Elijah German, MBA

The real value in direct contracting isn’t the price. It’s the promise of new payment rails. Hear me out. Modern Healthcare is highlighting the growth of direct contracting platforms - and included a fair question from one commentator: are employers just inserting another intermediary? (Shawn Gremminger) That’s a legitimate concern. If “direct” simply means replacing a traditional carrier with a tech-enabled administrator that has more favorable direct contracts with a set of select providers, then structurally not much has changed. And while better price transparency is a benefit, it is the payment transparency that matters. Think about it - if the contracted price is 10 but 100 leaves the employer’s funding account after spreads, percentage-of-savings fees, card interchange, and payment processing costs, then price transparency becomes largely cosmetic. It can even create a false sense of security. So, direct contracting isn't just capable of solving a pricing problem. It has the potential to solve a payment infrastructure problem. Today, an employer typically funds an account for claims payments but does not execute the payments itself; instead, a TPA adjudicates the claim, a network repricer may apply contracted rates, etc., TPA requests funding (prefunding or reimbursement) from employer for claims, TPA instructs a payment vendor to release the funds, a clearinghouse transmits remittance data, and payments are often issued via virtual card rails or ACH - introducing potential interchange, repricing, and percentage-of-savings fees along the way. In short, money moves through multiple entities before it reaches the provider. each needing to take their piece along the way. BUT, with direct contracting models, the employer could have more control. Employer funds trust account, direct contracting platform has authority to pull funds, claims is adjudicated with transparent pricing logic, and the payment is executed directly from the employer controlled financial rail to the provider through ACH or other low friction method - full visibility into timing, settlement and fees. Above that financial transaction sits the claims layer: line-item detail, unit price, modifiers, adjudication logic. Below it sits the money movement layer: exact payment amount, date, method, confirmation of receipt. No invisible toll collectors clipping basis points simply for moving funds. That is a fundamentally different payment architecture. That’s why the real value in direct contracting isn’t just the price. You don’t just bypass a carrier, you are removing layers of invisible toll collectors that exist purely to move your money. Clearinghouses. Repricers. Payment integrity vendors. Card networks. Settlement platforms. Each one takes a slice. And employers never see it. This is where I see the real financial upside of the direct contracting model - not just better prices, but transparent, auditable payment rails the purchaser controls.

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Healthcare Financial Management Association (HFMA) highlights how "denial friction" is costing hospitals and practices millions. Denials are up a staggering 18% since 2020, and each denial can cost more than $100 to rework. Many of these denials and never reworked and more than 80% of these denials are avoidable. The key is to move from reacting to preventing by: * Auditing trend denial data to find root causes. * Using rule-based automation to catch errors before submission. * Involving clinical leaders to strengthen documentation and workflows. #Denials are not just an administrative issue. They slow cash flow, create frustration, and take focus away from patients. A proactive strategy can protect revenue and improve efficiency. I'm interested to hear how your organization is working to reduce denials. #HFMA #healthcarefinance #denialmanagement #revenuecyclemanagement #RCM

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This is a great evaluation of the direct contracting revolution. Employers often don't see the many layers of intermediaries that are all taking a slice out of their benefits costs - they are not required to be reported transparently. Going direct will change the lens of who's hands are in the mix, between your employees and the care you want to ensure they receive. There are far more than one might think!

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California is becoming one of the most contentious commercial payer markets in the country. If you work in revenue cycle or managed care, the signals are getting harder to ignore. Over the past several months we’ve seen a steady escalation in how commercial payers and providers are negotiating reimbursement across the state. A few examples: 🔹 Elevance Health’s Anthem Blue Cross has introduced a California policy that can reduce hospital payments when out-of-network physicians are involved in facility claims — a move many providers see as a direct lever on hospital reimbursement. 🔹 The broader fight around the No Surprises Act arbitration process continues to intensify. Providers argue arbitration is necessary when commercial claims are underpaid, while insurers increasingly challenge eligibility and arbitration volume. 🔹 Major California systems like Sutter Health, Stanford Health Care, Providence, and City of Hope continue navigating complex negotiations with commercial payers around reimbursement rates and network participation. 🔹 Policies like automated E/M downcoding and evolving reimbursement methodologies are also drawing regulatory scrutiny. Three trends are becoming clear: 1️⃣ Contract negotiations are getting more aggressive Disputes that used to stay private are increasingly showing up in arbitration challenges, policy changes, and litigation. 2️⃣ Out-of-network strategy is under pressure Payers are rolling out policies designed to reduce OON leverage while providers rely on arbitration to resolve reimbursement disputes. 3️⃣ Complex claims are becoming the battleground High-acuity services like spine, trauma, oncology, and specialty surgery are increasingly denied, arbitrated, or disputed. 💡 The takeaway Managed care strategy doesn’t stop when the contract is signed. The providers that succeed in this environment are the ones that operationalize their contracts across the entire revenue cycle. Because in 2026: Contract language sets the framework. Revenue cycle execution determines the outcome.

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