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A Look at 'High-Performance Solutions': Direct Contracting Options for Purchasers

Analysis  |  By Laura Beerman  
   January 04, 2022

"…[A]lthough the proverbial devil is in the details, a reasonable path exists toward greater direct contracting between purchasers and ACOs," states The American Journal of Accountable Care.

In its December 2021 issue, The American Journal of Accountable Care (AJAC) highlights how multiple factors—including the "pandemic … a reduction in sales and tax bases, along with a continued increase in health care costs, has driven active exploration of alternative approaches" to traditional purchasing mechanisms. This exploration transcends traditional health plan relationships to direct contracting between employers and accountable care organizations (ACO). For these to succeed, ACOs must understand key purchaser objectives and priorities.

Why is this happening? The AJAC authors highlight that purchasers are beginning to see traditional health plan approaches—using claims data to create case and disease management programs to target patients with the most complex conditions, highest utilization, and highest costs—as limited. While these components are important, the rising importance of social determinants of health (SDOH) linked with both alternative data is driving employers and other groups toward "high-performance solutions" that are more innovative and disruptive.

Direct contracting options and implementation findings

These high-performance solutions include direct contracting with centers of excellence (COE), outcomes-driven narrow networks, and ACOs. In its 2020 Health Care Delivery Survey, Willis Towers Watson reported that over the next three years, 73% of employers intend to adopt these strategies. The company’s 2022 survey showed that more are planning or considering the following alternatives:

  • An additional 23% are looking to COEs
  • An additional 30% may partner with narrow networks
  • Some 37% more may contract with vendors to improve employee well-being

These are in addition to the 48%, 21%, and 45% of employers (respectively) that already deploy these solutions.

What ACOs must consider

Where direct contracting is considered, the AJAC article notes that organizations like ACOs must consider the following:

  • Scope: Noting that "few ACOs truly excel at offering multiple high-value service lines," they may want to focus on more limited contracting for what they do best. The journal articles cite recent examples of the Connecticut and New Jersey State Employees’ Health Plans shifting to bundled payments for surgery, hospitalization, and other "high-performance solutions not offered by the current plan administrator."
  • Organization: The authors contrast the advantages of health-system-based and provider-based ACOs: the former for "core services … including [the] case and care management, as well as claims administration" traditionally offered by health plans, and the latter for better "inherent alignment between business goals and purchaser objectives."
  • Infrastructure: For direct contracting to succeed, ACOs must also "have dedicated personnel" for the infrastructure roles that plans generally provide: sales/marketing, claims, analytics, and consumer support.
  • Value: Because all alternative payment methods are rooted in increased value, ACOs must demonstrate they can do better than their counterparts. The authors again cite the importance of data analytics to fulfill this promise.

Early focus and priorities

Even desired alternatives must often start smaller to create opportunities to demonstrate difference and success. The AJAC identifies seven purchaser questions that ACOs must be prepared to answer:

  1. Can the ACO prove it has delivered better results?
  2. Are the ACO and purchaser truly a good fit?
  3. Are the ACO’s current clients satisfied?
  4. Like any innovative venture, does the ACO know how to scale?
  5. Can the ACO sustain results over time?
  6. Does the ACO make implementation and deployment easy?
  7. Can the ACO offer outcome guarantees?

The AJAC authors acknowledge that answers and success stories are still emerging. But the note that "although the proverbial devil is in the details, a reasonable path exists toward greater direct contracting between purchasers and ACOs." 

Laura Beerman is a contributing writer for HealthLeaders.


Purchasers can and are taking advantage of multiple direct contracting options, from bundled payments and centers of excellence to narrow networks and ACOs.

Direct contracting is one of many examples of how healthcare moves to make progress in value-based reimbursement, even as foundational elements like full-risk continue to lag. 

Success is far from guaranteed, however, as employers and ACOs must consider a range of questions, considerations, and priorities.

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