Direct Contracting: Take Control of How Your Healthcare Dollars Are Spent

Direct Contracting: Take Control of How Your Healthcare Dollars Are Spent. For many employers, health insurance is still treated as a once-a-year decision: review the renewal, evaluate the increase, make a few adjustments, and move forward. But what if your health plan was something you could actively manage?

DirectPath gives employers greater information and control over their healthcare plan, helping them understand where their healthcare dollars are going and identify opportunities to improve how care is purchased and accessed.

One of those opportunities is direct contracting.

What Is Direct Contracting?

In a traditional health plan, a provider bills for a service, the insurance network applies its negotiated rate, and the plan pays the rest. The problem is, employers often have limited visibility into how healthcare prices are determined, making it difficult to influence what they are paying for and where their employees are receiving care.

Direct contracting can change that. Instead of relying on traditional network pricing, employers can establish arrangements with selected providers for specific services at agreed-upon, predictable prices. When designed effectively, this approach can create savings for the plan and lower costs for employees.

More opportunities are available.

Many employers associate direct contracting with negotiating directly with a large hospital system. While that is one possibility, it represents only a small part of the opportunity. Employers can pursue direct or pre-negotiated arrangements across a range of healthcare services, including:

• Surgical care: Many procedures that are traditionally performed in hospitals can also be performed at independent surgical facilities or ambulatory surgery centers (ASCs), often at a lower cost and with strong quality outcomes. With a bundled arrangement, the employer can establish one predictable price for the procedure and related care. That can lower the plan’s cost while also creating an opportunity to reduce the employee’s out-of-pocket expense.
• Imaging: The cost of an MRI, CT scan or other imaging service can depend on where it is performed. Direct arrangements with independent imaging facilities can give employers more predictable pricing while offering employees convenient, high-quality options outside of higher-cost hospital settings.
• Laboratory services: Routine bloodwork can vary in price depending on where it is performed, even when the same tests are being done. Employers can establish preferred pathways to independent laboratories with negotiated pricing, sometimes allowing employees to receive common lab services at little or no cost.
• Physical therapy: A direct arrangement can give employees convenient access to care at a negotiated price while giving employers greater control over what the plan pays. Instead of accepting traditional healthcare prices, employers can have more say in where care is provided and how it is purchased.

But, the specific service isn't the most important part. The bigger opportunity is changing the employer's role from a passive purchaser to an active healthcare buyer.

Fair price. Quality care.

A lower-cost option isn't necessarily a better option if employees don't use it. That's where plan design comes in. When an employer is able to purchase care more efficiently, a portion of those savings can be used to create a meaningful incentive for employees to choose the preferred pathway.

For example, a bundled surgical arrangement may reduce the employer's total cost while allowing the employee to avoid some or all of the out-of-pocket expense associated with using a traditional plan.

We've seen this first hand with DirectPath. In a recent client example, directing a procedure to an independent surgical facility generated more than $10,000 in savings for the health plan while keeping $2,000 in the employee's pocket.

Stop managing your plan on autopilot.

Every organization has a different employee population, plan experience, and set of cost drivers. What works for one organization may not make sense for another. DirectPath gives employers the flexibility to look at their own data, workforce, and local healthcare market and determine where the greatest opportunities are.

For one employer, that may mean focusing on surgical care. For another, the opportunity could be imaging, pharmacy, or primary care. The right strategy starts with understanding where the plan has the most room to improve.

That’s where DirectPath can make a difference.

Employers can build a stronger foundation, gain better insight into how their healthcare dollars are being spent, and use that information to make more informed decisions about where the plan should go next. As those strategies are implemented and results are measured, the plan can continue to evolve based on what the data shows.

Healthcare strategy doesn’t have to be a one-time decision. With better information and greater visibility, employers can take a more deliberate approach to improving their plan, and keep building on what works.

Want to know more about how DirectPath can help your organization? Reach out today! 

Cost figures, coverage details, and plan design elements presented in this blog are for illustrative purposes only and do not reflect any specific insurance policy or provider. Actual costs will vary based on your organization’s health plan, the insurance carrier, provider contracts, and the specifics of each medical situation. Employers and employees should refer to their official plan documents or speak with their broker or benefits consultant for guidance if needed.