Gary W. Herschman and Kevin J. Ryan, Members of the Firm in the Health Care and Life Sciences practice, in the firm’s Newark and Chicago offices, were quoted in the Bloomberg BNA Health Care Daily Report, in “Amazon Deal Brightens Blasé January Health Transactions Landscape,” by Mary Anne Pazanowski.

Following is an excerpt (see below to download the full version in PDF format):

The late January announcement that Inc., BerkshireHathaway Inc., and JPMorgan Chase & Co. plan to join forces to meet their employees’ health-care needs created a lot of health-care industry dealmaking buzz in a month that was otherwise on the quiet side. …

The Amazon announcement was scant on details, and no one quite knows what the companies have in mind. Without trying to predict what the three will do, one possibility is direct contracting.

In direct contracting arrangements, self-insured employers cut out the middleman and contract directly with health-care providers. Providers may create clinically integrated networks or accountable care organizations designed to meet the employers’ needs, but health insurers, health maintenance organizations (HMOs), and preferred provider organizations (PPOs) are not used as the primary network or administrators, Gary W. Herschman, a member of Epstein Becker & Green health care and life sciences team, told Bloomberg Law.

Further, if a health system has or acquires sufficient internal claims processing capabilities, there may be no need for a third party administrator, Herschman said.

Large health systems are “gearing up” to be able to offer these arrangements, Herschman said. He is a Bloomberg Law advisory board member whose practice is based in New York and Newark, N.J.

Kevin J. Ryan, also of Epstein Becker & Green, agreed that the health-care industry will see more direct-to-employer contracting in 2018. Employers are beginning to evaluate which facilities and services their employees use most and how they can efficiently and cost-effectively make the services available more directly and at lower cost.

Ryan, who is in the firm’s Chicago office, told Bloomberg Law employers can be expected to use these direct contracting arrangements as a tool for retaining and recruiting employees. Employers “have an incentive to keep employees happy” and to offer perquisites that will attract top-level talent.

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