California

California has no law directly addressing DPC.  We are not aware of any planned legislation, although the state has attempted to pass DPC legislation in the past with Senate Bill 1320 in the 2012 session as described in this California Healthline article by Mari Edlin from September 6, 2012.  There are many DPC practices operating across the state.  

When designing your contract be sure to review the California Insurance Code (some of the more important provisions are included below) and the laws & regulations  of the Department of Managed Healthcare (so that you can demonstrate you are not an HMO). The Knox-Keene Act presents a potential hurdle to any prepaid practice models in California.  Please make sure you use a California attorney familiar with these issues - here is a quick overview from the California Society for Healthcare Attorneys.  Jim Eischen, JD has compiled this helpful summary entitled “Providing Care Through Private Direct Agreements” as part of the CMA Health Law Library (Nov 2018). The California HealthCare Foundation has compiled a helpful overview of the Act.

Knox-Keene requires health care providers to obtain a license or exemption from the California Department of Managed Health Care (DMHC) if they engage in global risk arrangements such as accepting a prepaid or periodic charge from enrollees. Here is some of the problematic language from the 1,013 page law:

Article 1 § 1345. Definitions (from the Knox-Keene Act)

“(b) “Basic health care services” means all of the following:
(1) Physician services, including consultation and referral.
(2) Hospital inpatient services and ambulatory care services.
(3) Diagnostic laboratory and diagnostic and therapeutic radiologic services.
(4) Home health services.
(5) Preventive health services.
(6) Emergency health care services, including ambulance and ambulance transport services and out-of-area coverage. “Basic health care services” includes ambulance and ambulance transport services provided through the “911” emergency response system.”

(f) "Health care service plan" or "specialized health care service plan" means either of the following:
(1) Any person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees.
(2) Any person, whether located within or outside of this state, who solicits or contracts with a subscriber or enrollee in this state to pay for or reimburse any part of the cost of, or who undertakes to arrange or arranges for, the provision of health care services that are to be provided wholly or in part in a foreign country in return for a prepaid or periodic charge paid by or on behalf of the subscriber or enrollee.

(r) “Plan contract” means a contract between a plan and its subscribers or enrollees or a person contracting on their behalf pursuant to which health care services, including basic health care services, are furnished; and unless the context otherwise indicates it includes specialized health care service plan contracts; and unless the context otherwise indicates it includes group contracts.

§ 1349. License requirement (page 75)

“It is unlawful for any person to engage in business as a plan in this state or to receive advance or periodic consideration in connection with a plan from or on behalf of persons in this state unless such person has first secured from the director a license, then in effect, as a plan or unless such person is exempted by the provisions of Section 1343 or a rule adopted thereunder.”

INSURANCE CODE - DIVISION 1. GENERAL RULES GOVERNING INSURANCE - PART 1. THE CONTRACT

CHAPTER 1. Classes of Insurance [106]
  (a) Disability insurance includes insurance appertaining to injury, disablement or death resulting to the insured from accidents, and appertaining to disablements resulting to the insured from sickness.
(b) In statutes that become effective on or after January 1, 2002, the term “health insurance” for purposes of this code shall mean an individual or group disability insurance policy that provides coverage for hospital, medical, or surgical benefits. The term “health insurance” shall not include any of the following kinds of insurance:
(1) Accidental death and accidental death and dismemberment.
(2) Disability insurance, including hospital indemnity, accident only, and specified disease insurance that pays benefits on a fixed benefit, cash payment only basis.
(3) Credit disability, as defined in subdivision (2) of Section 779.2.
(4) Coverage issued as a supplement to liability insurance.
(5) Disability income, as defined in subdivision (i) of Section 799.01.
(6) Insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.
(7) Insurance arising out of a workers’ compensation or similar law.
(8) Long-term care.
(c) In a statute that becomes effective on or after January 1, 2008, the term “specialized health insurance policy” as used in this code shall mean a policy of health insurance for covered benefits in a single specialized area of health care, including dental-only, vision-only, and behavioral health-only policies.

CHAPTER 1.5. Risk Retention [130(d)]

(d) “Insurance” means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk that is determined to be insurance under the laws of this state.

Dispensing Medications

This practice was challenged and upheld in Park Medical Pharmacy v. San Diego Orthopedic Associates Medical Group, Slip Op. No. D038051 (June 11, 2002), 2002 Cal App 4225. Article 12 of the Pharmacy Law (§§ 4170-4175) addresses when a physician may dispense drugs.   Section 4170, which is at issue in this case, sets out conditions imposed on a physician (a “prescriber”) who dispenses drugs to his or patients:

“(a) No prescriber shall dispense drugs or dangerous devices to patients in his or her office or place of practice unless all of the following conditions are met:

“(1) The dangerous drugs or dangerous devices are dispensed to the prescriber's own patient, and the drugs or dangerous devices are not furnished by a nurse or physician attendant.

“(2) The dangerous drugs or dangerous devices are necessary in the treatment of the condition for which the prescriber is attending the patient.

“(3) The prescriber does not keep a pharmacy, open shop, or drugstore, advertised or otherwise, for the retailing of dangerous drugs, dangerous devices, or poisons.

 “(4) The prescriber fulfills all of the labeling requirements ․, all of the recordkeeping requirements of this chapter, and all of the packaging requirements of good pharmaceutical practice, including the use of childproof containers.

“(5) The prescriber does not use a dispensing device unless he or she personally owns the device and the contents of the device, and personally dispenses the dangerous drugs or dangerous devices to the patient packaged, labeled, and recorded in accordance with paragraph (4).

“(6) The prescriber, prior to dispensing, offers to give a written prescription to the patient that the patient may elect to have filled by the prescriber or by any pharmacy.

“(7) The prescriber provides the patient with written disclosure that the patient has a choice between obtaining the prescription from the dispensing prescriber or obtaining the prescription at a pharmacy of the patient's choice.

“(8) A certified nurse-midwife who functions pursuant to a standardized procedure or protocol described in Section 2746.51, a nurse practitioner who functions pursuant to a standardized procedure described in Section 2836.1, or protocol, or a physician assistant who functions pursuant to Section 3502.1, may hand to a patient of the supervising physician and surgeon a properly labeled prescription drug prepackaged by a physician and surgeon, a manufacturer as defined in this chapter, or a pharmacist.

“(b) The Medical Board of California, the State Board of Optometry, the Dental Board of California, the Osteopathic Medical Board of California, the Board of Registered Nursing, and the Physician Assistant Committee shall have authority with the California State Board of Pharmacy to ensure compliance with this section, and those boards are specifically charged with the enforcement of this chapter with respect to their respective licensees.

“(c) ‘Prescriber,’ as used in this section, means a person, who holds a physician's and surgeon's certificate, a license to practice optometry, a license to practice dentistry, or a certificate to practice podiatry, and who is duly registered as such by the Medical Board of California, the State Board of Optometry, the Dental Board of California, or the Board of Osteopathic Examiners of this state.”

The Legislature has required that physicians who dispense drugs pursuant to section 4170 must have a secure area to store the drugs. (§ 4172.) The Legislature has also stated that section 4170 does not prohibit a physician  from dispensing a limited quantity of a manufacturer's drug samples to his or her patients so long as the samples are in the original packaging, the physician makes a record in the patient's chart, and does not charge the patient for the drug. (§ 4171, subd. (a).)

Medicaid-Related Questions:

If you wish to be able to privately contract for Medicaid covered services with Medicaid patients in California then it is likely best to avoid signing any standard Medicaid participating provider agreements. If labeled participating then you would lose the ability to privately contract for covered services based on the language of section 14019.3 and 14019.4 linked below.

Section 14019.3 seems to apply only to providers that are contracted with and participating in Medicaid. It should not apply to a provider simply based on the provider's decision to reside or be licensed in California. The provider would need to sign up with Medicaid in California. I believe that section 14019.4 is written to apply to Medi-Cal providers as well, though the vague ways in which the drafters swap between “provider and “Medi-Cal provider” are admittedly confusing. Thank you to Jeremy Snavely for pointing out this important nuance!

Paragraph (a): “A provider of health care services who obtains a label or copy from the Medi-Cal card or other proof of eligibility pursuant to this chapter shall not seek reimbursement nor attempt to obtain payment for the cost of those covered health care services from the eligible applicant or recipient...”

Paragraph (d) appears to refer more specifically to "a Medi-Cal" provider.

(d) “When a Medi-Cal provider receives proof of a patient’s Medi-Cal eligibility and that provider has previously referred an unpaid bill for services rendered to the patient to a debt collector, the Medi-Cal provider shall promptly notify the debt collector of the patient’s Medi-Cal coverage, instruct the debt collector to cease collection efforts on the unpaid bill for the covered services, and notify the patient accordingly.”

Also see this definition of "provider" in section 14043.1 which bolsters the argument that non-enrolled providers are not subject to prohibitions on private contracting:

(o) “Provider” means an individual, partnership, group, association, corporation, institution, or entity, and the officers, directors, owners, managing employees, or agents of a partnership, group association, corporation, institution, or entity, that provides services, goods, supplies, or merchandise, directly or indirectly, including all ordering, referring, and prescribing, to a Medi-Cal beneficiary and that has been enrolled in the Medi-Cal program.

Taken in total these details suggest that private contracting is permitted if the physician has not enrolled with Medi-Cal.

Additionally, see this Medi-Cal: Out-of-State Providers FAQs page:

Does a provider have to enroll in Medi-Cal to bill Medi-Cal?

“Yes. To bill Medi-Cal, a provider must complete the appropriate enrollment forms. For questions about which forms to use, contact the Out-of-State Provider Unit at (916) 636-1960. If a provider chooses not to enroll, they may bill the patient. However, an enrolled Medi-Cal provider cannot bill a Medi-Cal-eligible patient for a covered service.”

I don't really find the language of section 14005 problematic either.  This language appears to be establishing an option for a California Medicaid participating physician to charge Medicaid for any California resident that seeks care if all other regular third party payor options are not available and if there was no private agreement in place with the patient prior delivering the care.  I do not see how this language would prohibit the private (non-Medicaid contracted) physician from offering a private contract agreement to a Medicaid patient.