PHTI Survey Finds Majority of Employers and Health Plans Are Using Performance-Based Contracting to Pay for Digital Health Tools

NEW YORK — Health plans, employers, and health systems are increasingly tying payment for digital health solutions directly to clinical and financial results, according to the Peterson Health Technology Institute (PHTI)’s 2026 State of Digital Health Purchasing survey. A majority of purchasers, including 68% of employers and 55% of health plans, indicate they are currently using performance-based contracts.

PHTI surveyed 321 decision-makers responsible for purchasing or influencing adoption of digital health solutions at U.S. health plans, employers, and health systems. When those purchasers use performance-based contracts, they put substantial payments at risk—with 85% of contracts tying at least a quarter of fees to performance and 31% of contracts having more than half of fees at risk.

This shift to paying for performance aligns with the Centers for Medicare & Medicaid Services (CMS)’s new ACCESS model, which establishes outcomes-aligned payments for digital health solutions for chronic care management. While the CMS model gives the government direct access to outcomes data, this remains a challenge in the commercial market, in which the data needed for performance-based contracts is largely supplied by the vendors being paid. Purchasers report widespread challenges with this vendor-provided data: 45% say it is difficult to integrate with their own internal claims or utilization data, and 38% say they cannot independently verify the outcomes that vendors report.

“Across both Medicare and the commercial market, payment for technology-driven chronic care management should be directly tied to clinical outcomes,” said Caroline Pearson, executive director of PHTI. “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. 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.”

Meaningful engagement is essential to drive clinical outcomes

For digital health solutions to improve outcomes, patients need to actually use them, which means vendors and purchasers must be able to recruit, engage, and retain patients in these programs. Purchasers indicate that strong member engagement is a prerequisite for increasing their digital health spending (64%). However, 47% of purchasers say that fewer than a quarter of their eligible members enroll in these solutions. Respondents also say that poor member engagement is the leading reason they switch vendors.

“Purchasers want to pay for outcomes, not for activity. That is what performance-based contracting is for, and it is increasingly becoming table stakes across the sector,” said Meg Barron, managing director of engagement and outreach at PHTI. “But these tools only deliver outcomes for the people who use them. Getting members to engage is a shared responsibility between purchasers and companies, and it is where the two sides most often fail to align. That is why engagement is becoming a defining issue for this market heading into 2027.”

“Even when we agree with a vendor on the outcomes we want, we often see engagement differently: what it looks like, how to measure it, and how to build it into the contract,” said Tammy Fennessy, senior director of benefits at DICK’S Sporting Goods. “Getting on the same page about that upfront is what turns a good intention into a solution that actually reaches our employees.”

Budgets for digital health hold steady

Despite widespread reporting of purchasers paring back benefits in the face of rising costs, those surveyed indicate they plan to maintain their budgets for digital health technologies at current levels. Over the next 12 months, a majority (56%) plan to maintain their current digital health spending, while 38% plan to increase it. Echoing longer-term trends from previous surveys, purchasers are also consolidating their portfolios around fewer solutions.

Initial AI adoption has been focused on administrative tasks

Artificial intelligence has been widely adopted among health plans and health systems, though many of these deployments are limited in scope. 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. Higher-stakes use cases lag well behind: just 18% of health systems report enterprise-scale deployment of AI for clinical decision support. For health plans, clinical documentation review is the top use case, with 67% reporting some level of deployment.

KRC Research designed the instrument, fielded the survey, and analyzed the results.