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 as described in this California Healthline article by Mari Edlin from September 6, 2012.  There are multiple DPC practices operating in 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. Here is some of the problematic language:

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

(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.


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).)