Most employers start a direct primary care conversation with the per-member-per-month fee. That is the wrong first question. The fee tells you what access costs. It says nothing about what changes after employees walk through the clinic door.
Only about a third of adults complete an annual physical, and roughly 8 percent complete all recommended preventive care. A flat fee does not close that gap. Employers need to read the payment clause before they negotiate price.
The Flat Fee Does Half the Job
Capitation flips fee-for-service. The employer pays for each member instead of each visit. The clinic gets predictable revenue and stops ordering unnecessary visits. That part works.
It also stops there. A capitated clinic gets the same fee whether an employee completes a colonoscopy, fills a statin, or never shows up. Access improves. Claims downstream do not.
Employees like same-day appointments, longer visits, and direct phone access. Employers see that as success. But prevention changes claims only when someone completes the preventive action. Access alone does not verify completion.
Primary Care Is a Small Slice of Spend
Primary care matters for health, but it is a small line item in most employer health budgets. The expensive claims come from hospital admissions, emergency surgery, cancer treatment, advanced imaging, and specialty drugs. A direct contract that only restructures primary care leaves those costs untouched.
Think through the referral path. A direct primary care clinic refers a member for an MRI. The MRI goes through the carrier. The specialist bills the carrier. The employer keeps the primary care savings in one bucket and the same expensive back rooms in another.
An estimated 20 to 25 percent of healthcare spend is wasted on administrative overhead, pricing failures, and unnecessary care. Direct contracting can remove some of that waste from primary care. It cannot touch specialty and hospital waste unless the contract extends beyond the clinic.
The Trigger Changes What You Pay For
About one in three Americans skip care or prescriptions because of cost. Removing the cost barrier at the front door helps, but it does not guarantee the preventive action happens.
A trigger-based contract changes the economics. The plan pays when a defined event occurs. Those events can include:
- A completed biometric screening
- A documented preventive action matched to a specific medical code
Payment follows proof. Employees get a reason to complete the action. Employers pay for documented activity, not for a list of eligible people.
Trigger-based payment also creates a data trail. Employers can see how many screenings were completed, how many abnormal results the clinic flagged, and how many follow-ups happened. That data holds up in a renewal meeting.
Structure Comes Before Contract
Some employers sign a direct primary care contract and treat it as a vendor agreement. ERISA section 3(1) treats an arrangement established by an employer to provide medical care through direct payment as a welfare benefit plan. That means written plan documents, summary plan descriptions, fiduciary responsibility, and claims procedures.
A narrow primary care contract also does not satisfy the minimum essential coverage standard under the ACA. Employees still need ACA-compliant group health coverage from the employer or a spouse. The direct contract sits alongside that coverage as a supplement.
Employee Contributions and Taxes
Employee contributions, if any, belong in a Section 125 cafeteria plan. Employer payments need plan rules to avoid wage characterization. These details should not wait until after launch.
How WellthCare Handles the Same Problem
WellthCare™ is a Health-to-Wealth™ Benefit System that works alongside the existing health plan and gets used first. Employees receive $0-co-pay care before their primary plan, earn reward dollars at the WellthCare Store™ on 3,000+ FSA-approved, health-supporting products, and build automatic retirement contributions funded by savings the employer commits.
The WellthCare approach differs from a capitated direct contract through verification. Plans of care are AI-drafted and reviewed by a nurse practitioner and a physician. WellthCare verifies completion through standardized preventive care codes. Employees earn reward dollars for documented health activity, not for enrollment.
A well-designed direct primary care contract borrows that logic. It names the specific events that trigger payment, defines the verification standard, and requires auditable data.
Ask This Before the Fee
Before the per-employee fee, ask the vendor to name the payment trigger. A direct contract should state what it pays for.
Membership fees produce access. Fees tied to documented actions produce behavior change. Behavior change is what moves claims.
Most direct contracts get access right. Few get triggers right. Employers that ask about the trigger before the price turn primary care from a vendor expense into a claims strategy.
See what a WellthCare Plan would look like for your team.
Healthcare that pays you back.
This article is for general information only and is not legal, tax, or medical advice. Employers should consult their own advisors.