Why self-insured companies are turning to direct-to-employer contracting
How to get started with direct-to-employer contracting, which offers a way to provide high-quality care to employees while managing costs.
As the cost for health care benefits continues to rise, direct-to-employer contracting offers a promising solution for employers looking to provide high-quality care to employees while managing costs. These contracting agreements offer high-quality, appropriate care and a better patient experience, with lower readmission/complication rates and predictable, competitive pricing.
More and more health care systems are offering or exploring the option to offer direct-to-employer services as they evaluate the needs of their communities and what’s required to fulfill those needs. Employers who are not yet in this market but are looking to contract with health care provider networks should seek out health care systems that offer a national high-value network, direct-to-employer advisory services and connections with network administrative partners.
How to get started
The first step for most companies is to gain a deeper understanding of the market. Who are the large health systems in your region and what capabilities do they offer? How do these organizations make decisions about patient care and how do they manage their provider network? Be sure to fully understand your pain points, specific types of health care needs for your employees and the specific types of solutions that would solve those challenges.
Be willing to start small with a care manager, an onsite clinic or other benefit plan supplement that allows you and your provider partner to build a relationship. Then look for opportunities to participate in service line-oriented programs, primary or preventive care programs, centers of excellence programs or even total cost of care programs depending on your needs to gain experience in managing risk-based direct-to-employer relationships. This will help build the infrastructure, culture and capacity necessary to improve outcomes and patient experience and reduce costs for your employees.
Access to your employee population data, such as claims data, can shed light on the benefit plan design and your employees’ use of health care services. This data analysis enables you and your provider partner to collaborate around opportunities for improving care delivery and tailor programs specifically for your employee population. It also enables providers to better manage patients and avoid unnecessary surgeries and diagnostics, reduce complications and reduce time away from work.
As an employer, you should be seeking relationships with providers who can offer high-quality, appropriate care that emphasizes high patient engagement and satisfaction, with lower readmission/complication rates and predictable, competitive pricing. Providers can demonstrate their organization’s value compared to the general provider network by sharing their outcomes data, such as length of stay, complication rates and readmission rates with potential employer partners.
3 things to look for in a partner
To enter and succeed in the direct-to-employer marketplace, it’s critical to have the right partners to support your contracting strategy, provide clinical and financial performance analytics, and offer administrative support. Seek out partners who offer:
National scale and scope—Many employers have a presence in multiple geographic markets. Employee populations and health care needs can also vary widely from one employer to another. A partner can connect providers to form high-value networks across geographies to ensure network adequacy and provide high-quality, cost-effective bundled services that meet the unique health care needs across a range of employee population sizes and geographies.
Employer-focused analytics—Employers want to know that their employees are getting high-quality, appropriate care at a reasonable price. Health systems can provide data-backed insights into cost and quality to self-insured employers who are interested in developing health benefit plans that include specialized networks of high-performing providers. A partner can bring data to support efforts to design an effective direct-to-employer program.
Expertise to support program design and implementation—Designing direct-to-employer programs is complex and providers are at different stages of readiness. Look for a partner who can assist with program design, success strategies and care model redesign, which could include such things as patient navigators, heightened levels of care integration between providers such that optimal care is delivered in a highly coordinated setting that stresses efficiency and quality, and concierge-type services that elevate and enhance the patient experience. In addition, complexities related to program administration and contract standardization can create barriers to participating in direct-to-employer programs. The right partner has standardized contracting processes and administrative best practices to help alleviate operational and other complexities.
Frustrated with high costs, a growing number of self-insured companies are considering contracting directly with high-performing health systems for their employees’ specialty care. Aiming for healthier, more productive employees and lower costs, industry data show that roughly half of self-insured employers were expected to contract with High-Performance Networks in 2021, up from just 16 percent in 2019.
Given the anticipated, rapid growth of these agreements, companies that are considering direct-to-employer contracting should first understand the attributes for success. For organizations that have capabilities in place, the time is now to take steps toward direct-to-employer contracting.
