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Can Physician “Concierge Fees” be Reimbursed From a Health FSA or HSA?

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By Janet Palcko

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Nov 25, 2014 –  As “concierge medicine” gains popularity, we are getting a lot of inquiries as to whether such fees can be reimbursed from a Health FSA or HSA.  The answer is not always clear.

What is Concierge Medicine?

Concierge medical practices provide a personalized focus to healthcare.   Patients may experience longer visits, an emphasis on preventive care, greater access to their physician, more patient education, and insurance management services.  Patient loads are less than in traditional medical practices.  The patient pays an additional fee for these “concierge services”; fees vary widely, but average $1,000-1,800 annually for a Family.

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Can Concierge Fees be reimbursed from a Health FSA or HSA?

A quick rule of thumb is if the expense is directly related to a qualified medical service that has been provided, it is reimbursable.  If it is only for access to services, or the right to “get in the door,” then it is not a qualified medical expense for HSA/FSA reimbursement purposes.

Who decides whether an expense is reimbursable under a health FSA or an HSA?

Not the claims administrator and certainly not the doctor. It depends on whether it meets the IRS definition of a qualified medical expense and whether it is a permitted expense under the employer’s plan.

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HSAs, the Affordable Care Act and Concierge Medicine

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In practical terms, to determine whether an expense is for medical care, an administrator (NEO) must ask: what, who, when, and why?

  • What is the expense for? The expense must fall within the legal definition of medical care as defined in Code §213(d) and be permitted under the employer’s plan. The expense must be for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. It must primarily be to alleviate or prevent a physical or mental defect or illness. This is the basis for all eligible medical expenses.
  • Who is the expense for? The expense must be for the participant, his or her spouse, a tax dependent, or a child who has not attained age 27 as of the end of the taxable year.
  • When was the expense incurred? It must be within the Plan Year (for a health FSA) or after the account was established (for an HSA).
  • Why was the expense incurred? It must be primarily for a medical purpose (e.g., generally not for cosmetic purposes).
Concierge Models Reimbursable?
Access Fees. Participant subscribes to a medical concierge to have access to care.  At the time services are rendered, additional fees directly related to the medical care given are charged and billed to insurance. No – the subscription portion of the fee is not eligible. But generally the amount related to actual care provided would be considered as an eligible medical expense
Annual Physical.  A fee is charged for an annual physical, and includes no additional non-medical services or “amenities.” Yes – but if the fee was paid up front, it is only reimbursable once the physical has actually been performed.  Keep in mind that annual physicals are often reimbursed at 100% by insurance; if the employee doesn’t have any out-of-pocket expense for the physical, nothing is reimbursable by the FSA or HSA.
Concierge Fees. Fees are exclusively for special treatment or extras like expedited or longer appointments, special waiting rooms, newsletters, etc. and are charged whether medical services are actually provided or not. No – These are not qualified medical expenses and, therefore, are generally not eligible for reimbursement through the participant’s HSA or FSA.
Monthly Retainer Fees. Similar to concierge fees above, but the fee offsets part or all of the cost of future services. The same is true of a monthly fee that a patient must pay in addition to any co-pays, deductibles, or other charges for office visits. No – Think of it as being similar to an insurance plan that will cover potential future expenses. They are like insurance because they are payable whether or not medical care is provided. Thus, they fall under the “no reimbursement of insurance premiums” rule that applies to health FSAs.

Bottom line: Most of these arrangements do not meet the criteria to be considered qualified health care expenses under the Code. If you want to submit such expenses under your employer’s FSA plan, expect to be asked to back up the reimbursement claims with documentation that medical services were rendered.

Janet Palcko is a partner at NEO Administration Company, a benefits consulting firm that provides FSA, HRA, HSA and COBRA administration and compliance services to area employers. As managing partner, she is responsible for all aspects of NEO’s business, from fiscal planning to practice development, compliance, and client services. Ms. Palcko is a member of the National Association of Professional Benefit Administrators (NAPBA) and the Employer’s Council on Flexible Compensation (ECFC)in Washington DC and is one of a select number of practitioners in the U.S. who have earned the designation of Certified in Flexible Compensation (CFC) from ECFC’s Academy of Professional Standards & Ethics. The CFC designation is the highest professional certification available for practitioners in flexible compensation. Janet is also certified in FSA, HRA, HSA and COBRA administration.

5 replies »

  1. Thank you for providing an easy “rule of thumb” guide for membership based practices and consumers to use as they contemplate how to access their pre-tax FSA and HSA dollars. If you are a physician, educating consumers on how to access FSA and HSA dollars is a powerful way to market your practice. However, you should have the internal documents and processes built into your practice prior to marketing this message as it’s incredibly difficult to recreate retroactively.

    Here are a few steps to consider:
    1) Create a list of all of your “covered” and “non-covered” medical services, according to insurance. You then want to take this list and compare it to the IRS Qualified Medical Expense list.
    2) Identify the IRS Qualified Medical Expenses and the “non-covered” medical services that fall into the reimbursable category, you will need to assign the correct description for the service for documentation that will ultimately appear on the reimbursement documents. This information then needs to be placed into your EMR/ EHR along with a fair market value for the qualified services provided.
    3) Take the time to train your medical team on how to document each interaction with your members for the membership related service list that you have created. The time you invest in your team now, will create tremendous efficiencies in generating accurate invoices that depict the date of service, description of service and value of the services which will lead to a higher likelihood for reimbursement.

  2. Unfortunately, this article does not completely address the services rendered by a DPC practice. Unlike Concierge practices which charge a retainer to their wealthy clients, a DPC practice (which uses a membership payment model) both offers and provides actual medical services for the cost of the monthly membership to its clients. Many DPC practices bill/collect/invoice in arrears (after the month of service has passed) whether the patient has utilized the services offered or not. This is not unlike a prescription which is either filled and taken or filled and not taken. The prescription cost is covered by the HSA/FSA/HRA with no questions asked about consumption of the prescribed medication. I do not understand why this same type of logic could not be “legally” applied to the treatment/services offered by a DPC practice (whether or not the patient actually “consumes” the purchased service/treatment).
    We have had to “justify” to HRA/FSA administrators that the cost of the monthly membership over the past 3 months in question was substantially less than the fee-for-service costs would have been. (Usually not too difficult to prove if a patient has had at least one visit.) We have called Humana to obtain clarification on this question for their HRA administered plans, but have never received any replies by email, phone or letter. We have visited our state’s health commissioner with the same question and have not been given an answer either.
    I think the IRS needs to amend Publication 502 “Medical and Dental Expenses” with clarification about the validity of DPC membership costs being recognized as legitimate medical expenses for HSA/HRA/FSA purposes. Until then, we are all left in a quandary.

  3. Sonja,
    It looks like we are doing a similar process as you.
    We offer either a membership or typical fee-for-service direct payment model to our patients. All of our medical services meet the requirements of IRS Publication 502, so it is a no-brainer for our fee-for-service patients to justify the use of their HRA/HSA/FSA for our services. (We also provide a standard CPT code on our statement for them.) We then list our standard fees (used for our fee-for-service patients) as “value of service” on statements for our membership patients when they request justification for HRA/FSA purposes for the cost of their membership. It is a little tedious and frustrating, but until the IRS determines that DPC membership costs are “qualified medical expenses” in and of themselves, I see no other way to help our patients justify their medical expenses to their health plan administrators.
    Thanks for your ideas,
    Bruce

  4. I am interested in knowing if I only charge my patients the monthly fee (no copay) for all services, does it qualify? I suppose I know the answer to that question, but the reality in my practice is that the monthly fee is not simply for access, it is for the ongoing care I give (looking through people’s records, reaching out to people who need care, e-visits, etc). It seems like this system is still mired in the idea that “care” equals procedures. Care is about access and communication, not doing stuff necessarily. I am not sure if there is any way to change this, but it seems that any visits my patients have (or communication with me) is something they get in exchange for my monthly fee. Again, I wonder if not charging a visit copay helps me on this.

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