What Is Direct Contracting?
Direct contracting allows employers to negotiate directly with providers — hospitals, physician groups, or specialty centers — bypassing the traditional network. Direct contracts can achieve significantly lower rates than network contracts because the employer is offering the provider a guaranteed volume of patients in exchange for lower prices.
Direct Primary Care
Direct Primary Care (DPC) is the most common form of direct contracting for employer health plans. In a DPC arrangement, the employer pays a flat monthly membership fee to a primary care practice in exchange for unlimited primary care access for enrolled employees. DPC practices typically charge $50–$100 per member per month.
Hospital and Specialty Direct Contracts
IQ Insight
Large employers with significant employee concentrations near specific hospitals or specialty centers can negotiate direct contracts that achieve 30–50% lower rates than network contracts. These arrangements require legal expertise, actuarial analysis, and ongoing contract management — but the savings can be substantial. For employers with 500+ employees in a single market, direct contracting is worth serious evaluation.