Purchasers are more and more looking for performance-based contracts — wherein fee is tied to outcomes — with digital well being options. Nevertheless, implementing these contracts is tough, particularly for employers who’ve restricted assets.
That’s why the Peterson Well being Expertise Institute (PHTI) launched a playbook final week for purchasers on how you can successfully execute performance-based contracts. The playbook was created in collaboration with well being plans, distributors, brokers, consultants, information warehouses and different stakeholders.
“We’ve got persistently heard from each well being plans and employers that the method of negotiating performance-based contracts stays very arduous. … We would love to see purchasers coming to the desk as a buyer with excessive requirements, we wish to elevate the bar on buying,” stated Caroline Pearson, government director of PHTI, in an interview. “Each payer needs to be holding their companions accountable for outcomes that basically matter.”
Along with sharing greatest practices for implementing these contracts, the playbook gives toolkits on how you can create a performance-based contract for digital diabetes administration, digital musculoskeletal options, digital hypertension administration and digital options for despair and anxiousness.
Listed here are 5 issues purchasers ought to know from the report:
1. Purchasers have a variety of objectives 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 objectives whereas defending purchasers from danger — notably when an answer is new, unproven or is dependent upon long-term member engagement. This strategy makes it simpler for purchasers to confidently put money into new options.
2. Purchasers range extensively of their skill 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 information and assets, resulting in challenges round measuring outcomes and implementing 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 assets and need to 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 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 really broaden entry earlier than scaling. Many are additionally investing in centralized information infrastructure and audit rights to confirm outcomes and enhance contracts over time.
4. Many performance-based contracts embrace efficiency ensures, similar to clawback preparations that require purchasers to pay distributors upfront and later get well a portion of these funds if agreed-upon efficiency targets will not be met. Nevertheless, many purchasers have been disenchanted 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 payment mixed with a performance-based element that’s withheld till efficiency has been validated. This strategy is designed to steadiness the seller’s want for fee to assist ongoing engagement actions with the purchaser’s want to reward significant outcomes.”
5. In response to 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 liable for conducting outreach to members and what information the payer and vendor are going to share forwards and backwards.
“Many of those selections include trade-offs, similar to sacrificing specificity to scale back administrative burden or prioritizing predictability at the price of vendor accountability,” PHTI states.
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