Employer-funded direct primary care held growth to 0.9% a year in five-year analysis
Employers that used health reimbursement arrangements to pay for direct primary care memberships saw annual health care cost growth of 0.9% over five years, far below the 6.2% expected trend attached to the program’s analysis. Emergency department visits fell 31%, inpatient admissions fell 71%, and participating employers were said to have saved $13.84 million over the period. The numbers are striking because they point to a payment model that shifts primary care from fee-for-service billing toward a fixed, prepaid relationship built around access, continuity, and rapid problem resolution.
The business logic is straightforward. If patients can reach a physician early, avoid fragmented visits, and get minor problems handled before they escalate, downstream utilization should fall. That is the promise employers are buying when they use pretax dollars in an HRA to cover monthly membership fees, while the worker’s broader health plan still handles specialist care, hospitalization, and surgery.
How the HRA model changes the economics of primary care
Under the arrangement described here, the employer funds an HRA and the account pays the practice’s fixed monthly membership fee with pretax dollars. Internal Revenue Service proposed regulations from 2020 allowed an employer HRA to reimburse DPC payments because they qualify as medical care under the tax code. The membership does not replace the employer health plan; instead, it sits beside it and changes the front door to care.
In practical terms, that means the worker can use the DPC practice for office visits, urgent symptoms, and ongoing management, while higher-cost services still flow through the existing insurance structure. SALTA Direct Primary Care, which has clinics in Auburn Hills, Clarkston, Shelby Township, and Troy, uses a platform that syncs eligibility, divides payment responsibility, and reconciles accounts so human resources receives a single invoice. For employers, that simplification matters as much as the clinical access story because payroll, benefits administration, and claims reconciliation all shape whether a program feels manageable.
A fixed-fee primary care model can work especially well when a population carries predictable chronic disease burden, frequent minor acute visits, or poor access to timely appointments. The savings mechanism is not mysterious: fewer delays mean fewer unmanaged flares, less urgent care shopping, and fewer emergency department encounters that could have been handled in clinic.
The utilization drop was large, but the comparison needs context
Patients seen in SALTA’s clinics returned to the emergency department at a rate of 23%, compared with 42% for patients in traditional primary care groups. The companies also said members who used the clinics had a 25% lower hospital stay rate than members who did not, even though clinic users carried a 40% higher burden of long-term illness. Those figures suggest the model may be attracting and managing a sicker subset while still reducing acute care use.
A single sentence captures the clinical implication: lower downstream utilization is plausible when access becomes immediate rather than episodic.
Still, the savings claims deserve careful reading. The release and accompanying case study do not identify who conducted the analysis, how many employers or employees were included, which years were covered, or where the 6.2% expected trend came from. Without an enrollment count, the reported $2.90 million annual net savings per 1,000 enrolled people cannot be reconciled cleanly with the $13.84 million total. The release also leaves open the window used to count emergency department return visits, which matters when repeat utilization is used as a quality marker.
Those gaps do not erase the observed pattern, but they limit how confidently employers or physicians can project the result onto a new workforce. A five-year employer case study can show feasibility and signal potential, yet it is not the same as a fully specified comparative effectiveness trial with prespecified endpoints and transparent adjustment for baseline risk.
Selection effects could make the savings look larger than they are
The most important caution comes from prior evidence on who chooses direct primary care. Milliman actuaries, in a 2020 study commissioned by the Society of Actuaries, found that employees who opt into DPC often have lower expected health costs than co-workers who remain in a traditional plan. When that difference is not adjusted for, DPC can appear to generate savings that actually reflect a healthier or more motivated group of employees rather than the delivery model alone.
Milliman compared roughly 900 DPC enrollees with about 1,100 patients in the same employer’s preferred provider organization plan over two years. After adjustment for health status, the DPC group used fewer downstream services, mainly because emergency department and other facility use was lower. Even so, employer net costs for DPC enrollees were estimated to be 1.3% higher, with a range from a 5.2% reduction to a 7.8% increase, because the employer paid the membership fees and waived the medical deductible for everyone in the DPC option.
That mixed result is clinically important. It shows how hard it is to separate the value of better access from the effect of benefit design, employer contribution strategy, and patient self-selection. A direct primary care practice may still be the better clinical environment, but savings cannot be assumed without claims-based verification and a comparator group that looks like the enrollees at baseline.
New HSA rules broaden the appeal for employers and physicians
Federal policy has moved in a direction that could make the employer pitch easier. The One Big Beautiful Bill Act, signed July 4, 2025, changed how direct primary care interacts with health savings accounts by stopping the treatment of qualifying DPC arrangements as coverage that disqualifies someone from HSA contributions beginning in 2026. Treasury and IRS guidance issued in December set the terms: a qualifying arrangement must provide only primary care from primary care practitioners for a fixed fee of no more than $150 per month for one person or $300 for more than one, with inflation indexing after 2026.
The notice also clarifies a series of operational limits. The fixed fee must be the only payment for included services, though the practice can bill separately for care outside the arrangement. If a contract includes services beyond primary care, it fails to qualify even if the patient never uses them. Fees can be billed annually as long as they stay within the monthly cap on an annualized basis. Fees above the cap can still be paid from an HSA, but the member cannot contribute to one while enrolled.
For employer contracting, the most restrictive point may be the interaction with high-deductible coverage. The plan cannot pay DPC fees before the deductible is met, and fees paid by an employer, including through salary reduction, cannot be reimbursed from the employee’s HSA. An HRA generally must reimburse only premiums to avoid disqualifying HSA contributions. Whether the SALTA employer cohort was enrolled in HSA-eligible plans was not stated.
Employers are treating DPC as a staffing and retention tool as much as a benefit
Physicians who market DPC to employers describe a recurring pattern: small businesses want an affordable way to offer care without building a large benefits infrastructure, and self-funded employers want predictable spending. Chamber of commerce outreach remains a common entry point. Kelsey Smith, M.D., who practices in Stillwater, Oklahoma, said she targets businesses with fewer than 50 employees. Richard Berry, M.D., whose practice is in Mentor, Ohio, said his employer clients range from two employees to 175 and that HSA use is already common in his small-business population.
The enthusiasm is real, but the evidence base is still uneven. Employers will want claims data, risk adjustment, and a clear accounting of who enrolled before they assume the savings will repeat. Physicians considering employer contracts will need the same discipline, because the strongest clinical case for DPC can be undercut if the payment model is misread as automatic cost control rather than a care redesign that needs careful measurement.