Both models charge patients a recurring membership fee. In direct primary care (DPC), the membership fee is the payment for the primary care it covers, and the practice relies on patient fees for that care; a concierge practice charges an annual membership on top of billing insurance and government programs for covered services (American Academy of Family Physicians). That one difference shapes how Medicare, health savings accounts (HSAs), and state insurance law treat your practice.
The short version.
Direct primary care is a membership model in which patients pay a recurring fee, monthly, quarterly, or annually, that covers their primary care services, as an alternative to fee-for-service insurance billing (AAFP). Washington's insurance regulator describes direct practices the same way: a set monthly fee for all primary care services, regardless of the number of visits (Washington Office of the Insurance Commissioner, 2025 report).
Federal tax law now carries its own definition. For HSA purposes, a direct primary care service arrangement provides only primary care services from primary care practitioners, and a fixed periodic fee is the sole compensation for that care (IRS Notice 2026-5). The notice names who counts as a primary care practitioner: a physician whose primary specialty designation is family, internal, geriatric, or pediatric medicine, or a nurse practitioner, clinical nurse specialist, or physician assistant.
Concierge medicine is a membership model in which patients pay an annual fee, billed annually or monthly, while the practice can keep accepting insurance and government programs and billing insurers (AAFP). The AAFP lists an in-depth physical and screenings as what the concierge membership covers.
The labels overlap in law. Washington's regulator notes that direct practices are sometimes called "retainer" or "concierge" practices (Washington OIC). The IRS, the OIG, and Washington's regulator each look at the arrangement itself: what the fee covers, and whether you also bill a payer for the same services.
| Direct primary care | Concierge medicine | |
|---|---|---|
| What the fee pays for | The primary care services in the membership (AAFP) | An in-depth physical and screenings, alongside insurance billing (AAFP) |
| Insurance billing | Relies on patient fees for member primary care (AAFP) | Can keep billing insurers and government programs (AAFP) |
| HSA treatment from 2026 | Qualifies when the IRS conditions are met (IRS Notice 2026-5) | A membership that also bills separately for member services does not qualify (IRS Notice 2026-5, Q-11) |
| Medicare patients | Opt out with a private contract per patient, or charge only for non-covered services (CMS, OIG) | Fee limited to non-covered services while you bill Medicare (OIG) |
| State insurance law | Set by each state; Washington exempts registered direct practices from insurer rules (Washington OIC) | Set by each state |
Yes, from January 1, 2026. The One, Big, Beautiful Bill Act changed the rule, and IRS Notice 2026-5 sets out how it works (IRS). Before the change, a DPC arrangement could count as a health plan and could end a member's eligibility to contribute to an HSA (IRS Notice 2026-5).
Under the notice, your arrangement keeps a member HSA-eligible when it meets these conditions:
The terms of the arrangement decide whether it qualifies, whatever services a given member uses (Q-14). Above the fee limit, members can still pay DPC fees from an HSA, but they lose eligibility to contribute to an HSA while enrolled (A-20).
The HSA rule covers only the practitioner types the notice lists: physicians with a primary specialty designation in family, internal, geriatric, or pediatric medicine, plus nurse practitioners, clinical nurse specialists, and physician assistants. A membership from a practitioner outside that list, such as a physician in another specialty, a registered dietitian, therapist, health coach, or chiropractor, gives its members no protection for their HSA contribution eligibility under this rule.
You have two paths with Medicare patients, and the membership fee works differently on each.
If you stay enrolled and bill Medicare, the HHS Office of Inspector General (OIG) states that charging patients for services Medicare does not cover is legal, and that an "access fee" or "administrative fee" that lets Medicare patients obtain Medicare-covered services from your practice is double billing (OIG). The OIG cites a physician who paid $107,000 to resolve potential liability over an annual patient fee; the alleged violation was that some of the services outlined in the annual fee were already covered by Medicare.
If you opt out of Medicare, CMS requires a private contract with each Medicare patient (CMS). CMS lists who is eligible to opt out: doctors of medicine, osteopathy, dental surgery or dental medicine, podiatric medicine, and optometry; physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives; and clinical psychologists, clinical social workers, registered dietitians and nutrition professionals, marriage and family therapists, and mental health counselors. Chiropractors, physical therapists, occupational therapists, qualified audiologists, qualified speech language pathologists, and anesthesiology assistants cannot opt out. The opt-out applies to all your Medicare patients and services, and it renews automatically every two years unless you cancel at least 30 days before it expires. Emergency and urgent care are the exception: you cannot sign private contracts with Medicare patients who need those services.
It depends on your state, so start with your state's insurance department. Washington is one documented example. Its legislature authorized direct practices in 2007 under RCW Chapter 48.150, and registered direct practices are not insurers under the state insurance code (Washington OIC). The same report sets out what that safe harbor asks of a practice:
Washington had 99 registered direct practices in 2025, with monthly fees from $40 to $2,000 (Washington OIC).
Run your plan against four questions.
For a functional medicine practice that sells programs and packages outside primary care, the IRS DPC definition does not reach that work. Practice Better's guide to switching to a cash-based functional medicine practice covers that transition, and how to set up cash-pay packages covers pricing and payment plans.
Practice Better handles the recurring billing side of either model. For memberships, clients are charged automatically when they purchase and keep being charged at regular intervals until you cancel the payment plan; installments can charge daily, weekly, or monthly (Earn recurring revenue with subscriptions and memberships).
Practice Better serves medical doctors and nurse practitioners with practice management and EHR software in one platform. Which legal model your memberships fall under stays a decision for you and your counsel.
Write down what your membership fee covers, who you bill besides the patient, and whether you see Medicare patients. Those three answers place you in one model or the other. Then set up the fee, packages, and payment plans to match.
Start a free trial of Practice Better and build your first membership plan.
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Both models charge patients a recurring membership fee. In direct primary care (DPC), the membership fee is the payment for the primary care it covers, and the practice relies on patient fees for that care; a concierge practice charges an annual membership on top of billing insurance and government programs for covered services (American Academy of Family Physicians). That one difference shapes how Medicare, health savings accounts (HSAs), and state insurance law treat your practice.
The short version.
Direct primary care is a membership model in which patients pay a recurring fee, monthly, quarterly, or annually, that covers their primary care services, as an alternative to fee-for-service insurance billing (AAFP). Washington's insurance regulator describes direct practices the same way: a set monthly fee for all primary care services, regardless of the number of visits (Washington Office of the Insurance Commissioner, 2025 report).
Federal tax law now carries its own definition. For HSA purposes, a direct primary care service arrangement provides only primary care services from primary care practitioners, and a fixed periodic fee is the sole compensation for that care (IRS Notice 2026-5). The notice names who counts as a primary care practitioner: a physician whose primary specialty designation is family, internal, geriatric, or pediatric medicine, or a nurse practitioner, clinical nurse specialist, or physician assistant.
Concierge medicine is a membership model in which patients pay an annual fee, billed annually or monthly, while the practice can keep accepting insurance and government programs and billing insurers (AAFP). The AAFP lists an in-depth physical and screenings as what the concierge membership covers.
The labels overlap in law. Washington's regulator notes that direct practices are sometimes called "retainer" or "concierge" practices (Washington OIC). The IRS, the OIG, and Washington's regulator each look at the arrangement itself: what the fee covers, and whether you also bill a payer for the same services.
| Direct primary care | Concierge medicine | |
|---|---|---|
| What the fee pays for | The primary care services in the membership (AAFP) | An in-depth physical and screenings, alongside insurance billing (AAFP) |
| Insurance billing | Relies on patient fees for member primary care (AAFP) | Can keep billing insurers and government programs (AAFP) |
| HSA treatment from 2026 | Qualifies when the IRS conditions are met (IRS Notice 2026-5) | A membership that also bills separately for member services does not qualify (IRS Notice 2026-5, Q-11) |
| Medicare patients | Opt out with a private contract per patient, or charge only for non-covered services (CMS, OIG) | Fee limited to non-covered services while you bill Medicare (OIG) |
| State insurance law | Set by each state; Washington exempts registered direct practices from insurer rules (Washington OIC) | Set by each state |
Yes, from January 1, 2026. The One, Big, Beautiful Bill Act changed the rule, and IRS Notice 2026-5 sets out how it works (IRS). Before the change, a DPC arrangement could count as a health plan and could end a member's eligibility to contribute to an HSA (IRS Notice 2026-5).
Under the notice, your arrangement keeps a member HSA-eligible when it meets these conditions:
The terms of the arrangement decide whether it qualifies, whatever services a given member uses (Q-14). Above the fee limit, members can still pay DPC fees from an HSA, but they lose eligibility to contribute to an HSA while enrolled (A-20).
The HSA rule covers only the practitioner types the notice lists: physicians with a primary specialty designation in family, internal, geriatric, or pediatric medicine, plus nurse practitioners, clinical nurse specialists, and physician assistants. A membership from a practitioner outside that list, such as a physician in another specialty, a registered dietitian, therapist, health coach, or chiropractor, gives its members no protection for their HSA contribution eligibility under this rule.
You have two paths with Medicare patients, and the membership fee works differently on each.
If you stay enrolled and bill Medicare, the HHS Office of Inspector General (OIG) states that charging patients for services Medicare does not cover is legal, and that an "access fee" or "administrative fee" that lets Medicare patients obtain Medicare-covered services from your practice is double billing (OIG). The OIG cites a physician who paid $107,000 to resolve potential liability over an annual patient fee; the alleged violation was that some of the services outlined in the annual fee were already covered by Medicare.
If you opt out of Medicare, CMS requires a private contract with each Medicare patient (CMS). CMS lists who is eligible to opt out: doctors of medicine, osteopathy, dental surgery or dental medicine, podiatric medicine, and optometry; physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives; and clinical psychologists, clinical social workers, registered dietitians and nutrition professionals, marriage and family therapists, and mental health counselors. Chiropractors, physical therapists, occupational therapists, qualified audiologists, qualified speech language pathologists, and anesthesiology assistants cannot opt out. The opt-out applies to all your Medicare patients and services, and it renews automatically every two years unless you cancel at least 30 days before it expires. Emergency and urgent care are the exception: you cannot sign private contracts with Medicare patients who need those services.
It depends on your state, so start with your state's insurance department. Washington is one documented example. Its legislature authorized direct practices in 2007 under RCW Chapter 48.150, and registered direct practices are not insurers under the state insurance code (Washington OIC). The same report sets out what that safe harbor asks of a practice:
Washington had 99 registered direct practices in 2025, with monthly fees from $40 to $2,000 (Washington OIC).
Run your plan against four questions.
For a functional medicine practice that sells programs and packages outside primary care, the IRS DPC definition does not reach that work. Practice Better's guide to switching to a cash-based functional medicine practice covers that transition, and how to set up cash-pay packages covers pricing and payment plans.
Practice Better handles the recurring billing side of either model. For memberships, clients are charged automatically when they purchase and keep being charged at regular intervals until you cancel the payment plan; installments can charge daily, weekly, or monthly (Earn recurring revenue with subscriptions and memberships).
Practice Better serves medical doctors and nurse practitioners with practice management and EHR software in one platform. Which legal model your memberships fall under stays a decision for you and your counsel.
Write down what your membership fee covers, who you bill besides the patient, and whether you see Medicare patients. Those three answers place you in one model or the other. Then set up the fee, packages, and payment plans to match.
Start a free trial of Practice Better and build your first membership plan.
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{{free-trial-simple-text}}
