Direct Contracting vs Health Insurance

Advantages of Direct Contracting:

• Cost Control: Direct contracting allows employers to negotiate a fixed price for care with the provider, resulting in reduced and more predictable costs.
• Improved Patient Care: Direct contracts can lead to improved access to top-level care for members, as employers can work directly with medical providers to establish a mutually beneficial fee schedule.
• Financial Predictability: Direct contracting provides financial predictability for employers, as they can see reduced and more predictable costs, and plan members receive care from top-tier providers.
• Increased Efficiency: Direct contracting can expedite payment processes and substantially reduce the time between service provision and provider payment.
• Customization: Direct contracting enables employers to design comprehensive plans that address their workforce’s specific health requirements, fostering a healthy workplace culture.
• Incentivizing Providers: Direct contracting relationships may involve incentivizing providers for achieving certain quality outcomes, such as prevention of hospital readmissions or successful care transitions between clinicians.
• Shared Savings: Direct contracting can involve shared savings plans, where employers and providers share funds saved through strategies like care management or application of data analytics.
• No Member Cost Share: Employers can eliminate member cost share for using the direct contract, providing no-cost medical care and incentivizing members to opt for the best care at the best cost.
• Bundled Arrangements: Direct contracts often use bundled arrangements, where the entire episode of care is billed as one cost, rather than multiple billing codes in the traditional fee-for-service model.