120 - Tired of Insurance Red Tape? This New Law Makes It Easier for Physicians to Build Patient-First Medical Practices with Direct Primary Care Membership

Tired of letting insurance companies dictate how you care for patients—and how you get paid?

For years, physicians embracing Direct Primary Care (DPC) have faced legal ambiguity around accepting Health Savings Account (HSA) payments. But a new federal law has changed the game. In this episode, Dr. Lee Gross—one of the original pioneers of DPC—joins us to break down what this HSA reform really means and how it opens the door for more autonomy, clarity, and growth.

• Learn how the law finally allows HSAs to cover DPC memberships without putting your practice at legal risk
  
  
• Understand what this means for independent physicians, residents, and those ready to ditch insurance-based care
  
  
• Discover how this reform creates new opportunities to partner with employers and expand access to affordable care

Listen now to learn how this policy shift removes key barriers and helps physicians like you practice medicine with more freedom, less red tape, and stronger patient relationships.

Discover how medical graduates, junior doctors, and young physicians can navigate residency training programs, surgical residency, and locum tenens to increase income, enjoy independent practice, decrease stress, achieve financial freedom, and retire early, while maintaining patient satisfaction and exploring physician side gigs to tackle medical school loans.

Transcript

Coach JPMD (00:45)
All right. So, uh, we are, we're live. So we're with, uh, Lee gross, Dr. Lee gross, uh, coming on the podcast, uh, on a short notice. Uh, but before we get into the interview, I wanted to play a clip, uh, that of an interview that I had with Lee gross. Uh, I think it was last year and, I wanted you to comment on it.

Well, should I call you President Lee Gross now?

Dr. Lee Gross (02:09)
hate.

I am not king for the day.

Yes,

fascinating thing. You know, as a physician, you obviously took lots of physics and one of the principles in physics is if something is not behaving in a way that you would expect it to behave, then it must be being acted on by an outside force that you can't see. And so when every power in Washington and all of the Congress and the Treasury and the HHS and everybody in the White House all says HSA should pay for direct primary care and yet it doesn't happen.

what is that outside force? And we can probably all take a pretty good guess of what those outside forces were. Those forces are pretty strong. ⁓ But yeah, this was a pretty big win for us.

Coach JPMD (02:52)
Yeah.

Yeah, so that's why you're here because thank you for coming on such a short notice. I wanted to pick your brain on the impact of this new bill, the HR 119th Congress. I really don't like this one big, beautiful bill. It's everywhere. And I tried to find out if it's called something else. Is it called something else or is it just that?

Dr. Lee Gross (03:16)
It's called HR1

or One Big Beautiful Bill. I think it's a big bill with one big beautiful page. ⁓ And that page is ⁓ something that we've been trying to enact for a long time.

Coach JPMD (03:19)
on BigQuery.

Yeah. And so you're one of the pioneers in direct primary care space, ⁓ also known as DPC. And when I read the provisions, I saw some things that it looks like it's going to be a big boost for independent physicians and primary care doctors. So I just wanted to kind of verify with you, since you're kind of the expert and you've taught us a lot on the podcast and ⁓ is it true?

Dr. Lee Gross (03:51)
it's real. It's law. It is happening.

Coach JPMD (03:56)
So for those residents that are coming out, new residents or even specialists coming out, can you help us define what DPC is before we get into the bill? even some nurse practitioners, a lot of nurse practitioners are starting DPC practices. So what is DPC?

Dr. Lee Gross (04:14)
I think that that is a definition that is evolving. You know, it doesn't have official state-based definitions and that varies by state, but the general concept between all of them is it's generally a direct relationship between a doctor and patient, cutting out the middleman and directly working between the physician or nurse practitioner, as you've just mentioned. And in many times that's done on a subscription basis.

So a membership-based primary care membership-based primary care practice. And honestly, that's kind of where the challenge became with the tax purposes because the Internal Revenue Service had a hard time recognizing a membership as a healthcare service. And so I'd be to sort of go down that rabbit hole with you as time allows, but that's the essence of it.

Coach JPMD (05:00)
Mm-hmm.

Yeah.

Yeah. And so in the bill, also says ⁓ something about, well, before we get into the bill, you know, let's kind of define what the HSA FSA problem was in the past with DPC. So I've heard that there are some HSA plans and insurance plans that would cover the DPC membership if it was billed six months in advance or a year in advance. Was that a problem in state by state problem, or was it a federal problem?

Dr. Lee Gross (05:35)
It's always been a federal ambiguity. I will say that, know, HSAs have been paying for DPC memberships for every bit of 15 years. We've been accepting HSA payments and millions of dollars every single year are processed by HSAs to pay for DPC. ⁓ But there, again, was ambiguity, but the Internal Revenue Service never made any effort to enforce that.

They never officially published anything that said that it's not allowable. There was always just sort of question in lingering in people's minds. And when accountants were advising businesses that maybe wanted to add DPC as an option, as an employee benefit, their cautious accountants were sort of warning them that, maybe this subscription might cancel your health savings account. ⁓

And so, you it was sort of the fear of the unknown that really was, which was stymieing progress. Now, large employers like Boeing ⁓ for years has sort of championed this, this effort to clarify this because they wanted to offer it as a, as a employee benefit.

Coach JPMD (06:44)
Yeah. And I know some, some employee benefits, ⁓ some employers are actually offering DPC as membership benefits. I, we deal with a company or I've seen a company called, ⁓ Appoli Appoli. think they're a nationwide company that helps contract with, ⁓ companies that want to provide the membership. what, what I hear is that they, these companies need a CPT code or they need a code to be able to bill for the services because they're there.

processes don't allow for membership payment processing. Do you know anything about that or?

Dr. Lee Gross (07:21)
I'm not specifically familiar with the internal operations of Appley and how they sort of navigate that, but I know for years they've been directly trying to connect ⁓ employees to DPC practices. And it sounds like it's a growing operation and people are generally pretty pleased with those services. know HINT has been working on that for years and there are many other people sort of working in the space as well. And that's going to be a huge part. ⁓

Coach JPMD (07:47)
Yeah.

Dr. Lee Gross (07:51)
You know, for example, when an employer signs up for a DPC practice for the employees, you know, that employer doesn't necessarily want to pick one doctor for all their employees. And so if you have these independent DPC practices, how do you do that in a way where the employer is not going to have to write checks to 16 different individual DPC practices? And so that's sort of where, you know, platforms like Appley can allow integration with independent practices without creating true networks, so to speak.

Coach JPMD (08:00)
Yeah.

Mm-hmm.

Yeah. So as far as the bill is concerned, it opens up the door for HSAs to be ⁓ used to pay for the memberships. Do you see now an opportunity or do you think that the hospitals, corporations or big hospitals will ⁓ get into this space? Is it possible for them to start competing in this space? Maybe setting up separate LLCs?

Dr. Lee Gross (08:46)
Honestly, I'm not really sure this is something that the hospitals are really going to get into. mean, this is sort of small potatoes for them. I mean, they'll try. They have tried many years ago. University of Michigan put out a, I think it was like the Victor's program that was like a DPC program. But, ⁓ you know, it's not in the hospital's DNA to do anything that's really affordable.

Coach JPMD (08:55)
Okay.

Dr. Lee Gross (09:13)
And so they set a price point that not only Set off the entire campus into a frenzy ⁓ They had protests and I mean it didn't last probably longer than weeks that program before they shut it down So I'm not really concerned about necessarily the hospitals on this end You know, especially you know, as you know a lot of DPC doctors are sort of forced to opt out of Medicare and

Coach JPMD (09:25)
Wow.

Okay.

Yeah.

Dr. Lee Gross (09:43)
in order to do this. And if you opt out of Medicare, you become a lot less profitable to a hospital. ⁓ So I'm not sure the hospital really wants to get into that space. But ⁓ if I can sort of kind of get into the nuances of the bill and sort of explain what it does and what it doesn't do. So again, I think the question with the Internal Revenue Service, again, the ambiguity because this has never been enforced. The IRS has never taken any actions against anybody for this.

Coach JPMD (10:02)
Absolutely.

Dr. Lee Gross (10:13)
So this is still kind of preemptive a preemptive strike, but the ambiguity was slowing the growth of the And ⁓ so the ambiguity comes in the fact that just for the subscription So if a practice were to just contract directly with a patient and charge a standard fee for service That is very clearly eligible for spending by any federal tax advantage Program whether it's an HSA an FSA an HRA

⁓ We're just general tax deductible purposes because those those medical services that you're selling are designated by the IRS as a as a Qualified medical expense under section 213 D of the tax code And everything points to section 213 D of the tax code ⁓ all the rules ⁓ the question always was is a subscription for health care services an actual health care service and

So that was the one question is, you know, is a subscription at a qualified medical expense under 213D. I think it always was, but that was one question. The other question specific to HSAs is that when you have a health savings account, by law, it has to be connected to a qualified high deductible health plan, very specific rules on what qualifies. And that high deductible health plan can be your only health plan. So.

Coach JPMD (11:20)
Mm-hmm.

Dr. Lee Gross (11:41)
The question from the IRS is, was DPC a health plan? And if it was, it's considered a second health plan, which disqualifies HSA contributions, future HSA contributions. Even if you didn't use the HSA to pay for the DPC membership, just having it ⁓ was problematic. And this was the interesting meeting. So we met with the Deputy Secretary of Tax Policy. ⁓ As I mentioned in that clip, you played a dozen.

lawyers for the Internal Revenue Service, and then three DPC docs met at the Treasury in Washington, DC, and sat down and had an hour-long conversation. And it was almost like an Abbott and Costello who's on first routine ⁓ as we were fielding this. And so the questions that were posed by the IRS attorneys were, well, what if somebody signs up for a subscription and doesn't actually utilize the service? Was that really a service? What if they signed up and never contacted you?

And my response to them is, well, what if I buy a bottle of Advil and I don't get a headache until the next tax year? Was that tax fraud? And the answer that they gave me was yes, that was tax fraud to purchase Advil with an HSA if you didn't get a headache until the next tax year. And I was like, well, how are you enforcing that? Well, we're not. I'm like, well, why would you start enforcing it on us? And we even sort of took that health plan a step further and said, so,

If I sign up for a membership at Costco or BJ's or Sam's Club, and that gives me access to discount prescription medications, discount healthcare services, healthcare goods, does Sam's Club become a health plan? And they said, yes, by our definition it does. And I said, so you're going to disqualify the HSAs of every member of every wholesale club in America? Well, no. Okay, well why start with direct primary care?

And the last one was every student that goes to a college in the United States usually pays, in addition to their tuition, a student health fee. ⁓ And that student health fee usually gives them access to the Student Health Care Service Center for free or for a small price. And so that would mean that they would have to disqualify the HSAs of every family member or every family in the United States that has a child in college.

That's how unenforceable the IRS's provisions were on this. And so again, we had that executive order from 2019 by President Trump that compelled the Treasury to fix this issue. And they issued a proposed rule in 2020 that was never finalized, but in that proposed rule, they very clearly stated that the membership, were comfortable with that being a qualified expense.

They had no issues whatsoever. They definitely clearly believed it was qualified. So that technically would have fixed the flexible spending account issue. It would have resolved any questions over 213D in the tax code. resolves any issues around health reimbursement arrangements from employers, tax deductibility. But what they weren't comfortable in doing without law is clarifying that the direct primary care membership was not a health plan.

And from the purposes of the IRS and the Department of Labor, something doesn't need to be insurance to be a health plan. ⁓ And they don't care what the states say, because as you know, about 30 states have passed legislation that says that DPC is not a health insurance. It's not a health plan, and therefore it's not regulated by the Office of the Insurance Commissioner or the Department of Insurance. Florida is one of those states that does that. ⁓ They don't care what the states have to say about it. ⁓ And so...

it absolutely required legislation in order for the IRS to say that. So what I would say is that the 213D issue really has been pretty much resolved at least since 2020. ⁓ And so fast forward to now this particular bill. This one specifically addressed the HSA issue. ⁓ It did not address the 213D issue. And what I very clearly said was that

Coach JPMD (15:53)
Yeah.

Dr. Lee Gross (15:59)
Direct primary care is a qualified medical expense for health savings accounts and direct primary care is not a health plan. ⁓ And so was a fairly simple thing. ⁓ I think maybe where the controversy, if there's controversy in this section of the bill, it's that they introduced caps. ⁓ And this was something that we fought and fought and fought, honestly, until the last minute before the bill was signed, we were still.

fighting to get that cap removed. And so when I say a cap, what they did was they put language in there that says that you can't, so it cast it at $150 per month for an individual and $300 per month for a family member. They didn't really define well what that cap meant. They didn't specifically say what happens after $151 and up, what happens. So there's no definition in there, but

The precedent is that this is the first time for HSAs that they've ever capped what a medical service can cost. And the irony that I have is we were sort of fighting over this over the years to get this cap removed is that direct primary care is the best bargain in healthcare. You find me a better deal. It doesn't exist. There's no better value in the country in healthcare.

Coach JPMD (17:06)
Medical expense would be.

Dr. Lee Gross (17:27)
and direct primary care and the downstream savings are phenomenal. And for the federal response to be putting a cap on that blows my mind before they would put a cap on hospital charges, a cap on, know, imaging service charges or whatever. They're gonna cap us, whatever. But what I will say is over the years, we made the language better and the ways and means, which is the committee of record that put this bill out to begin with,

in their summary that they specifically meant that that cap was on how much can be used from your health savings account. So if I can compare that to sort of your ⁓ home mortgage, the federal government's not telling you how much house you can buy, they're telling you how much mortgage interest you can deduct from your taxes. So they're not telling you how expensive your DPC can be, but they're telling you how much of it you can use pre-tax from your health savings account. And so that's what we're now going to be working with.

HHS and the Treasury on rolling out the rules and regulations around this is that that's how it's implemented. And people will figure out what over $151 looks like and how that is addressed, but it's not clear in the law.

Coach JPMD (18:41)
So that comes to one of my questions is that what happens between now and the time that the law is supposed to be enacted or enforced? Because it's not going to affect January 20, 2026, So.

Dr. Lee Gross (18:54)
Yeah, I think it's business as

usual for everybody. Keep doing what you're doing. I probably wouldn't roll out any large employer groups immediately, but again, I believe it was always fine. This just clarifies that we were right.

Coach JPMD (19:06)
Okay.

So, and this also doesn't address, if they put a cap on it, it doesn't address inflation. It doesn't address, it does?

Dr. Lee Gross (19:13)
It

It references for inflation. What it doesn't do is address the high cost of living areas. So what I charge here in Southwest Florida, I'm still at $89 a month. I'm well below 150. I charge a little bit $15 a month for children. So that cap is nowhere near us, but Manhattan?

Coach JPMD (19:17)
It does, okay.

Dr. Lee Gross (19:38)
You can't charge $150 a month in Manhattan, in San Francisco, in San Diego. There's no way. That's not even realistic.

Coach JPMD (19:43)
Yeah, yeah, the rents there,

just in in rent, we'll eat up that money. ⁓ So.

Dr. Lee Gross (19:48)
Right. So it doesn't adjust

for cost of living in different markets. And that's again, sort of one of the areas why we push back hard against that.

Coach JPMD (19:56)
It also excludes specialty services and prescription drugs. So that means that you can't use your HSA to purchase drugs in the DPC practice. So if you're providing, you know...

Dr. Lee Gross (20:06)
No means

you can't bundle the drugs into your membership. You can sell them.

Coach JPMD (20:10)
Okay, which you can

make additional money selling drugs and selling other services.

Dr. Lee Gross (20:16)
And you can use your HSA to pay the practice for those medications. You cannot build them into your subscription price. And the prescriptions don't count towards your caps as well.

Coach JPMD (20:26)
Okay.

Okay, so that's actually not bad because then.

Dr. Lee Gross (20:34)
It's not bad

where that gets practices like me. So if we give a B12 shot in the office, if I do a cortisone injection in a joint, ⁓ I don't charge for those services. There's no cost that I pass along to the patient. Other practices do. Other practices will charge the medication costs. I never did. We never have. It's included in your membership. So technically, that is bundling. If I give you

Coach JPMD (20:42)
Huh?

Dr. Lee Gross (21:03)
depo med roll in an intra-articular injection into your knee, I am bundling a prescription drug into the cost of your membership. So could I do an accounting thing where I charge them a penny separately for that service? Yes, I could. There's workarounds for that to make it practical. I don't want you to.

Coach JPMD (21:13)
Okay.

to keep in

line with the law that says that you can't you can't provide any other services within that membership. Is that what you're saying? Okay.

Dr. Lee Gross (21:34)
Right.

You know, so, the crazy thing is, is that all the conversations that I've had with people, I can't find anybody that can tell me why that provision is in there. Why, what is wrong with making something more affordable to people and bundling it into a membership? But nobody can explain that to me as to how it got there. Even to this day, I still have no idea what that provision is intended to accomplish.

Coach JPMD (21:46)
Hmph.

It's strange how we can pass these laws and doctors are not necessarily involved. You said there was only three people involved in the decision in negotiations with this.

Dr. Lee Gross (22:12)
There were, well,

we were only one of probably many people that were meeting with them, ⁓ one group. So there were three people in our meeting. I'm certain they had multiple meetings. But yeah, mean, there were the DPC coalition has been all over this for a decade. All of the medical societies have been lobbying for this for years. So we were not the only one towing this rope, that's for certain.

Coach JPMD (22:17)
Okay, one group, and your group. Okay.

So what would you say to a new resident coming out? And now things have changed and made things are a little bit clearer. Is this still the way to go? And what are you hearing on the ground? Do you see residents? Do you see specialists in your practice that want to do this or still on the fence? What's your pulse on the ground with the new ones?

Dr. Lee Gross (23:02)
Yeah, I mean, there's no

question that we definitely have momentum. You know, there, when you get the wind at your back, like we just got, as opposed to the wind directly in your face, I think it helps grow the movement. ⁓ You know, it feels like, you know, the government is supporting it when you're up against an army of people that want it to fail.

an army of special interests that wanted to fail. And so to have the backing of the federal government that this is a legitimate service that's not going to get shut down by some large insurance company that doesn't like what we do. That's helpful. I definitely think it grows the movement. So when I started my practice in 2010, there were probably a dozen of us around the country that were doing it simultaneously. There were definitely people that did it long before me.

the Q alliances of the world and the garrison blisses and so forth. ⁓ But ⁓ now there's thousands of us in all 50 states. We've had legislation passed in more than half the states in the country to protect the practice model. So you can do it freely and openly and don't have to hide in the shadows anymore. And so I think that's big. think that when we put on our conferences, ⁓

Coach JPMD (24:14)
Yeah.

Dr. Lee Gross (24:22)
years ago, well, for the last several years, we put on our conferences, the Nuts and Bolts Conference Series to teach physicians how to do this. And we've had well over a thousand doctors come through our training program. When I started this, expected a bunch of white haired people like me that were really, that had gone through their careers, didn't like the changes in medicine. And you were just so disgruntled with how the system had changed and how somebody moved my cheese. ⁓ That I expected a room full of just angry old men that were pissed off.

⁓ And what I got was a group of very young right out of training in training students ⁓ of all backgrounds and varieties in their lives and They were already burnt out in training ⁓ They were they weren't even done with training and they already were looking for an alternative career path And so and again, I hate to use that that phrase burnt out because I believe it's moral injury is more appropriate phrase ⁓

Coach JPMD (25:08)
⁓ That's crazy.

Dr. Lee Gross (25:22)
But if we're burning out our next generation of doctors before they even step foot into the career, ⁓ what in the hell are we doing? But when they see DPC, their eyes light up and say, wow, there is a future in this. I could do this. This is when I wrote my essay to get into medical school, that was the doctor I wanted to be. I didn't want to be the doctor checking the boxes with my face in a laptop and making sure I get my RVUs.

⁓ Nobody writes about their RVUs in their med school applications. But boy, doing it this way is so much more rewarding. And when you have a student that rotates to the office and you can just see, wow, I didn't even know this was possible in medicine today in the United States. so ⁓ it definitely is the future. As you know, personally, it's a lot of work. ⁓

Coach JPMD (26:09)
Yeah.

Yes.

Dr. Lee Gross (26:19)
you know, we sort of get accused of this being country club medicine and that we're skimming the cream off the top and leaving the, and, you taking care of the worried well and letting the system take care of the sick people. ⁓ These patients are sick. They need us. They want us. I believe we have essentially become the safety net's safety net, taking care of patients that are falling through large cracks in our system. ⁓

Coach JPMD (26:49)
Yeah.

Dr. Lee Gross (26:50)
And think it's a rewarding feeling as a physician. It's, you know, I know I can raise my prices. I could double my prices. Why don't I? Those are, that's not why I do this. You know, we make a decent living just because we can raise the prices doesn't mean we should raise our prices. ⁓ And I enjoy the patience that I get at the price point I'm at because I'm attracting sort of the working poor. ⁓ And

Coach JPMD (27:09)
Mm-hmm.

Dr. Lee Gross (27:18)
I kind of laugh at the country club medicine accusations of DPC and you know, work cherry picking, but people that truly understand what we do get it. it is, know, running your own business is hard. Recruiting.

Coach JPMD (27:22)
Yeah.

Yeah. Yeah.

We're not taught that. But you know, we have the resources now in this day and age, you know, we can Google things, can chat GPT things and we can listen to podcasts ⁓ that can really educate us.

Dr. Lee Gross (27:47)
But what I think this law does is it opens up more abilities for the DPC docs to work with businesses, work with employers, work with ⁓ not within insurance, but work with insurance. ⁓ And when you do the health savings account, it essentially allows a cash-based economy for more standard stuff, the more predictable things, and allows the insurance to be the backup as opposed to the

Insurance running every single transaction So in my world, you know that in my world we can make almost everything affordable through cash pack the insurance makes it more expensive and makes it harder to to access and so if we can convert as many routine things in the cash based transactions and Then it forces the price transparency

Coach JPMD (28:19)
Yeah, absolutely, absolutely.

Dr. Lee Gross (28:42)
forces market competition between doctors and hospitals and free market facilities ⁓ that drive up quality and down the price.

Coach JPMD (28:51)
Yeah, absolutely. I agree 100%. And, you know, I really appreciate you taking the time to kind of explain some of this stuff to us. ⁓ You know, it's, you know, you're an inspiration and I hope you're an inspiration to others that are looking to do the DPC practices in this country and just return medicine to what it should be. It's just patient care, taking care of patients and not taking care of hospital.

hospitals and their profits basically.

Dr. Lee Gross (29:25)
Yep, absolutely. I appreciate it. It's been a pleasure to chat with you.

Coach JPMD (29:28)
Thank you again. We'll see you soon.

Dr. Lee Gross (29:31)
Thanks.