Disadvantages Of Direct Contracting
Under direct contracting, providers must go beyond their traditional roles as suppliers of care to owners of integrated financing and delivery systems. This transition can be difficult for employers to compile and manage actuarial and legal mandates. A physician group can be presented as a threat to health plans, as it does business by obtaining an insurance license. This is because the subcontractor is a competitor. Providers must become active managed care partners with employers, instead of being reactive adversaries of managed care organizations on a contractual basis.
Providers can expose themselves to unintended risk in direct contract agreements if they fail to consider legal complexities, administrative requirements or population size.
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This would cause the hospital to see a greater opportunity for negotiation and can become more appealing to both hospitals and employers. Another typical issue with direct contracting is getting the employees to actually participate. Direct contracting can be unsuccessful without employee participation and enrollment. Direct contracting requires an employer-provider partnership that focuses on managing the causes of increases in medical cost.
In order to maximize employee participation, the employer must manage employee demand while reducing the number of health benefit plans offered. An employer can enhance the attractiveness of benefits associated with direct contracting by increasing the cost differential between directly contracted and insurance-sponsored services. Finally, employers can mitigate redundant utilization of services by managing employee co-pays and deductibles. Direct contracting improves patient comprehension of pricing and quality measurements, thus increasing price transparency. Both employers and providers begin to share an interest in maintaining employee-patient
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