The Growing Financial and Regulatory Realities of Concierge Medicine Models
His Doctor Will Go Concierge. He Will Pay a $2,400 Annual Fee to Stay in the Practice While Medicare Still Pays for Covered Visits. Declining the Fee Will Mean Finding a New Doctor.
That notice, arriving in mailboxes across the country, reflects a broader shift in how primary care is delivered and paid for. As more physicians adopt concierge and direct primary care models, patients and providers alike are navigating a complex landscape of membership fees, Medicare rules, and financial trade-offs.
The Rise of Concierge and Direct Primary Care Models
Concierge and direct-primary-care practice sites grew by 83% between 2018 and 2023, according to Health Affairs. Approximately 60% of clinicians in these practices participate in Medicare, meaning they continue to bill the federal program for covered services while charging patients an additional membership fee for access or enhanced amenities. This dual approach allows doctors to maintain smaller patient panels—often ranging from 400 to 700 patients in direct primary care settings—while seeking more predictable revenue streams outside traditional fee-for-service insurance.
Many of these practices are solo operations. A national survey led by Kenneth Qiu, M.D., found that a third of direct primary care physicians report having no additional staff. These figures highlight a model that emphasizes accessibility and continuity of care, though at a cost that falls directly on the patient.
Understanding the Distinction Between Membership Fees and Covered Care
Medicare does not cover concierge or direct primary care membership fees. Patients must pay these fees entirely out of pocket, and they do not count toward deductibles or premiums. For a Medicare beneficiary, the standard 2026 Part B deductible of $283 and the $202.90 monthly premium still apply regardless of membership status. The fee is layered on top of existing Medicare cost-sharing, not integrated into it.
Critically, doctors who accept Medicare assignment cannot charge extra for services already covered by the program. This means membership fees cannot be used to hide surcharges for standard office visits, preventive care, or other benefits Medicare already pays for. The fee may only cover services or amenities that Medicare does not cover, such as extended appointment times, 24/7 access via phone or email, or wellness programs not included in traditional benefits.
If a physician claims a service typically covered by Medicare is not covered and includes it in a membership fee, they must provide an Advance Beneficiary Notice of Noncoverage. This written notice explains why Medicare is expected to deny payment and allows the patient to decide whether to proceed and accept financial responsibility. Regulators, including the HHS Office of Inspector General, have investigated cases where physicians improperly bundled Medicare-covered services into concierge fees, violating assignment agreements.
Financial Implications for Patients and Practice Growth
For patients, the financial impact varies. A $2,400 annual concierge fee—like the one described in the recent notice—represents a significant out-of-pocket expense, particularly for those on fixed incomes. While some patients value the increased access and longer visits, others may find the cost prohibitive, especially when combined with existing Medicare premiums and out-of-pocket costs for drugs or specialist care.
For physicians, the model offers potential benefits: reduced administrative burden from insurance billing, more time per patient, and a steadier income stream. However, growth can be slow. Kenneth Qiu, M.D., notes that physicians starting a direct primary care practice from scratch often rely on only 1% to 5% of their previous fee-for-service patients following them into the new model. Many choose to moonlight while building their panels, and some avoid seeing Medicare patients altogether due to billing complexities, which limits access for beneficiaries and slows practice expansion.
The national survey also found that most direct primary care practices remain small, with a large share operated by a single physician without staff. This reflects both the appeal of autonomy and the challenges of scaling a model that depends heavily on patient willingness to pay directly for enhanced access.
Navigating the Transition When a Physician Changes Practice Models
When a doctor announces a shift to concierge or direct primary care, patients face a clear choice: pay the membership fee to remain in the practice or seek a new primary care provider. There is no middle ground under current Medicare rules—the fee is not optional if the patient wishes to stay with that physician under the new arrangement.
Patients are advised to review any notice carefully. They should verify what services the membership fee covers and whether those services are truly outside Medicare’s scope. If in doubt, they can request an Advance Beneficiary Notice of Noncoverage for any service the doctor claims is not covered. Beneficiaries can also consult their State Health Insurance Assistance Program (SHIP) for free, personalized guidance on Medicare rights and options.
For physicians considering the transition, compliance with Medicare regulations is essential. Transparency about what the fee covers, avoidance of double-billing for covered services, and proper use of noncoverage notices when required are not just regulatory obligations—they are key to maintaining trust with patients who may already feel uncertain about changing their long-standing care relationship.
Medicare’s Enforcement of Assignment Agreements and the Risks of Noncompliance
The HHS Office of Inspector General has explicitly warned that physicians violating Medicare’s assignment agreements—particularly by bundling covered services into concierge fees—face serious consequences. According to the Inspector General’s findings, practices that improperly include Medicare-covered services (such as annual wellness visits or chronic care management) within membership fees risk repayment demands, civil monetary penalties, or even exclusion from Medicare. The Inspector General’s office has cited cases where physicians were required to refund overpayments after audits revealed that fees were being used to circumvent Medicare’s fee schedule.
Medicare’s assignment rules require physicians to accept the program’s approved payment amount as payment in full for covered services. If a practice charges a membership fee that effectively replaces or supplements Medicare’s reimbursement for standard care, it may trigger an investigation. For example, if a concierge fee is marketed as covering “unlimited office visits” without specifying non-covered extras, Medicare may interpret this as an attempt to circumvent the assignment agreement. The Inspector General’s guidance emphasizes that fees must be transparent, with clear distinctions between covered and non-covered services—otherwise, beneficiaries may unknowingly waive their rights to Medicare benefits.
Compliance extends beyond billing practices. The Centers for Medicare & Medicaid Services (CMS) has clarified that physicians must provide an Advance Beneficiary Notice of Noncoverage (ABN) whenever they claim a service is not covered by Medicare and intend to bill the patient separately. Failure to issue an ABN when required can result in claims being denied retroactively, leaving the practice responsible for refunds. CMS audits have increasingly targeted concierge practices where ABNs were either missing or insufficiently detailed, particularly in cases where fees appeared to overlap with Medicare-covered services like preventive screenings or care plan updates.
The Inspector General’s reports note that some concierge practices have settled investigations by agreeing to refund fees to affected beneficiaries and implementing stricter fee structures. Patients, meanwhile, retain the right to appeal denied claims or file complaints with CMS if they suspect their doctor is improperly using membership fees to bypass Medicare coverage.
Sources
- His Doctor Will Go Concierge. He Will Pay a $2,400 Annual Fee to Stay in the Practice While Medicare Still Pays for Covered Visits. Declining the Fee Will Mean Finding a New Doctor
- What's holding direct primary care back, with Kenneth Qiu, M.D. | Medical Economics
- His Doctor Will Go Concierge. He Will Pay a $2,400 Annual Fee to Stay in the Practice While Medicare Still Pays for Covered Visits. Declining the Fee Will Mean Finding a New Doctor
Photo: ajay_suresh (CC BY 4.0)
