What Is Direct Provider Contracting

Dr. Rushika Fernandopulle, president of APG for Direct Contracting, described it as a kind of latent alternative payment model emerging from CMS. Not all payers enter with direct procurement, and in fact, not all payers have a supplier presence. But Humana fits these two descriptors, and as an organization, at least conceptually, it is fully integrated into the direct conclusion of the contract. “You see that CMS continues to offer flexibility to the risk-taking company, whether it`s the MA plan or the vendor group, to improve the experience. to get better results,” Eirich said. “As part of the direct contract program, CMS enables suppliers to effectively fund specific cost-sharing programs or performance improvements to achieve better results. “In direct contract awarding, you can enter into one of two different types of capitaitation, primary care capitation, or global capitulation of care,” said David Pittman, senior policy advisor for the National Association of ACOs. “CMS will look at where patients receive most of their care, and if it`s one of them, you`re financially responsible for the patient. Medicare will look at these patients` historical spending, find out what their spending has been over the past few years, and give you a projected goal or benchmark, a spending goal. David Pittman said direct contracts are certainly promising. In an interview with Healthcare IT News, Sean Cavanaugh, our director of policy and former deputy administrator and director of CMS, provides expert insights into virtual care after the pandemic. Earlier this year, the Center for Medicare and Medicaid (CMS) announced five new payment models designed to transform primary care by paying providers for outcomes rather than services.

Barrett expects the transition to some form of capitulation to be a paradigm shift, and if a doctor focuses on the granular details of care and doesn`t step back and assess the bigger picture, direct outsourcing can be complicated. Is direct contracting to suppliers a potential silver bullet for obtaining a value-based provision for employer-sponsored plans? It can be argued convincingly that awarding direct contracts to suppliers to employers of sufficient size in some regions is worthwhile, as evidenced by market activity. And alternatives to contracts directly with a health system, such as. B on-site clinics, CPD solutions and CENTERS of Excellence for specific procedures and/or conditions, have reduced costs and increased efficiency for some employers. These approaches could continue to gain ground. Conversely, it can be argued that there is a cap on direct contracts to suppliers, as employers seek to expand value-based approaches in areas where they lack market size or value. Developing single care contracts based on value for each employer makes no administrative or financial sense for most provider organizations. And many employers aren`t convinced about varying their programs in different regions because of the added complexity.

Purchasers may consider entering into a direct contract if they are not satisfied with the current health care plan or LTP services and/or if they want to have direct control and personalization of service delivery. There are many options that buyers can consider, including: While the overall concept of direct contracting with a supplier makes sense, there are key issues that make it difficult to implement on a large scale in the employer market – the typical geography of the employer and the employer`s commitment to the approach. Some employers may not be geographically structured in such a way that a direct assignment to the supplier is possible. For example, an employer may have a geographically dispersed workforce that is not large enough to award contracts with direct suppliers in a region. In addition, the majority of an employer`s workforce may be located in areas where the health care system is dominant in the region, making negotiations between the employer and the health care system difficult due to a lack of competition. In addition, employers must commit to large-scale direct agreements with value-based providers so that there is an opportunity for meaningful transformation within the U.S. healthcare system toward a value-based approach. For example, in the long run, employers can`t just have 10% of their employees in a direct agreement to the supplier based on value, while the remaining 90% remain in traditional fee-for-service models. Direct-to-provider contracts require sufficient scope to have a significant impact on costs and improved health outcomes. While direct outsourcing is a viable solution for most businesses, it`s important to have the right partners on hand. Contracts must make financial sense for all parties and companies must be willing to coordinate all moving parts.

Direct outsourcing is just one way for companies to save in healthcare. Download our latest report: 3 Strategies of Companies Spending 22% Less on Healthcare to learn more. Supplier and employer interest in direct-to-supplier solutions is hampered by the many ways in which these agreements can be structured. Direct-to-supplier contracts can take many different forms, some of which work better for suppliers and individual employers than others. This could mean something like GM`s deal, which involves signing a contract with a health care system for only a small portion of GM`s employee base. Alternatively, it could mean working with providers to set up on-site clinics, working directly with physicians to provide direct primary care (CPD), or developing a center of excellence (COE) model for specific procedures and/or conditions. For the purposes of this section, a direct contract with the claimant is defined as an employer directly responsible for a health system to provide comprehensive health care to its employees and dependents. We do not consider on-site clinics, CPD or COE models to be part of our definition, as these narrower forms of employer-provider contracts do not offer the same potential for significant population-level savings for all services covered by employer-sponsored health plans.

That`s why Aisha Pittman, vice president of policy at Premier, calls it a more sustainable approach, especially during a pandemic, as billing for each item and service can become problematic when there is a service shutdown, as was the case with different suppliers and specialties in the face of COVID-19. Companies of all sizes can benefit from a direct contractual agreement as it opens up a direct discussion about costs and quality that are traditionally unavailable. As a result, companies can achieve significant savings through successful direct contracts. Direct contracting is a strategy that some employers, usually large, self-funded and other purchasers of health care services use when they feel it is beneficial to purchase health care services directly from an institution, group of physicians and/or an integrated health care system on behalf of their covered population. For some services, there may be a direct assignment (e.B. joint replacement in a competence centre) or for full services (e.B. Responsible Care Organisation or COA). Healthcare service buyers can opt for this approach if they want to personalize the healthcare they get, which can be difficult due to an existing contract with a health insurance company. .