Direct-to-employer arrangements, High Performance Networks, High Performance Health Plans – what does it mean?
There is a lot of discussion and interest in health network development lately, as employers try to find solutions to rising health plan costs and providers seek to diversify and stabilize income.
Employers have experienced unrelenting medical plan cost increases of 6% to 14% increases per year for the last 16 years. In addition, the Affordable Care Acts Medical Loss Ratio requirement created an incentive for carriers to not manage cost trends. From 2008 to 2018, employee deductibles have gone up 212%, while wages have only gone up 26%. The outcome of these high deductible plans is that employees are functionally uninsured because they cannot afford, and consequentially delay, care.
The good news is that a 2019 Rand Study showed that 40% of low-cost hospitals also have high quality. This allows employers an opportunity to contract directly with these high quality/low-cost hospitals and conversely it allows these high quality/low-cost hospitals to market themselves to employers directly. The Rand Study further showed employers can see a 40% drop in facility costs when they transfer care from a higher cost/high quality facility to a lower cost/high quality facility. These observations and observations like this have opened the doors for employers to establish direct partnerships with local providers. The birth of the D2E.
What is D2E? Whether you refer to the arrangement as Direct to Employer Network, Direct to Employer Contracting, High Performance Network, or use other terminology – these strategic partnerships help cut health care costs significantly for employers and members.
D2E or high performance networks are arrangements in which specific health systems become the contracted provider of healthcare services for an employer group. Employers accept a reduced number of providers in exchange for high quality/low cost health care results for their employees.
High performance networks are designed to include providers who deliver higher quality care and lower costs in comparison to others. These networks also use claims and utilization data to transparently analyze and improve outcomes.
Direct to employer arrangements can have different components based on the needs of the employer. On-site clinical services for staff, center of excellence models and high-performance networks are some examples – but they all essentially mean an agreement between employers and health systems to partner and bring high quality care to employees while lowering costs.
The outcome of these arrangements?
- Reduced costs for employers to provide a health plan – up to a 20%-40% reduction in facility costs.
- Dramatically lower out of pocket costs for members when they access the network – up to a 50% reduction in out of pocket costs or no out of pocket costs with the preferred providers.
- Improved benefits for employees as a competitive recruitment advantage.
- Health systems also win with a diversified and stable revenue stream and increased market share.
At Consociate Health, we have been building and successfully managing D2E networks since 1995. We can assist you in developing a D2E Network in your local community.
To find out more, contact Scott Barnes, Consociate Health Senior Vice President of Network and Business Development at email@example.com new email.