Nebraska Ordered Its Own Employee Health Plan to Sell Direct Primary Care. It Removed the Option in July 2024.

Nebraska ordered its own employee health plan to sell direct primary care, and it put the order in statute. The Legislature passed LB1119 by a vote of 42 to 2 on April 11, 2018, and the statute that came out of it told the Nebraska State Insurance Program that it “shall include direct primary care health plans” for fiscal years 2019-20 through 2022-23.

The program got one extra year on a renewal. Then the state ended it. Here is the last of the key takeaways in the final report the Department of Administrative Services filed with the Legislature on the pilot: “State of Nebraska made the decision to discontinue the DPC Plans after Plan Year 2023-2024. The program concluded on July 1st, 2024.”

Behind that sentence sit four annual reports on an employer DPC program, filed with the Legislature under a statutory reporting duty. They landed in 2021, 2022, 2023 and 2024, and together they cover five plan years of enrollment, cost and utilization data. Nobody had to guess how this went. Nebraska wrote it down.

What Nebraska actually built

DAS and its health plan vendor, United Health Group, offered two DPC plans at open enrollment to state employees eligible for the state insurance program. The University of Nebraska system, the state colleges and the community colleges were left out of the pilot. Both plans rode on a high-deductible chassis, the Standard Plan at a $5,000 deductible and the Select Plan at $3,500, covering everything outside primary care. Strada Healthcare was selected to oversee the provision of DPC through primary care offices across the state.

Enrollees and their families got unlimited access to their chosen Strada primary care provider with no copays and no deductibles, in the office or by phone, text or video. The state paid 79 percent of the monthly rates and the employee paid 21 percent.

This was not a token gesture. The pilot opened in 2019 with 26 providers in eight Nebraska cities and one in Iowa. Grand Island and North Platte came the next year, bringing it to 41 providers in 11 cities. Beatrice and Broken Bow were added in fiscal 2022-23. Nebraska built the network, ran in-person education before open enrollment in the first year and again in the last two, moved to video sessions for the two COVID years in between, and kept the plans on the menu for five plan years.

The number that never moved

DPC took 1 percent of all state health plan participants in fiscal 2019-20 and 2 percent the year after. By fiscal 2023-24 it was 1.60 percent, which the report describes as consistent with the prior year. The analysis table in that final filing counts 632 active members, a figure the report defines as all lives, employees and dependents together.

Who signed up tells you more than how many. The average age across every state health plan was 46. The average age in a DPC plan was 29. In the 2021 report the gap was wider still, 26 against 46.4.

And this, from the 2021 filing, is the number that should stop any DPC physician cold. Thirty-four percent of employees enrolled in a DPC plan for at least three months contacted their provider even once. Two out of three bought a relationship with a provider and never used it. DAS also ran member satisfaction surveys and reported that participation was so low it could not publish the results.

The plan sitting next to it

The 2024 report explains the stall without hedging. “The value and resultant popularity of the WellNebraska plan reduces participation in the DPC plans,” it says, and then, flatly: “The DPC Plans have the highest deductible and out of pocket costs to the member.”

Look at what an employee was choosing against. WellNebraska carried an $800 individual deductible and a $2,700 out-of-pocket maximum. It covered the first $500 of non-preventive lab and pathology work. It paid maternity hospital charges at in-network hospitals at 100 percent, all colonoscopies and mammograms at 100 percent including diagnostic, and 24/7 virtual visits at 100 percent.

A 29-year-old with no chronic conditions and a low premium appetite took the DPC plan. Almost everyone else did the arithmetic and stayed put. When the 2024-2025 options guide went out, DAS wrote it down in one sentence: “As the Pilot Program timeframe has ended and the selection and participation in these plans has remained low, we have decided to remove Direct Primary Care as an option for a medical plan.”

Why this surfaced today

On September 28, an op-ed headlined “Nebraska patients deserve more control over their health care” ran in the Omaha World-Herald under its Midlands Voices banner. The author is Ryne Bessmer, and the paper’s author note identifies him as president of Strada Healthcare, “which was founded in Omaha and has grown into one Nebraska’s largest direct primary care networks.”

Same company. The state gave Strada’s model a five-year run inside its own benefits program, filed four reports on it with the Legislature under a statutory reporting duty, and then took it off the menu. The op-ed walks through the 2016 Direct Primary Care Agreement Act, the HSA change Congress passed last year, and Nebraska’s rules on dispensing medication from the clinic. It never mentions the pilot.

The Counterargument

The strongest case against reading Nebraska as a DPC failure is Nebraska’s own data. Every report says DPC members cost the plan less and used less. Emergency room visit frequency and cost were markedly lower. Prescription utilization was lower. If you are selling DPC to a self-funded employer, those are the slides you want.

DAS gave that finding three possible causes, and only one of them is the model. Primary care was paid by membership instead of billed to the plan as a claim, so it vanished from claims data by construction. The DPC population was younger. And members used discounted cash prices for labs, imaging and physical therapy, which also never reached the plan. The 2021 report listed all three and did not rank them.

There is a second version of the counterargument that holds up much further. It says the model was never on trial in Nebraska, the benefit design was. Put DPC beside a traditional plan with a richer benefit and a lower deductible, make employees pick one, and the people who pick DPC will be young, cheap and mostly absent. That is what the 34 percent engagement figure is really describing. Hint Health counts employers as the funders of 60 percent of active DPC memberships today. Where those employers place DPC against the rest of the benefit is the question Nebraska answered in public and the trend reports do not ask.

Nebraska paid for that lesson under statute, across five plan years. The reports are still sitting on the Legislature’s website.