Purchasers are more and more in search of performance-based contracts — through which cost 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 successfully execute performance-based contracts. The playbook was created in collaboration with well being plans, distributors, brokers, consultants, knowledge warehouses and different stakeholders.
“We’ve 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 increase the bar on buying,” stated Caroline Pearson, government director of PHTI, in an interview. “Each payer ought to be holding their companions accountable for outcomes that actually matter.”
Along with sharing finest practices for implementing these contracts, the playbook offers toolkits on create a performance-based contract for digital diabetes administration, digital musculoskeletal options, digital hypertension administration and digital options for despair and nervousness.
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 — significantly when an answer is new, unproven or is determined by long-term member engagement. This strategy makes it simpler for purchasers to confidently put money into new options.
2. Purchasers differ broadly of their capability 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 implementing accountability. Bigger organizations often have extra leverage in constructing performance-based contracts as they usually have in-house actuaries and devoted advantages groups, whereas smaller organizations don’t often have the wanted sources and should depend on consultants.
“To broaden the usage of PBCs, distributors and purchasers might want to align on normal definitions and approaches, whereas streamlining the efficiency adjudication course of,” the report stated.
3. Purchasers are transferring previous experimentation and towards constant, data-driven performance-based contracts. Main organizations are testing distributors by way of structured pilots, utilizing scorecards to information renewals and verifying that digital instruments truly develop 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 embody 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 usually are not met. Nevertheless, many purchasers have been disillusioned 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 cost mannequin: an engagement charge mixed with a performance-based part that’s withheld till efficiency has been validated. This strategy is designed to steadiness the seller’s want for cost to assist ongoing engagement actions with the purchaser’s need to reward significant outcomes.”
5. In line with PHTI, profitable performance-based contracts require settlement on three core areas: what the cost 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 consists of deciding who’s accountable for conducting outreach to members and what knowledge the payer and vendor are going to share forwards and backwards.
“Many of those selections include trade-offs, comparable to sacrificing specificity to scale back administrative burden or prioritizing predictability at the price of vendor accountability,” PHTI states.
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