Direct Primary Care for Employers: Costs and Evidence

Direct primary care is one of the more interesting ideas in employer health benefits, and one of the most oversold. The model is sound, and for the right employer it improves access to care in ways employees notice. But the savings figures in vendor material are rarely supported by independent evidence, and whether you save anything depends mostly on how your health plan is funded.

What Direct Primary Care Is

In a direct primary care (DPC) arrangement, a primary care practice charges a flat periodic membership fee, usually monthly, in exchange for ongoing primary care. The practice does not bill insurance for those services. Members typically get same-day or next-day appointments, longer visits, direct phone or text access to their physician, and basic in-office services covered by the fee.

See also: Improving Health. Controlling Costs. Delivering Results., our approach for employers who want cost to move between renewals.

Because the practice is paid by membership rather than per visit, it can keep much smaller patient panels than a conventional practice. That is the source of the access advantage, and the reason capacity in any given area is limited.

What DPC does not cover is everything outside primary care: specialists, hospital care, emergency care, most imaging, and prescription drugs. A DPC membership is not health insurance. Employers who offer it do so alongside a group health plan, not in place of one.

Michigan treats DPC agreements as medical retainer agreements, which fall outside the state Insurance Code under MCL 500.129. In practice that means a practice can sell memberships without being regulated as an insurer.

What the Independent Evidence Actually Shows

The most rigorous independent study available was produced for the Society of Actuaries in May 2020. It examined a midsized self-insured employer that offered DPC as an option alongside a traditional plan, covering about 1,000 employees and 1,000 dependents, with roughly half enrolling in DPC.

After controlling for demographics and health status, the DPC option was associated with a statistically significant 12.64% reduction in overall demand for health care services, driven largely by fewer emergency department and facility visits.
Once the membership fees were counted, the DPC option increased the employer’s total non-administrative plan costs by 1.3%, with a plausible range from a 5.2% reduction to a 7.8% increase.
The authors stressed that controlling for selection is essential. The employees who chose DPC were healthier and lower-cost than those who did not, so a naive comparison would have overstated the savings considerably.

In other words, DPC reduced how much care people used, and the membership fees used up that saving. The authors’ own conclusion was measured: for many employers, introducing DPC on a cost-neutral basis while improving access and employee experience would be a sufficient return.

That is the honest benchmark. Claims that DPC reduces outpatient or total claims costs by 20% or 30% generally come from vendors or from comparisons that do not adjust for the fact that healthier employees tend to opt in. We would not build a budget on them.

Why Your Funding Arrangement Decides Whether DPC Saves Anything

The mechanism by which DPC could save an employer money is lower claims: fewer emergency visits, fewer unnecessary specialist referrals, conditions managed earlier. Whether you capture that depends entirely on who keeps the claims savings.

Funding Arrangement	Who Keeps Lower Claims	What DPC Does for Your Costs
Fully insured, 2–50 employees	The carrier. Small group rates are not based on your own claims	Adds the membership fee as a new cost with no offsetting premium reduction. Can still be worth it for access and recruiting, but not as a cost measure
Fully insured, 51+ employees	The carrier in the current year; partly you at renewal, to the extent your rates reflect your own experience	Any saving arrives indirectly and late, through a better renewal, and only if the carrier gives your experience weight
Level funded	Partly you, through any surplus return, depending on the contract terms	A real, if diluted, mechanism, and worth modeling against the surplus provision
Self-funded	You, directly	The only arrangement where lower claims flow straight back to the employer. This is where the SOA study was conducted, and where it found costs roughly neutral
ICHRA or QSEHRA	Neither. Employees buy their own individual coverage	Can be offered alongside, but the employer does not capture any claims effect

This is the question to settle before looking at any DPC vendor. A small employer on a fully insured plan can have perfectly good reasons to offer DPC: faster access, a benefit employees value, a recruiting edge. Cost reduction is not one of them, because nothing about your premium responds to fewer claims.

DPC and HSAs After January 1, 2026

Until 2026, enrolling in a DPC arrangement generally made an employee ineligible to contribute to a health savings account, which kept DPC and high-deductible plans apart. That changed with the One Big Beautiful Bill Act. Under IRS Notice 2026-05, beginning January 1, 2026, an otherwise eligible individual enrolled in a qualifying DPC arrangement may still contribute to an HSA.

For an arrangement to qualify:

The fee must be a fixed periodic fee, and it must be the sole compensation for the care provided. A practice that charges a membership and also bills separately for included services does not qualify.
Fees cannot exceed $150 per month for individual coverage or $300 per month for family coverage. Practices may bill quarterly or annually as long as the total stays within those limits.
The arrangement cannot include procedures requiring general anesthesia, prescription drugs other than vaccines, or laboratory services not typically administered in an ambulatory primary care setting.

One employer-specific detail: if the employer pays the DPC fee, including through pre-tax employee contributions under a cafeteria plan, those fees are not treated as qualified medical expenses that the HSA can reimburse. The employee remains HSA-eligible; the HSA simply cannot also pay a fee the employer already covered.

The practical result is that DPC can now be paired with an HSA-qualified high-deductible plan. For self-funded employers that combination is worth modeling: the DPC practice handles routine care without deductible friction, while the HDHP and HSA carry everything else. Our page on HDHP and HSA limits has the current figures.

Optimizing DPC Integration for Michigan Employers

Access employees notice. Same-day appointments, unhurried visits and a physician who answers messages are the benefit employees remember, particularly those used to waiting weeks for a primary care slot.
Fewer avoidable emergency visits. The utilization reduction the SOA study found was concentrated in emergency and facility services, which is where easy primary care access would be expected to help.
Chronic condition management. Longer visits and direct contact suit employees managing diabetes, hypertension and similar conditions, where continuity matters more than any single visit.
A recruiting and retention signal. For a workforce that values it, DPC is a visible benefit that competitors frequently do not offer.
HSA compatibility since 2026, which removes the old conflict with high-deductible plan designs.

The Limitations and Pitfalls

The savings are unproven at scale. The best independent evidence points to roughly cost-neutral after fees. Vendor ROI figures deserve the skepticism you would apply to any wellness savings claim.
Selection flatters the results. Where DPC is optional, healthier employees opt in. Any results a vendor shows you from its own clients should adjust for that, and usually do not.
Geography limits it. DPC only works for employees who live or work near a participating practice. A single-site employer near a practice can make it work; a workforce spread across rural Michigan counties usually cannot.
Capacity is finite. Small panels are the point of the model, which also means a practice may not be able to absorb a large group at once.
Employees must actually switch. DPC only changes anything if employees use the DPC physician instead of their existing one. Many will not leave a doctor they already like.
It adds a vendor and a contract. The membership is a separate agreement with its own terms, termination provisions and data-sharing questions, alongside the health plan.
It is not coverage. A DPC membership is not minimum essential coverage. Offered on its own, it does not satisfy the employer mandate or protect employees from specialist, hospital or prescription costs.

When DPC Tends to Fit

Consideration	Better Fit	Weaker Fit
Funding	Self-funded, or level funded with a meaningful surplus provision	Small fully insured group, where lower claims do nothing for premium
Location	Workforce concentrated near one or more participating practices	Dispersed or rural workforce far from any practice
Workforce	Employees without an established primary care relationship, or with poor current access	Employees attached to existing physicians they do not want to leave
Objective	Access, experience and recruiting, with cost treated as neutral	A specific cost-reduction target
Plan design	Paired with an HSA-qualified high-deductible plan	Low-deductible plan where primary care is already cheap to use

Questions to Ask a DPC Practice or Vendor

Where are your practices, and how many of our employees live or work within a reasonable drive? Map it against your census before anything else.
What is your panel limit, and can you take our group without closing to new members?
What exactly does the membership include — which labs, which in-office procedures, which medications at cost, and what is billed separately?
Does your arrangement meet the HSA requirements in Notice 2026-05? Fixed fee as sole compensation, within the monthly limits, with no excluded services.
What results can you show from other employers, and did the comparison adjust for who chose to enroll?
What data will you share with us on utilization and referrals, and in what form?
What are the contract term and termination provisions?

How We Help

We are not a DPC provider and we do not sell memberships. When an employer asks us about direct primary care, our work is advisory: we look at how your plan is funded and whether DPC could affect your costs at all, map participating practices against where your employees actually are, and read the vendor’s claims against the independent evidence. Where DPC fits, we will say so. Where it would add a cost with no offsetting benefit to you, we will say that too.

Frequently Asked Questions

What is direct primary care for employers?

Direct primary care is an arrangement in which a primary care practice charges a flat monthly membership fee for ongoing primary care instead of billing insurance per visit. An employer can pay that membership for employees as a benefit, typically alongside a group health plan. Members usually get faster appointments, longer visits and direct access to their physician. DPC does not cover specialists, hospital care, emergency care or most prescriptions, so it is not a replacement for health insurance.

Does direct primary care save employers money?

The independent evidence says roughly break-even. A 2020 study for the Society of Actuaries found DPC was associated with a 12.64% reduction in demand for health care services after adjusting for health status, but once membership fees were counted, the employer’s total plan costs were 1.3% higher, within a range of 5.2% lower to 7.8% higher. The authors suggested cost-neutral with better access is a reasonable expectation. Vendor claims of 20% or 30% savings usually do not adjust for healthier employees choosing DPC.

Does DPC make sense for a small fully insured employer?

As an access and recruiting benefit, possibly. As a cost measure, no. In the small group market your premium is set by the carrier’s filed rates rather than your own claims, so any reduction in claims that DPC produces benefits the carrier, not you. The membership fee becomes an added cost with no offsetting premium reduction. DPC can only reduce employer costs where the employer keeps the claims savings, which means self-funded plans and, to a lesser degree, level-funded plans.

Can employees have DPC and an HSA at the same time?

Yes, since January 1, 2026. Under IRS Notice 2026-05, implementing the One Big Beautiful Bill Act, an otherwise eligible individual in a qualifying DPC arrangement can still contribute to an HSA. The arrangement must charge a fixed periodic fee as its sole compensation, stay within $150 per month for individual or $300 per month for family coverage, and exclude general-anesthesia procedures, prescription drugs other than vaccines, and non-routine lab services. If the employer pays the fee, the HSA cannot also reimburse it.

Is direct primary care considered insurance in Michigan?

No. Michigan treats DPC agreements as medical retainer agreements, which fall outside the state Insurance Code under MCL 500.129. A practice can sell memberships without being regulated as an insurer. That also means a DPC membership is not health insurance for the employee, and it is not minimum essential coverage for ACA purposes.

Can DPC replace our group health plan?

No. DPC covers primary care only. Employees still need coverage for specialists, hospitalization, emergency care, imaging and prescriptions, and a DPC membership alone does not satisfy the ACA employer mandate for an applicable large employer. Employers use DPC alongside a group health plan, most usefully a high-deductible plan where DPC handles routine care without deductible friction.

How much does a DPC membership cost?

Fees vary by practice and age. Survey figures reported in the 2020 Society of Actuaries study showed monthly fees around $75 for adults aged 25 to 50 and around $40 for children. For employees who want to keep HSA eligibility, a qualifying arrangement cannot exceed $150 per month for individual or $300 per month for family coverage. Get quotes from practices near your workforce rather than relying on national averages.

Unhappy with your current broker? Switch to CFH. Your employees won’t notice. You will.

Also from CFH: Long-Term Disability Insurance: A Buyer’s Guide for Michigan Employers · Term vs Whole Life: The Question Employees Bring to HR · Employee Health Insurance Consulting: Comprehensive Benefits Services and

Integrating Direct Primary Care into Michigan Self-Funded Plans