Direct Contracting By Physicians and Medical Groups

Ebay and Craigslist have disintermediated the classified section in the newspaper, which used to be the largest moneymaker in that business. The newspaper as middleman has been put to bed for the last time.

But in healthcare, middlemen abound. Hospital systems are middlemen for their controlled/employed physicians. Insurance companies, and even more so on steroids, IPAs and risk bearing medical groups are the middlemen between, largely, employers and their employees’ medical care.


Some claim it’s because of the hassle, the administrative burden, the HIPAA this and the “coordination of care” that. So, they say, middlemen are needed. But that’s largely B.S.

Direct primary care contracting, that is, between patient and physician, is now a real thing. So real, in fact, that CMS recently sought, in their own words, “broad input on direct provider contracting (DPC) between payers and primary care or multi-specialty groups to inform potential testing of a DPC model within the Medicare fee-for-service (FFS) program (Medicare Parts A and B), Medicare Advantage program (Medicare Part C), and Medicaid.”

Over the next several months, we’ll be discussing elements of direct contracting, primarily from the angle of physician group to employer. We’ll discuss compliance, potential licensing issues, deal structure, and other elements.

For now, understand that “direct contracting” has many meanings and is certainly not “one size fits all.” It encompasses arrangements as diverse as concierge medicine, to subscription plus menu-like fixed fees for services, to sophisticated carve-out type deals directly between orthopedic surgery groups and large employers.

Thinking is constricted by the frame, the “allowed” parameters of the process. But many times, in fact, nearly all times, the concept of “allowed” is just a mental construct with no real teeth. Employers – insurers – other middlemen – providers is a frame that the large players, the CVSs of the healthcare world are breaking. You can break them, too.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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