Purchasers are more and more searching for performance-based contracts — wherein cost 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 the best way 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 have now constantly 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, govt 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 the best way to create a performance-based contract for digital diabetes administration, digital musculoskeletal options, digital hypertension administration and digital options for melancholy and anxiousness.
Listed below are 5 issues purchasers ought to know from the report:
1. Purchasers have a variety of objectives after they undertake digital well being options, together with bettering member satisfaction, increasing entry, bettering outcomes and lowering prices. Efficiency-based contracts ought to tie funds to those objectives whereas defending purchasers from threat — significantly when an answer is new, unproven or relies on long-term member engagement. This strategy makes it simpler for purchasers to confidently spend money on new options.
2. Purchasers differ extensively 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 assets, resulting in challenges round measuring outcomes and imposing 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 assets and must depend on consultants.
“To broaden using 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 shifting 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 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, akin to clawback preparations that require purchasers to pay distributors upfront and later recuperate a portion of these funds if agreed-upon efficiency targets should not met. Nevertheless, many purchasers have been dissatisfied on this mannequin, as they usually 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 element that’s withheld till efficiency has been validated. This strategy is designed to steadiness the seller’s want for cost to help ongoing engagement actions with the purchaser’s need to reward significant outcomes.”
5. In accordance 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 choices include trade-offs, akin to sacrificing specificity to cut back administrative burden or prioritizing predictability at the price of vendor accountability,” PHTI states.
Picture: atibodyphoto, Getty Pictures
