6 minute read
A Primer on Direct Care and Direct-to-Employer Contracting for Spine Surgeons
In the 15 years following enactment of the Affordable Care Act, the share of patient responsibility for healthcare costs in the United States has grown dramatically. According to the Kaiser Family Foundation, the average annual premium for employer-sponsored family health coverage in the United States has increased by approximately 47%, rising from $16,029 in 2013 to $23,968 in 2023. This growth has outpaced the general inflation rate of 30% over the same period.1 In conjunction with rising premiums, enrollment in high-deductible health plans has also increased dramatically over the past decade, shifting even further financial responsibility to patients (Figure 1).1 As deductibles rise and patients bear a greater share of cost, many are seeking predictability and transparency in how they access care. For spine surgeons, this shift opens the door to models that bypass traditional insurance altogether—namely, direct care and direct-to-employer (DTE) contracting. These alternative payment strategies offer the potential to streamline operations, reduce administrative burden, and restore physician autonomy in delivering spine care.
Understanding Direct Care: A Patient-Driven Shift
Direct care refers to the delivery of healthcare services outside the conventional insurance framework. Patients pay their physicians directly—typically via bundled pricing—for defined episodes of care. In spine surgery, this would include all-inclusive pricing for procedures, encompassing the preoperative visit, imaging, surgery, anesthesia, facility fees, and postoperative follow-up.
The model was originally established by direct primary care (DPC), in which patients pay a monthly membership fee for comprehensive access to primary services. Like DPC, direct care in surgery eliminates third-party utilization management, surprise billing, and opaque cost structures. Instead, it emphasizes transparency, timely access, and clear delineation of services included in the episode of care.
This philosophy has gained momentum as more patients find themselves in high-deductible health plans (HDHPs), often exceeding $5,000 annually for individual coverage.1 For patients with these plans, using insurance can actually be more costly than paying a cash discounted rate.
Health Sharing Ministries and Other Parallel Models
Some direct care patients navigate their healthcare using nontraditional financing arrangements. Health sharing ministries (HSMs), for example, are faith-based organizations in which members contribute monthly shares to fund the medical needs of others. While not considered insurance under federal law, these ministries often reimburse major surgical expenses when members submit pre-negotiated, transparent invoices from physicians.2
A recent report from the State of Colorado Division of Insurance found that more than 1.5 million Americans now participate in health care sharing programs.3 These patients are highly motivated to find value-based care options and often seek out surgical centers and physicians who can provide comprehensive, upfront pricing. Other similar noninsurance arrangements have emerged as well, including medical cost-sharing cooperatives and healthcare savings account–based models.
The Mechanics of Direct-to-Employer Contracting
While individual patients are driving interest in direct care, employers are also evaluating alternatives to the traditional insurance model. Employer-based health plans typically fall into three categories: fully insured, self-funded, and level-funded. In a fully insured plan, the employer pays fixed premiums to an insurance carrier, which assumes all financial risk and handles claims. Self-funded plans, by contrast, involve the employer directly funding employee medical claims, often with the help of a third-party administrator (TPA). Level-funded plans blend features of both, with employers paying a predictable monthly amount that includes administrative costs, claims funding, and stop-loss coverage to limit risk. If claims are lower than expected, the employer may receive a rebate.
One of the primary drivers behind the rise in direct-to-employer contracting is growing dissatisfaction with traditional insurance carriers and third-party administrators (TPAs). In many self-funded employer health plans, TPAs manage claims and networks while the employer bears the financial risk. These administrators often negotiate discounts with facilities and surgeons but retain a portion of those savings—a practice known as “the spread.” For example, a facility may agree to perform a procedure for $20,000, but the TPA may bill the employer $25,000, keeping the $5,000 difference. This spread is rarely visible to employers due to opaque pricing structures and proprietary contract language. Employers assume they are paying a discounted rate, when in fact, intermediaries may be adding margin without contributing to clinical value. Over time, this lack of transparency has led large, self-insured employers to reevaluate their relationships with TPAs.
Direct-to-employer (DTE) contracting enables physicians to negotiate directly with companies, offering surgical care packages that often include the procedure in addition to navigation services, travel coordination, and postoperative rehabilitation. As a result, more employers are seeking direct relationships with high-value practices through DTE arrangements. By bypassing TPAs, employers can negotiate fixed prices, demand measurable outcomes, and better align incentives while eliminating the costs associated with the spread. For spine surgeons, this creates an opportunity to contract directly with benefit managers or human resource teams to deliver predictable, evidence-based care at a known cost. DTE contracts have become increasingly popular among large employers with self-funded plans. Programs like Walmart’s Centers of Excellence, which contract directly with high-performing spine centers, have demonstrated measurable reductions in cost and improved outcomes.4 Surgeons who can demonstrate low complication rates, strong patient satisfaction, and cost efficiency should find themselves well-positioned in this space.
Operational Considerations for Spine Surgeons
Implementing a direct care or DTE model requires familiarity with healthcare pricing. Surgeons must be able to quote accurate, bundled rates and often collaborate with facilities to streamline contracts. Administrative support is necessary to handle direct billing, communicate with patients or employers, and ensure that care episodes include the full scope of services. Many successful practices develop dedicated landing pages or concierge teams to assist direct pay patients from consultation through recovery.
In the DTE context, quality metrics become essential. Employers expect transparency around outcomes, complication rates, and readmissions. Participation in national registries (eg, National Surgical Quality Improvement Program or Quality Outcomes Database) or the use of internal benchmarking tools can strengthen negotiating positions. Establishing pathways for travel, preoperative clearance, and remote follow-up also helps make DTE contracts scalable.
Conclusion
Direct care and direct-to-employer contracting offer more than just alternative payment models—they represent a philosophical shift in healthcare and spine surgery delivery. They re-center the relationship between surgeon and patient, strip away unnecessary intermediaries, and focus on value, transparency, and access. As dissatisfaction with traditional coverage grows, spine surgeons who can adapt to these models may not only thrive economically, but also lead the way in redefining the patient experience.
References
1. Kaiser Family Foundation. 2023 Employer Health Benefits Survey. Published October 18, 2023. Accessed April 14, 2025. https://www.kff.org/report-section/ehbs-2023-section-1-cost-of-health-insurance/
2. Barlow J. Health care sharing ministries. The Actuary Magazine. March 2018. https://www.theactuarymagazine.org/health-care-sharing-ministries/
3. Colorado Division of Insurance. Health Care Sharing Plans and Arrangements in Colorado, 2023: Report Pursuant to House Bill 22-1269. Colorado Department of Regulatory Agencies; October 2024. https://doi.colorado.gov/health-care-sharing-associations
4. HBR Editors. Two Surgeries, Two Outcomes. Harvard Business Review. March 18, 2019. https://hbr.org/2019/03/two-surgeries-two-outcomes
Contributor:
Brandon P. Hirsch, MD
From DISC Sports and Spine Centers in Newport Beach, California.
