Employers are actively seeking out alternatives to curb rising health benefit costs by sidestepping traditional carriers, a new report from Brighton Health Plan Solutions shows.
Of the 150 health benefit respondents cited for the report, 75% said they are actively having conversations about direct contracting. A significant segment, 41%, which are not already in direct contracting relationships will consider them for 2025.
This could result in a 6% to 20% increase in savings compared to conventional partnerships with health insurers, according to a news release. Nearly half of respondents said they viewed improved benefits and fewer costs as the two primary reasons for considering direct contracting.
“These results are somewhat surprising and certainly suggest a wider interest in direct contracting than previously understood by the market,” said Michelle Zettergren, chief sales and marketing officer at Brighton, in the report.
However, just 39% of participants said providers reached out to them about direct contracting, with the figure only rising to 47% for third-party administrators (TPAs). Among employers who said they are considering direct contracting, only 31% of health systems and providers discussed the concept with them.
“This represents the need for health systems and provider groups to dial up their outreach and approach those targets with more direct messaging, as well as the need for engaging TPAs that have experience in direct contracting to help jumpstart those conversations,” according to Brighton’s report.
Direct provider contracting’s popularity is on the rise since healthcare costs and inflation are impacting employers more than ever. Brighton engages in direct contracting for its self-funded clients by negotiating with the provider.
Other value-based contracting arrangements are also under evaluation from employers. These arrangements would include shared savings, provider incentives or shared risk.
Respondents were benefit leaders in retail, construction, tech and other industries. Nearly 60% worked in companies with less than 5,000 employees, while almost 20% worked in corporations with more than 10,000 employees.