A growing number of primary care physicians are negotiating direct working relationships with self-funded employer-sponsored health plans.
Direct Contracting is a payment model that shifts risk to a primary care group of physicians to provide a defined set of medical services in exchange for a monthly capitation fee. The model supplants the traditional fee-for-service reimbursement process with a value-based care arrangement. Direct contracting reduces providers’ administrative burdens. Physicians participating in direct contracting report that they spend more time with patients.
Direct Contracting Achieves Superior Results
Self-funded health plans are discovering that “going direct” lowers costs by eliminating the “middleman.” Direct contracting enables the provider to coordinate and manage the provision of health care services with an eye on controlling costs while improving the quality of care and increasing participant satisfaction – proactively and effectively. Superior results are achievable via a direct contracting arrangement where the plan sponsor and the health provider align their respective business interests by aligning their respective economic interests.
Further, studies show that individuals incur lower costs where there is an established patient – primary care provider relationship. For example, where such a relationship exists, fewer individuals defer needed care due to anticipated out of pocket expenses.
Importantly, delayed or forgone visits for routine screenings for heart disease, diabetes, cancer, and other conditions, or for other preventive care, will inevitably increase the cost to treat serious diseases that might have been prevented, or at least diagnosed and treated earlier.
Direct Contracting Delivers High-Quality Direct Primary Care
Direct Primary Care (DPC) is largely the practice of delivering high-quality, physician-led care to employees through near-site, onsite, or shared multi-employer clinics independent of traditional employer-sponsored insurance. Compared to traditional primary care, employers find direct primary care offers a better experience, more comprehensive care and lower costs.
DPC may be a familiar practice for many benefits decision-makers that already negotiate contracts for products and services: direct arrangements with a provider organization — typically a large health system or provider network (accountable care organization or clinically integrated network) — include key negotiated terms on which the provider will provide and manage the provision of care to the employer’s employees and dependents.
When negotiating DPC arrangements, the plan sponsor should also consider the opportunity to secure additional value, beyond improved health outcomes and reduced medical claims costs from improvements in primary care. That is DPC can favorably impact absence, return to work and productivity.
It’s important to gauge the impact of a changing regulatory environment, such as the introduction of the No Surprises Act (NSA)
According to Christine Cooper, CEO of aequum, “The NSA has altered the significance of direct contracts. For plans and administrators faced with the paramount issue of cost, the employer and provider might negotiate reimbursement rates to be paid to the provider that account for the historical or (in the case of primary/preventative care) desired utilization of services by the employer’s covered population.”
Seven Components of Direct Contracting Success
Click Here for guidance on navigating direct contracting from an article published in The Self-Insurer, the official publication of the Self-Insurance Institute of America (SIIA).