Integrating Centers of Excellence Into a Direct Contracting Strategy

Centers of excellence (COE) programs have been around longer than most direct contracting platforms.

They promise:

• Better outcomes at high-volume centers
• Tighter pricing for complex procedures
• A more guided member experience

Direct contracting, especially at the regional level, can look similar on paper.

The mistake is treating them as competing ideas instead of complementary tools.

Where COEs fit

COEs tend to shine in a few areas:

• Complex surgeries (cardiac, spine, transplants)
• Rare or high-risk procedures
• Cases where volume and expertise matter more than geography

They often involve travel benefits, intensive care coordination, and more stringent clinical criteria.

Where regional direct contracts fit

Regional direct contracts, by contrast, often focus on:

• High-volume but more routine procedures (joints, GI, imaging)
• Markets where local access and relationships matter
• Service lines where you want to build deeper ties with regional systems

They are less about flying members to a single flagship center and more about reshaping local patterns.

Designing them to work together

Think of COEs and regional direct contracts as layers in one steerage strategy:

• COEs for the highest-risk, most complex cases where centralizing expertise makes sense.
• Regional direct contracts for the bulk of routine, high-spend work where staying closer to home is reasonable.

For each service line, decide:

• Do we have a viable COE option?
• Do we have a viable regional partner?
• Which should be the default, and under what criteria?

Aligning benefits and incentives

Nothing confuses members faster than conflicting benefit designs.

Work toward:

• Similar patterns of generosity (e.g., $0 out-of-pocket for COE and for qualifying regional direct contract cases).
• Clear rules about when travel is covered and when local options are preferred.
• A single narrative: “For certain procedures, you have access to a curated path that is better on cost and outcomes.”

Members should not have to decode whether something is “COE” or “direct contract” to understand what happens to their bill.

One navigation front door

If you ask members to:

• Call one number for COE,
• Another for local direct contracts,
• And a third for the rest of the network,

…most will default to whatever their surgeon’s office suggests.

Whenever possible, give them one front door:

• A single phone number or digital entry point.
• Behind the scenes, your partners can route them to COE or regional options as appropriate.

This is where partnerships between COE vendors, navigation platforms, and regional direct contract partners really matter.

Managing overlap and politics

Inevitably, there will be situations where:

• A regional system wants to be your COE, or
• A national COE overlaps with a direct contract service line.

Use your data and governance:

• Compare outcomes and total episode cost between options.
• Use your joint operating committee to work through overlap instead of letting it fester.

It is better to make a deliberate choice than to quietly let two programs compete.

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COEs and direct contracts both exist to solve the same problem: too much variation in cost and quality for high-impact care.

When you design them as pieces of one steerage strategy instead of disconnected projects, members get a clearer experience—and you get a cleaner story for your CFO.