Abstract: My medical practice was recently approached with a direct contracting proposal from a large local employer. What should my colleagues and I consider as we review the proposal? Direct contracting is an emerging method of financing health care that is attracting both physicians and payers, because it eliminates the managed care intermediary. Under these arrangements, self-insured employers contract directly with physician groups and hospitals in an effort to bypass the hefty administrative costs associated with managed care organizations (MCOs). MCOs, however, may be used indirectly as third—party administrators (TPAs) to provide services such as claims processing and marketing. Employers often contract directly with physician groups on a discounted fee-for-service basis and provide stop-loss insurance to cover catastrophic or unanticipated medical losses. More complex arrangements involving capitation are subject to state insurance regulations such as the requirement for physicians to either obtain an MCO license or work with an existing MCO.
Publication Year: 1999
Publication Date: 1999-03-01
Language: en
Type: article
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