American Medical News
Some large employers look to direct contracting with doctors
They believe they can save money and get better quality by
negotiating benefits directly without a middleman from an insurance
company.
By Emily
Berry, amednews staff. Posted May 23,
2012.
Health benefits industry insiders say the combination of
upheaval in health care because of reform and continual increases in the
cost of coverage are prompting more self-insured employers to consider
direct contracting. They save the fees they pay plans to put together
networks and handle claims and, in some cases, pass the savings along to
doctors.
Industry experts said that if doctors want to take advantage of the
direct contracting trend, they should have data that demonstrate their
high-quality and low-cost care and be ready to tell employers why their
practices should be part of their network.
In many cases, however, physicians are prohibited from approaching
employers themselves under their own contracts with health plans, said
A.J. Lester, a Houston-based consultant who helps employers build directly
contracted networks. He said physicians should be prepared to have an
employer approach them and be ready to make a case for inclusion in an
employerfs network, which is likely to be far more narrow in scope than
the networks that health plans put together on companiesf behalf.
Roger Merrill, MD, is chief medical officer at chicken processer Perdue
Farms, which has been contracting directly with physicians and hospitals
for more than 10 years. Now it has about 15,000 contracts that cover care
for 30,000 employees and dependents. Dr. Merrill, an internist by
training, said direct contracting has improved Perdue employeesf health,
brought better pay to primary care physicians and saved the company money,
all without a health planfs involvement, he said.
gWe at Perdue and the patient and provider all have the same goal: We
all want to maximize the health of the patient. Typically, large insurance
companies do not have that same goal,h he said.
Though there is no official count of the number of employers engaged in
direct contracting, people in the industry say interest is growing.
Employersf direct contracts vary in scale. For some large employers, such
as Lowefs, the home improvement chain, direct contracting has created a
niche side benefit for employees. Lowefs reached a deal that allows
employees and their dependents to be transported to Cleveland Clinic for
heart surgery at no out-of-pocket cost.
Some employers, like Toyota, are creating optional narrow or
ghigh-performanceh networks made up of physicians and hospitals with high
clinical quality scores and low prices. Other employers, like Perdue, are
creating entire networks, including primary care, specialty care and
hospital care for their employees, using a third-party administrator just
to adjudicate and pay claims.
gI do think therefs an appetite in the current marketplace for moving
toward more narrow and high-performance networks,h said Andrew Webber,
president and CEO of the National Business Coalition on Health. gItfs not
the same as when we had the managed care wars in the mid-1980s. Rather
than a [network in which] you just signed up a lot of doctors with cheap
prices, now we truly have better measurement systems so that wefre first
looking at the quality of care.h
Among the reasons Perdue chose direct contracting was the companyfs
belief that primary care physicians should not be at the bottom of what
Dr. Merrill called the medical network gfood chain.h Perdue pays primary
care doctors well, he said, and thatfs intentional. When he meets with
contracted primary care doctors, Dr. Merrill asks who their best payer is.
If itfs not Perdue, he tries to remedy that.
gWe want them to smile when one of our employees come through the
office,h Dr. Merrill said.
Sometimes direct contracts wonft pay better, Lester said, gbut at least
therefs the opportunity for give-and-take. The reality of having a managed
care middleman is that the buyer and seller never talk directly to each
other.h
Direct contracting advocates are among those who acknowledge that
physiciansf willingness, or lack thereof, to participate will not make
much of a difference in practice traffic, especially compared with the
number of patients they get through a health plan. However, the advocates
say it could be a worthwhile exercise for physicians interested in new
payment arrangements and could set them up for being first on employersf
minds as more set up direct contracting.
gEven in medical communities dominated by the local PPO network or
national networks that are out there, it still behooves physicians [and]
large and small medical groups to be willing to engage in direct
arrangements,h Lester said. gYoufre sending out a message by contracting
with local employers that youfre willing to do this sort of thing so when
larger employers start to think about it theyfll know youfre one of the
people they can go to.h
Copyright 2012 American Medical Association. All
rights reserved.