Purchasers are more and more looking for performance-based contracts — during which fee is tied to outcomes — with digital well being options. Nevertheless, implementing these contracts is tough, particularly for employers who’ve restricted sources.
That’s why the Peterson Well being Expertise Institute (PHTI) launched a playbook final week for purchasers on tips on how to successfully execute performance-based contracts. The playbook was created in collaboration with well being plans, distributors, brokers, consultants, knowledge warehouses and different stakeholders.
“We now have constantly heard from each well being plans and employers that the method of negotiating performance-based contracts stays very arduous. … We would like to see purchasers coming to the desk as a buyer with excessive requirements, we wish to elevate the bar on buying,” mentioned Caroline Pearson, government director of PHTI, in an interview. “Each payer must be holding their companions accountable for outcomes that basically matter.”
Along with sharing finest practices to implementing these contracts, the playbook offers toolkits on tips on how to create a performance-based contract for digital diabetes administration, digital musculoskeletal options, digital hypertension administration and digital options for despair and anxiousness.
Listed below are 5 issues purchasers ought to know from the report:
1. Purchasers have a variety of targets once they undertake digital well being options, together with enhancing member satisfaction, increasing entry, enhancing outcomes and lowering prices. Efficiency-based contracts ought to tie funds to those targets whereas defending purchasers from danger — notably when an answer is new, unproven or will depend on long-term member engagement. This method makes it simpler for purchasers to confidently put money into new options.
2. Purchasers differ broadly of their potential to design and handle efficient performance-based contracts, and most are nonetheless early in adoption. Early performance-based contracts have been primarily experimental and constrained by restricted knowledge and sources, resulting in challenges round measuring outcomes and imposing accountability. Bigger organizations normally have extra leverage in constructing performance-based contracts as they usually have in-house actuaries and devoted advantages groups, whereas smaller organizations don’t normally have the wanted sources and should depend on consultants.
“To broaden using PBCs, distributors and purchasers might want to align on customary definitions and approaches, whereas streamlining the efficiency adjudication course of,” the report mentioned.
3. Purchasers are transferring previous experimentation and towards constant, data-driven performance-based contracts. Main organizations are testing distributors via structured pilots, utilizing scorecards to information renewals and verifying that digital instruments truly increase entry earlier than scaling. Many are additionally investing in centralized knowledge infrastructure and audit rights to confirm outcomes and enhance contracts over time.
4. Many performance-based contracts embrace efficiency ensures, comparable to clawback preparations that require purchasers to pay distributors upfront and later recuperate a portion of these funds if agreed-upon efficiency targets will not be met. Nevertheless, many purchasers have been dissatisfied on this mannequin, as they typically result in disputes with distributors and don’t present nice accountability.
As an alternative, PHTI recommends a “two-stream fee mannequin: an engagement price mixed with a performance-based element that’s withheld till efficiency has been validated. This method is designed to stability the seller’s want for fee to assist ongoing engagement actions with the purchaser’s want to reward significant outcomes.”
5. Based on PHTI, profitable performance-based contracts require settlement on three core areas: what the fee mannequin goes to be, the way you’re going to measure outcomes, and what the operational parts are for the contract. For the latter, this contains deciding who’s chargeable for conducting outreach to members and what knowledge the payer and vendor are going to share forwards and backwards.
“Many of those choices include trade-offs, comparable to sacrificing specificity to scale back administrative burden or prioritizing predictability at the price of vendor accountability,” PHTI states.
Photograph: atibodyphoto, Getty Photos
