what the model has to protect as it grows. One is worried about government money. The other is worried about mission drift. They picked different risks, and neither one is the risk the tax code already wrote down.

Dan Swartz, MD, went first, on September 11, with a warning borrowed from the electric vehicle industry. His case is that government money reshapes whatever it touches, and that DPC physicians pushing to bring Medicare and Medicaid patients into the model are inviting exactly that. The new HSA rules get one line. He writes that others in DPC predict the “imposed, arbitrary caps” of $150 for an individual and $300 for a family will distort the market, then allows that the limit may not distort it much this year.

Angela Andrews, MD, published on September 14 with a piece about Costco. Her worry is mission drift rather than Washington. Drawing on Eric Ries’ book Incorruptible, she writes that Costco holds roughly 9% of grocery sales while performing about 30% of the country’s food safety audit workload, and that its influence comes from what it refuses to compromise rather than from its size. DPC serves about 0.4% of the U.S. population by her count, and she argues that is enough, because a practice that protects small panels, physician autonomy and real access changes what patients expect from primary care well past its own membership list. Her hypothesis, which she says she cannot yet prove, is that practices guarding that purpose last longer than practices that let it slip.

One doctor is worried about federal money. The other is worried about losing the thing that money would pay for. Both wrote about a model the tax code has already defined.

The definition that came with the money

For 2026, enrolling in a qualifying direct primary care service arrangement no longer disqualifies someone from contributing to a health savings account. The change applies to months beginning after December 31, 2025, and it is the tax treatment DPC advocates chased for years.

It arrived with a specification attached. Per compliance guidance summarizing the IRS notice, a qualifying arrangement has to deliver only primary care services from a named list of practitioners: physicians in family medicine, internal medicine, geriatric medicine or pediatric medicine, plus nurse practitioners, clinical nurse specialists and physician assistants. The fixed periodic fee cannot exceed $150 a month for an individual or $300 for coverage of more than one person, with inflation adjustments starting after 2026.

The arrangement also cannot include three categories of service: procedures requiring general anesthesia, laboratory services not typically administered in an ambulatory primary care setting, and prescription drugs other than vaccines.

That last exclusion matters for any practice that folds dispensing into its membership fee. Nothing in the tax rules stops a practice from dispensing at all. What the rules say is narrower and more awkward: a fixed fee that covers prescription drugs is not a qualifying arrangement for HSA purposes.

Splitting the billing on its own does not fix it. The notice denies DPCSA status to an arrangement that supplies items on the condition of membership and bills for them separately, and allows it only when the practice offers those items outside the arrangement to people regardless of membership and bills members and non-members alike. A dispensary open only to members fails either way. So a practice opens dispensing to people who are not members, or it gives up the tax treatment for its HSA patients. Physician dispensing regulations vary by state, and physicians are responsible for verifying their own state’s requirements before restructuring anything.

Who is already setting terms

Swartz aims his warning at government money DPC has not yet taken. The buyer mix says a third party is already in the room. Hint Health’s 2026 trends report, drawn from 1.4 million members and more than 2,700 clinicians, found employers fund 60% of active memberships. Employer-sponsored rates in that dataset have held in a $55 to $65 range for five straight years.

A model where most memberships are bought by employers is already a model where somebody other than the patient signs the contract. The HSA rules add a fee ceiling and a service list on top of that.

The $150 cap sits well above the employer-sponsored range Hint reported, so it does not bind those memberships today. Whether a ceiling that high stays irrelevant is a fair thing to watch, and the first inflation adjustment lands after 2026.

The Tension the Model Lives Inside

Direct primary care works because a physician answers to one buyer and can therefore decide what a visit is worth and how long it lasts. Growth requires money. The money now reaching the model comes from employers and from a federal tax preference, with public programs waiting behind the Medicaid bills sitting in Congress. Every one of those buyers comes with terms.

Andrews’ answer is to hold the line on panel size and access, and let influence follow from the refusal. Swartz’s answer is to turn down the government money before it arrives. Neither answer touches the part that already happened. Employers fund 60% of memberships, and the HSA rules are in effect for this tax year.

DPC can refuse the outside money and keep its own terms. It can take the money and negotiate somebody else’s. Doing both at once is the trick nobody in either essay has described yet.