Performance-based contracting is becoming the norm for digital health solutions, with the majority of employers and health plans tying vendor payments to clinical and financial outcomes, according to a new survey from Peterson Health Technology Institute (PHTI).
Specifically, 68% of employers and 55% of health plans are using such contracts. Eighty-five percent of contracts tie at least a quarter of fees to performance while 31% tie more than half, PHTI analysts wrote in the report (PDF).
The report drew insights from 321 digital health professionals responsible for purchasing across health plans, employers and health systems. Four main areas were covered: purchasing approach, artificial intelligence adoption, contracting process and future plans.
Analysts note the shift to performance-based contracts aligns with the U.S. Centers for Medicare and Medicaid Services’ (CMS) new ACCESS model. The model, launched in December, establishes outcome-aligned payments for digital health solutions and chronic care management.
Vendor-provided data is a pain point for organizations opting for performance-based contracts, as 45% of respondents report difficulty integrating with their own claims or utilization data and 38% report being unable to independently verify outcomes.
PHTI Executive Director Caroline Pearson said in a statement that "payment for technology-driven chronic care management should be directly tied to clinical outcomes" in both commercial and Medicare markets.
“While the industry is broadly aligned on this approach, employers and health plans still struggle to negotiate and adjudicate these contracts, which often depend on vendors to report clinical and financial data,” Pearson said. “Easing these administrative challenges is essential to driving broader adoption of performance-based contracts. Over time, these contracts can actually generate more data about how vendors perform and help build confidence in digital health solutions.”
The report notes digital health commitments remain steady, but fewer purchasers report increasing spend than two years ago. This year, 64% of purchasers report increasing spending, compared to 75% of purchasers back in 2024. This year, roughly a third of purchasers (35%) report maintaining their organization's level of spending. For those boosting their investment in digital health, factors include strong engagement outcomes (64%), improved access outcomes (62%), cost savings (59%) and improved health outcomes (56%).
Moreover, over the next 12 months, 56% of respondents plan to maintain current spending and 38% report plans to increase it.
When it comes to AI, most respondents indicate deployments of such tools have been largely focused on administrative tasks. Among health systems, clinical documentation and ambient scribing lead, with 71% reporting some level of deployment, including 41% running enterprise-wide and the remainder in department- or use-case-specific deployments. Clinical documentation review is the top use for health plans as well, with 67% reporting some deployment level.