Running a Claims Deep Dive Before You Negotiate a Direct Contract

Too many direct contract conversations start with the provider’s story.

Volumes, quality, market position, brand.

All important—but if you have not done your own claims deep dive first, you are negotiating on someone else’s narrative.

The point of the deep dive

The goal is not to build a perfect actuarial model.

It is to answer four pragmatic questions:

1. Where are we clearly overpaying today?
2. How much of that spend is realistically addressable in a direct contract?
3. Which providers already see a meaningful share of that volume?
4. What would “good” look like financially if we changed the structure?

You can answer most of that with a few simple cuts of data.

Cut 1: High-cost service lines

Start by ranking service lines by allowed amount over the last 12–24 months:

• Joints
• Spine
• GI
• Imaging
• Maternity
• Oncology (often more complex)

For each, pull:

• Total allowed amount
• Number of claims / episodes
• Average allowed per episode

You are looking for the combination of high spend and relatively standardizable care.

Cut 2: Site-of-service and facility concentration

Within those service lines, look at where the dollars actually go:

• What percentage of spend sits in inpatient vs. outpatient vs. ASC?
• Which facilities or systems receive the bulk of the dollars?

A few simple ratios tell you a lot:

• Top 3 facilities’ share of spend
• Average allowed amount by site-of-service

This is where obvious overpayment and potential partners start to emerge.

Cut 3: Benchmarks

You do not need a full-blown benchmark study.

But you should at least:

• Compare your average allowed amounts to a Medicare-based benchmark (e.g., DRG or APC rates) for a sample of common procedures.
• Look at any internal “best-in-class” pricing you already have through carve-outs or COEs.

If you see that one facility is routinely 50–100% above your internal or external benchmarks, that is a strong candidate for a direct contract—or for a steerage strategy away from that facility.

Cut 4: Member geography and density

Overlay geography:

• Where do affected members live?
• How far are they from the facilities that dominate your spend?
• Are there alternative providers within a reasonable radius?

This tells you whether a potential direct contract will be viable from a member experience standpoint.

Turn analysis into an initial thesis

Once you have those views, your first negotiation thesis writes itself:

• Target: “We want to address joint replacement episodes in Metro A.”
• Baseline: “We currently spend $X per year, with average allowed of $Y per case.”
• Partner options: “Systems 1 and 2 already see Z% of this volume.”
• Goal: “We want to move to case rates at roughly [X% of Medicare], with steerage in the 40–60% range.”

Now, when you sit down with a potential partner, you have your own numbers.

Share enough to build trust, not enough to lose leverage

You do not have to hand over every row of your claims data.

But you should be ready to share:

• High-level spend and volume for the targeted services.
• A sense of how the prospect compares to peers on price and volume.
• The basic economic guardrails you are targeting.

This creates a more honest conversation:

“Here is where we are today. Here is where we need to be for this to make sense. How close can we get together?”

Direct contracting is not a leap of faith.

It is a data-informed change in how you buy something you are already paying for.

Doing a minimal claims deep dive before you negotiate is how you keep it that way.