Executive Summary

Healthcare has become one of the least predictable lines on the corporate P&L, and the traditional tools—broad networks, incremental Plan Design tweaks, and passive communications—are no longer enough to manage trend or deliver a better employee experience. The latest KFF Employer Health Benefits Surveys highlight a decisive response among employers: more are turning to Direct Contracting and Value-Based Care as primary levers to control rising spend and reintroduce predictability into budgets and renewals. That shift matters at the executive level because it changes risk, governance, and the partnership models CFOs and CHROs must oversee.

At JA, we see this evolution every day. Employers are pursuing direct relationships with high-value providers and embracing outcomes-based models—but importantly, they are pairing these strategies with activation: education, navigation, and incentives that move real employee decisions. Our approach combines rigorous analytics—bridging cost and quality— with employee-centric activation to deliver better care, better outcomes, and significantly lower costs.

This whitepaper outlines a practical, executive-level roadmap to design, implement, and govern Direct Contracting and value-based programs that actually shift utilization. You will find:

• Why Direct Contracting and Value-Based Care are gaining momentum and how they reshape financial predictability and risk
• A pragmatic framework to turn strategy into activation via education, navigation, and incentive design
• An anonymized case example demonstrating how simple, targeted action around outpatient imaging shifted utilization away from a high-cost facility (with 500%+ price variance) toward high-value options
• A governance approach that balances Fiduciary oversight, data management, Provider performance, and member experience
• A 180-day C‑suite roadmap with measurable milestones

“Start with data, translate insights into a clear definition of success, and communicate the specific behaviors each stakeholder must take to achieve it.”

1. The C‑Suite Imperative: From Rising Costs to Predictable Value

For most organizations, healthcare remains an inflation-exposed expense with limited line-of-sight into what is driving spend month to month. Executive leaders face a threefold challenge:

• Financial predictability: Year-over-year medical and pharmacy trend has remained elevated, with specialty drugs exerting outsized pressure. Traditional benefit tweaks have produced diminishing returns, making it hard to forecast renewals with confidence.
• Quality ambiguity: Higher price is not a proxy for better care. Wide variation in cost and outcomes across facilities—even within the same market—creates compounded clinical and financial risk.
• Employee experience: Confusing networks, opaque pricing, and inconsistent navigation erode trust and undercut engagement. Strategy without activation rarely changes behavior or spend.

Employers are acting accordingly. The 2025 and 2026 KFF Employer Health Benefits Surveys report that more employers are adopting Direct Contracting and value-based arrangements to regain control and align dollars with outcomes. Many are also pairing these models with member navigation and education so that lower allowed amounts and higher clinical value translate into real utilization changes. Taken together, these approaches create a durable platform for improved predictability, stronger vendor accountability, and a better employee experience.

Three market dynamics make this moment particularly ripe for action:

• Price transparency rules have opened new pathways for analytics. Machine-readable files and reporting requirements enable employers and their advisors to identify outlier prices and evaluate alternatives more granularly than ever before.
• Provider readiness has advanced. Many health systems, independent physician groups, and centers of excellence (COEs) now have the infrastructure to participate in bundles, Shared Savings, and other outcome-tied arrangements.
• Benefits tech, navigation, and point solutions have matured. Employers can orchestrate communications, steerage, and scheduling assistance to reduce friction and help members reliably choose high-value care.

Still, strategy alone does not move claims. We consistently see the difference when organizations embed activation—employee-centric education, trusted navigation, and aligned incentives—into the operating model. That union of strategy and activation is where Direct Contracting and Value-Based Care deliver their promise.

2. A Different Approach: Pairing Data-Driven Strategy with Employee-Centric Activation

Our methodology at JA starts with a premise that guides every decision: empowerment. When people understand their options, they choose better care pathways. When leadership has credible, comprehensive insight, they make better investments and govern with confidence. Achieving both requires rigor and simplicity.

Here is how we bring that to life:

• Integrate cost and quality data to find “value oases.” We test assumptions with real claims, not anecdotes. That includes analyzing utilization patterns and total episode costs, comparing allowed amounts across sites of care, and layering in quality signals (e.g., readmissions, complications for relevant categories, recognized third-party measures) to surface high-value options.
• Target the right categories first. Rather than boiling the ocean, we prioritize service lines with high spend, wide price variation, and clear steerage potential—imaging, ambulatory surgery, joint replacements, maternity, GI, and certain cardiac procedures are frequent early candidates.
• Design the right commercial model for the category. Options include direct fee-for-service with preferred rates, episodic bundles, Shared Savings, prospective Care Management fees, or COE arrangements with warranties. The model should match Provider readiness, organizational scale, and risk tolerance.
• Make it easy for people to do the right thing. We demystify the “how” for employees: where to go, whom to call, what it costs, and why it’s better. Then we remove friction via navigation support and simplified scheduling.
• Align incentives to reinforce behavior. We structure Plan Design and rewards so the high-value option is the obvious choice—lower (or waived) out-of-pocket costs, pre-service concierge support, and timely communications that make the path clear.
• Measure relentlessly and attribute fairly. We define success up front, then track utilization shifts, unit cost changes, member experience, and renewal impact. We separate program effects from noise, adjust for case mix where appropriate, and report results transparently to leadership.

This interplay between analytics and activation is what ultimately changes outcomes—financial, clinical, and experiential. It is also what differentiates “pilot purgatory” from durable, scalable value creation.

3. From Insight to Impact: An Imaging Example That Moved the Needle

One employer client’s experience illustrates how targeted activation can convert a good idea into measurable results. We began by reviewing historical claims to understand utilization patterns in outpatient imaging—specifically CT and MRI services. Our analysis compared total facility plus physician pricing across four regional facilities commonly used by members.

What we found was striking: a greater than 500% variance in price for the same class of services across locations, with the highest-cost site not demonstrating superior quality based on available signals. This is a common but underappreciated reality in healthcare: higher price does not automatically equal higher quality. In fact, the disconnect can amplify both clinical and financial risk.

With leadership alignment, we moved from insight to action using a few simple, employee-centric tactics:

• Transparent, targeted education. We provided members with straightforward cost comparisons for common imaging procedures at nearby facilities, paired with plain-language guidance on how to access the high-value options.
• Navigation that reduces friction. We offered a clear point of contact for scheduling support and pre-service guidance, ensuring the chosen site met both cost and quality thresholds.
• Plan Design that rewards smart choices. For these imaging services, the plan reduced or eliminated out-of-pocket costs when members selected high-value providers identified through the analysis.

Communications began with leaders and managers to establish context and build trust. Then we launched focused employee outreach, timed to coincide with typical care-seeking cycles and reinforced by reminders in digital channels. We kept the message simple: here is a higher-value option, here is why it’s better, and here is how to access it—today.

Results followed. Ongoing utilization reporting showed a clear shift away from the highest-cost facility toward lower-cost, high-value alternatives. Members saved at the point of service with lower out-of-pocket costs, reported a more streamlined experience, and the employer reduced overall spend in that category within the Plan Year. The key was empowerment: by equipping people with transparent information and making the right action easy—and financially attractive—we aligned individual and organizational interests without sacrificing access or quality.

Attribution and governance mattered, too. We tied activity to outcomes by:

• Setting a pre-intervention baseline for utilization by facility and modality
• Tagging communications and navigation interactions to support pre/post comparisons
• Monitoring claims with place-of-service and Provider identifiers to confirm steerage
• Reviewing unit costs and allowed amounts against targeted rate expectations

While every market and population differs, the lessons generalize: thoughtful, data-driven design paired with focused activation can shift behavior quickly—especially in categories with high price dispersion and clear pathways to high-value care.

4. Designing for Value: Direct Contracting and Value-Based Models That Work

“Value-Based Care” and “Direct Contracting” are umbrella terms covering a spectrum of models. Choosing the right architecture for your organization starts with clarity on goals, constraints, and the maturity of your Provider partners.

Common models and when to consider them:

• Preferred direct contracts for high-variation services
  • What it is: Directly negotiated rates and access terms with select high-value providers (e.g., imaging, ambulatory surgery, GI, maternity bundles).
  • When it fits: Early-stage programs, midsize populations, markets with pronounced price dispersion, and providers prepared to honor steerage privileges and service standards.
  • Activation essentials: Member education with side-by-side cost comparisons, navigation-and-scheduling concierge, and Plan Design waivers for selected services.
• Centers of Excellence (COE)
  • What it is: Contracted regional or national centers for defined procedures (e.g., joint replacement, spine surgery, transplants) offering tightly managed episodes, warranties, and quality guarantees.
  • When it fits: Employers seeking predictable episode costs and superior outcomes for high-cost, lower-frequency cases.
  • Activation essentials: Pre-certification pathways that default to COE with exception protocols, travel benefits, and zero member cost share to reinforce selection.
• Shared Savings or episodic bundles
  • What it is: Outcome-tied reimbursement arrangements (retrospective or prospective) that reward providers for meeting quality and cost benchmarks over a defined episode or period.
  • When it fits: Providers with Care Management capability and data infrastructure; employers ready to track and reconcile performance and settle Shared Savings.
  • Activation essentials: Clear quality metrics, transparent reporting, and employee guidance to selected sites and clinicians.
• Accountable care constructs (e.g., ACO-like models)
  • What it is: Broader population-based arrangements with aligned incentives for total cost of care and quality.
  • When it fits: Larger populations, markets with integrated Provider partners, and employers seeking longitudinal management of chronic conditions.
  • Activation essentials: Attribution clarity, primary care engagement, care coordination, and targeted incentives that nudge In-Network, high-value pathways.

Key design principles across models:

• Anchor to outcomes. Rate reductions alone are fragile. Tie economics to quality (e.g., avoidable readmissions, complications, patient-reported outcomes where applicable) and service standards (e.g., access, scheduling, turnaround times).
• Focus on total cost of care. Price per unit matters, but leakage, site-of-care shifts, and episode efficiency often drive the real savings.
• Balance access and steerage. Tiered designs can preserve broad access while creating clear, meaningful differentials—financial and experiential—that guide members to high-value care.
• Be pragmatic about data. Use the transparency now available but recognize its limits. Blend multiple sources—claims, Provider-reported quality, trusted third-party measures—to triangulate value.
• Invest in activation. Budget for communications, navigation, and incentives at the outset; treat them as core cost of goods sold for your strategy, not add-ons.

5. Activation That Works: Education, Navigation, and Incentives

Activation is not a newsletter. It is a deliberate operating system designed to make the right choice obvious, easy, and rewarding. Employers highlighted in recent KFF surveys are increasingly combining benefit design changes with targeted engagement to steer utilization toward high-value providers—a pattern we see validated in our client work.

What moves the needle:

• Clarity beats complexity. Communications should highlight one action at a time, with three core elements: the “why” (quality + cost), the “where” (named providers/sites), and the “how” (steps to schedule, navigate, and save).
• Proximity to the decision. Time outreach to moments of need: diagnostic orders, pre-authorizations, and care-plan milestones. Embedding navigation into these touchpoints amplifies impact.
• Frictionless navigation. A single, well-publicized access point—phone, chat, or app—that can verify eligibility, identify the right Provider, schedule the appointment, and confirm benefits removes barriers that derail good intent.
• Incentives that matter. Align Plan Design with your value strategy:
  • Zero or reduced out-of-pocket costs at high-value providers and COEs
  • Cash rewards or HSA/HRA contributions for using preferred sites for targeted services
  • Contribution differentials for enrolling in high-value primary care or ACO-like arrangements
  • Streamlined approvals when members select high-value pathways, balanced by appropriate exception processes
• Manager and clinician engagement. Provide leaders with toolkits and talking points; equip ordering clinicians (e.g., PCPs) with easy referral pathways to high-value sites.
• Feedback loop. Share early wins and member stories. Social proof builds momentum and normalizes the new path as standard care.

Done well, activation elevates trust. Employees feel informed and supported rather than steered. That trust is an asset that compounds over time, enabling deeper value-based initiatives without provoking disruption fatigue.

6. Governance and Risk: How the C‑Suite Ensures Control Without Complexity

Direct Contracting and Value-Based Care change your vendor map and introduce new dependencies. To secure predictability and minimize risk, executives should organize governance around five pillars:

• Strategy and scope
  • Define goals, service lines, target markets, and member segments up front. Express objectives as measurable outcomes (e.g., utilization shifts, unit cost reductions, quality thresholds, member experience scores).
• Provider selection and performance
  • Use multi-factor criteria: cost, quality signals, access, capacity, readiness to participate in value arrangements, and cultural fit.
  • Embed service-level agreements (e.g., access times, prior-authorization responsiveness, data-sharing cadence) and quality guarantees where appropriate.
• Data, privacy, and reporting
  • Clarify data flows and responsibilities among TPA, providers, navigation partners, and analytics teams.
  • Standardize reporting on utilization, unit cost, total cost, quality measures, and member experience. Establish monthly operational reviews and quarterly executive readouts.
• Member experience and equity
  • Track adoption and satisfaction across populations; ensure language, cultural, and geographic access. Provide robust exceptions and continuity-of-care pathways.
• Financial controls and attribution
  • Separate program impact from external trend. Use pre/post baselines, compare to non-targeted categories, and adjust for case mix where feasible.
  • Account for the “all-in” economics: incentives, navigation costs, and administrative fees—alongside unit price and utilization changes.

A word on risk: Direct contracts do not have to mean narrow networks or disruption. Tiered access can preserve choice while creating clear, material differentials that guide members to value. Exception processes and continuity-of-care policies safeguard clinical relationships when needed. And collaborative Provider relations—sharing data, celebrating wins, addressing issues quickly—prevent small problems from becoming systemic.

7. Measurement that Matters: Making CFO-Grade Results Visible

Finance leaders need results that stand up to scrutiny. The measurement framework should be defined before launch and include both leading and lagging indicators:

• Leading indicators (30–90 days)
  • Engagement: open and click-through rates, navigation calls/chats, scheduling completion
  • Adoption: percentage of targeted episodes routed to high-value providers
  • Experience: quick pulse checks (e.g., post-visit NPS) and issue logs
• Lagging indicators (quarterly and annual)
  • Utilization shift by site and category (e.g., percent of imaging at preferred facilities)
  • Unit cost reduction and average Allowed Amount changes in targeted categories
  • Quality outcomes where applicable (e.g., avoidable readmissions, complications)
  • Net savings after incentives, navigation costs, and administrative fees
  • Renewal impact and trend stabilization

Attribution techniques to improve credibility:

• Baseline and cohorting. Lock a pre-intervention baseline; define impacted cohorts (e.g., members in markets with direct contracts) and appropriate comparisons.
• Tagging and tracing. Where feasible, tag communications and navigation interactions for linkage with claims outcomes; track scheduling via vendor logs.
• Case-mix awareness. Adjust for service mix and acuity within reason; avoid overfitting that delays decision-making.
• Transparency. Share both wins and learnings; refine the program rapidly rather than waiting for “perfect” proofs.

Finance and HR leaders should agree on the definitions of “savings,” “avoidance,” and “ROI” at the outset, and align on the treatment of incentive and program costs. Consistency in definitions is as important as the numbers themselves for governing the program over time.

8. A 180‑Day C‑Suite Roadmap: Launching Direct Contracting + Activation

Here is a practical, time-bound plan that balances speed with governance:

• Days 1–30: Define goals and select targets
  • Align CFO/CHRO/COO on 2–3 service lines with high price variation and strong steerage potential (e.g., imaging, ambulatory surgery, GI)
  • Set success metrics (utilization shift, unit cost reduction, member experience)
  • Initiate Provider market scan and preliminary rate/quality assessment
• Days 31–60: Confirm partners and finalize design
  • Shortlist providers; validate cost and quality; confirm capacity and SLAs
  • Decide commercial model (preferred rate, episodic bundle, Shared Savings)
  • Design plan incentives (e.g., waived cost share) and navigation integration
  • Draft communications and leader toolkits
• Days 61–90: Build activation and measurement
  • Stand up navigation workflows; train internal stakeholders
  • Finalize data-sharing agreements and reporting cadence
  • Confirm baseline metrics and dashboards for leading/lagging indicators
  • Pilot messaging with small cohorts; refine for clarity
• Days 91–150: Launch and iterate
  • Launch employee communications and go-live navigation
  • Enable frictionless scheduling; monitor adoption daily/weekly
  • Hold biweekly operations huddles with providers and navigation partners
  • Share quick wins and address barriers; adjust incentives if needed
• Days 151–180: Validate impact and plan scale
  • Review utilization shift, unit cost changes, and member experience
  • Quantify net savings and renewal implications
  • Decide on expansion to additional categories or geographies
  • Codify governance rhythm and performance management

9. Managing Change: Communications and Culture for Sustainable Adoption

Direct Contracting and value-based initiatives are as much about change leadership as they are about contracts. Success depends on building trust and making the new path feel normal:

• Lead with purpose. Explain why the change matters—to employees and to the business. Emphasize quality, convenience, and savings for both.
• Make managers multipliers. Provide concise talking points and FAQs; equip them to answer “where do I go?” and “what does it cost me?”
• Use multiple channels. Email, SMS, portal banners, mailed guides, and on-demand webinars reach different audiences; keep messages consistent and brief.
• Normalize through stories. Share member experiences of better care and lower bills; peer validation reduces skepticism.
• Close the loop. Ask for feedback after interactions and demonstrate responsiveness; small improvements signal respect and build confidence.

When employees see that the organization has done the work—vetted providers, simplified access, aligned benefits—they are far more likely to participate willingly and to recommend the program to peers.

10. What the Data Enables Today—And What to Avoid

Thanks to transparency requirements and advancing analytics, employers can now:

• Benchmark negotiated rates and identify outliers at the code and category levels
• Model steerage scenarios and expected savings before contracting
• Monitor performance in near real time and correct course quickly

But there are pitfalls to avoid:

• Over-indexing on price alone. Without quality and experience guardrails, short-Term savings can create longer-Term cost through complications, readmissions, or member dissatisfaction.
• Boiling the ocean. Spreading too thin across categories dilutes focus and delays visible wins.
• Under-funding activation. Without clear communications, navigation, and aligned incentives, even excellent contracts underperform.
• Neglecting clinician behavior. Ordering patterns drive downstream costs; equip and engage clinicians with easy, high-value referral pathways.
• Measuring too slowly. Waiting a full year for results costs momentum; use leading indicators to learn and adjust within weeks.

Actionable Takeaways for Executive Leaders

• Pick two to three service lines with outsized price variation and clear steerage potential; don’t wait for a grand redesign to start delivering value.
• Define success in concrete terms—utilization shift, unit cost reduction, and member experience—and lock your baseline now.
• Fund activation from the outset. Budget for navigation and incentives as essential components, not optional add-ons.
• Design plan features that make high-value choices obvious: zero cost share, concierge scheduling, and simplified approvals.
• Institutionalize governance: monthly operational reviews, quarterly executive dashboards, and transparent reporting that stands up to CFO scrutiny.
• Communicate with empathy and clarity. Lead with quality and experience, then show employees how the program benefits their wallets and wellbeing.
• Start small, learn fast, and scale what works. Early wins build the political and cultural capital to expand into more complex value-based arrangements.

Conclusion

Direct Contracting and Value-Based Care are no longer experimental—they are pragmatic tools to reintroduce predictability into healthcare spend while elevating the employee experience. The most successful employers are combining rigorous analytics with thoughtful activation to move real decisions at the moment of care. As the KFF Employer Health Benefits Surveys underscore, CFOs and CHROs are now at the point where strategy must be paired with execution to demonstrate utilization shifts, support renewal negotiations, and deliver on the promise of better care at lower cost.

Our experience at JA shows that the formula works: start with data, evaluate cost and quality together, and design contracts that reward measurable value. Then close the activation gap with simple, transparent education, frictionless navigation, and incentives that make the right choice the easy choice. Governance and measurement keep everyone honest and focused on outcomes. Most important, this approach respects and empowers employees—because when people understand their options and are supported in acting on them, they choose better care paths and everyone benefits.

“Start with data, translate insights into a clear definition of success, and communicate the specific behaviors each stakeholder must take to achieve it.”

Author: Carrie Divens, Benefits Advisor, JA