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Direct contracting is a healthcare delivery model in which providers forgo a traditional insur-
ance-based payment structure and offer their services directly to employers with self-funded
health plans. Rather than pay premiums to traditional health insurance companies and accept
the provider network arrangements created by the carriers, employers contract directly with
provider systems or hospitals to be their preferred points of service for their employees' health-
care needs.
Direct contracting isn't new, but more employers are considering it among other cost-cutting
measures. According to Aon Hewitt's "2014 Health Care Survey," 11% of employers are currently
engaging in some form of direct healthcare provider and service contracting, and 28% expect to
do so in the next 3 to 5 years.
While Wal-Mart and Lowe's have made healthcare news headlines by signing direct contract-
ing deals, the arrangement isn't just for Fortune 500 giants. It's becoming increasingly popular
among mid-sized and even small companies as well. According to a recent Kaiser Foundation
survey, 63% of those who receive health benefits through their employers are covered by self-
funded or partially self-funded plans. Given the continuing migration of surgeries to the outpa-
tient arena, conditions look favorable for ambulatory surgery providers to enter the direct con-
tracting market.
This is an attractive concept for both parties. For employers, locking in high-quality, cost-effi-
cient care promises predictability and keeps spending under control. For providers, direct con-
tracts offer fair reimbursement rates and open new patient revenue streams.
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BYPASSING HMOs
Fast Facts About Employer Direct Contracting
claim.
Be prepared to discuss the issue of liability coverage with employ-
ers, and to highlight such relevant information as provider-friendly
tort reforms where it's applicable. It might also be useful to remind
employers that the concept of steering patients to care and treatment
