‘Hospitals are stepping up’: Direct contracting gains traction in Indiana

 Indiana’s first review of direct-to-employer healthcare arrangements found that all participating hospitals met the state’s pricing benchmark, and advocates say the results signal a broader shift in how employers and health systems are structuring their relationships.

The Indiana Department of Health on April 22 published the inaugural Direct-to-Employer Healthcare Arrangement Plan Review for 202522, finding that every submitted plan came in at or below the statutory threshold of 260% of Medicare rates. The review was mandated under state law requiring nonprofit hospitals to demonstrate their employer-direct plans remain within that ceiling.

Participating systems included:

• Ascension St. Vincent (Indianapolis)
• Community Health Network (Indianapolis)
• Franciscan Health (Mishawaka)
• Indiana University Health (Indianapolis) 
• Parkview Health Network (Lebanon)

Many priced well below the statutory cap, offering employers greater predictability in year-over-year healthcare spending, according to the report. 

“This year’s review demonstrates that Indiana hospitals are stepping up to provide employers with affordable, predictable healthcare options,” Indiana Health and Human Services Secretary Gloria Sachdev said in the release. “Direct-to-employer contracts are an important tool for controlling costs while maintaining access to high-quality care.”

The Indiana Hospital Association also welcomed the findings, framing direct contracting as a market-based solution to the growing friction between employers, insurers and providers.

“By working more directly with hospitals or targeted networks to cut out unnecessary middlemen, employers can improve health outcomes of their employees, reduce administrative complexity and create more predictable healthcare spending,” Scott Tittle, the association’s president, said in a statement shared with Becker’s. “As the state’s review shows, hospitals are more than delivering on competitive, transparent pricing that aligns with employers’ needs.”

Ascension St. Vincent CEO Don King pointed to the health system’s employer solutions program — established in 2009 and now serving more than 75 businesses, 125 public schools and over 300 public safety agencies — as evidence that direct contracting at scale is already well underway.

“Through direct employer arrangements, we partner with organizations across Indiana — from small employers to large corporations, schools, public safety agencies and local governments — to improve affordability and deliver high-value care,” Mr. King said.

Indiana’s report lands amid growing national momentum around direct contracting, driven in part by employer frustration with traditional insurance models and high-profile efforts to bring transparency to hospital pricing.

Entrepreneur Mark Cuban has been among the most vocal advocates for the model. 

At the Becker’s Spring Chief Pharmacy Officer Summit in Chicago on April 15, Mr. Cuban said the largest commercial payer relationships may actually be the least profitable for hospitals once administrative costs, denials, late payments and clawbacks are fully accounted for.

“If you literally did a cost analysis and a profitability analysis by insurance carrier, the biggest ones are where you’re going to be losing the most money,” he said.

His direct contracting platform, Cost Plus Wellness, connects self-insured employers with providers through publicly posted contracts, with no prior authorization requirements, no balance billing and a mandatory 30-day payment window.

Dallas-based Baylor Scott & White Health was the first major health system to sign on.

Cost Plus Wellness currently lists 27 published contracts covering at least 9,200 providers and 193 facilities, predominantly in the Dallas-Fort Worth area, with more being added, according to Mr. Cuban.

His pitch to health system leaders is straightforward: Start with the employers whose workers you already see.

“Go and sit down with them and say, ‘let’s talk about all these patient experiences and what you paid for them, because I can save you money,'” he said. “Because you know what you both have in common? You don’t like insurance companies.”

https://www.beckershospitalreview.com/finance/hospitals-are-stepping-up-direct-contracting-gains-traction-in-indiana/