This article is part of Frier Levitt’s D2E Conference Insights series, highlighting key discussions from the inaugural Direct-to-Employer Conference co-hosted by Frier Levitt and the Northeast Business Group on Health (NEBGH).
At Frier Levitt and the Northeast Business Group on Health’s (NEBGH) inaugural Direct-to-Employer (D2E) Conference, the opening panel, “Employer and Convener Perspectives: Lessons from the Field,” brought together stakeholders from across the D2E contracting landscape to explore the motivations, mechanics, and major considerations driving employers toward direct contracting arrangements. Moderated by Arielle Miliambro and featuring panelists, Dane Guarino (Handpicked Health), Clint Flanagan, M.D. (KerixHealth), Claire Brockbank (32BJ Health Fund), and Erik Davis (USI Insurance Services), the discussion offered practical insights into how employers are reshaping their approach to healthcare purchasing, with a particular emphasis on primary care as a foundation for long-term cost savings and improved patient outcomes.
Why Employers Are Turning to Direct-to-Employer Arrangements
Panelists identified several core drivers behind the shift toward D2E models. Traditional insurance structures have demonstrated persistent shortfalls in meeting the needs of employer-sponsored populations, often driving up the cost of healthcare, especially as it relates to hospital-based care, without providing purchasers meaningful control over quality or cost. The central tension, as panelists noted, is that employers are the true purchasers of healthcare for their employee populations, yet under conventional arrangements, they are rarely in the driver’s seat when it comes to determining where, how, and at what cost care is delivered.
D2E arrangements offer employers the opportunity to reclaim that purchasing power by contracting directly with providers and facilities, bypassing intermediary structures that have historically separated employers from having more control and transparency into the economics of care delivery.
Designing Plans That Drive Utilization
Panelists emphasized that employer-driven plan design must account for the patient population and incorporate meaningful incentives to drive utilization toward preferred facilities and providers. Strategies such as zero-dollar copays, proximity of facilities, and other benefit design features can significantly increase patient engagement with designated providers. In turn, higher utilization allows employers to leverage their D2E arrangements more effectively, strengthening their negotiating position with facilities and reinforcing the value of the direct contracting model.
Primary Care as the Foundation for Cost Savings
A significant portion of the discussion focused on the role of primary care in D2E contracting. Panelists observed that in many settings, primary care providers manage approximately ninety percent of health conditions and are uniquely positioned to address lifestyle factors that drive long-term patient health costs. For employers, investing in D2E opportunities in primary care can generate meaningful cost savings while simultaneously driving up utilization of high-value services.
Direct Primary Care (DPC) emerged as a particularly promising model. In DPC arrangements, employers contract directly with primary care providers, often eliminating out-of-pocket expenses for patients entirely. Panelists shared anecdotal evidence of five- to six-times greater patient engagement under DPC models with zero-dollar out-of-pocket costs. This model allows practitioners to focus on patient care rather than navigating traditional insurance hurdles, resulting in higher quality of care and cost savings to employers and their members. Fundamentally, DPC removes the barriers of traditional fee-for-service medicine and treats patients as individuals rather than as billing codes.
Advanced Primary Care and Referral Pathways
The panel also explored the concept of “advanced primary care,” which layers additional services such as physical therapy, behavioral health, and other disciplines onto a traditional DPC foundation. This integrated approach can drive meaningful lifestyle changes for patients and produce compounding health benefits over time.
Panelists discussed the importance of referral pathways from DPC providers to high-quality specialists. Informed referrals, supported by conveners and other care navigators in the D2E space, can contribute to both lower costs and higher quality outcomes by steering patients toward high-quality centers of excellence (COEs). These navigation services help ensure that when patients require specialty or advanced care, they are directed to providers with demonstrated records of quality and cost-effectiveness.
Direct-to-Employer Models in the Hospital Space
The panel also engaged in discussions of the potential for D2E models to extend beyond primary care into the hospital setting. Recent hospital-system direct contracting models demonstrate how these arrangements can move from concept to scale: by connecting the true purchasers of care (i.e., employers) directly with hospital-based providers, reducing administrative layers, and using lower negotiated rates and benefit design to steer members toward preferred networks. Key takeaways for employers from this portion of the discussion are that hospital-focused D2E contracting is not merely a pricing exercise; it requires coordinated plan design, data transparency, navigation support, and a preferred-provider strategy that makes the lower-cost, high-quality option easy for members to use.
For employers, the hospital opportunity is most compelling where the arrangement combines measurable savings for the plan, meaningful reductions in member out-of-pocket costs, access to a sufficiently broad provider network, limits on future fee-schedule increases, and simplified navigation for major medical events. Together, those elements can help convert hospital systems from passive high-cost facilities into active partners in affordability, access, and care coordination.
Major Considerations for Employers
The panel identified several key considerations for employers seeking to leverage direct contracting models effectively:
- Data warehousing and analytics capabilities are essential for determining referral patterns, patient workflows, quality of care metrics, access to care, and ultimate cost savings. Without robust data infrastructure, employers cannot measure the effectiveness of their D2E arrangements or identify opportunities for improvement.
- Employers should consider entering into arrangements with conveners, third-party administrators (TPAs), and other care and patient navigators experienced in the direct contracting space to ensure a thorough understanding of utilization patterns, risk assessment, and referral quality to high-performing providers.
- Investment in primary care through D2E contracting with DPC providers should be evaluated on an aggregate, long-term basis, allowing employers to measure cost savings over the lifespan of plan utilization by employees and members.
- Finally, employers must take deliberate steps to remove disincentives from receiving primary care, ensuring that benefit design encourages rather than discourages engagement with primary care providers.
Engage Experienced Benefits Counsel
D2E healthcare models represent one of the most promising developments in healthcare benefits. Organizations considering or currently operating D2E arrangements should engage counsel with deep experience in the specific regulatory, compliance, and privacy issues unique to these models, such as compliance audits, risk mitigation strategies, contract drafting and review, and ongoing legal support. Contact Frier Levitt for assistance with the development or review of your D2E model.
