Per Engaged Member Per Month (PEMPM) contracting is an alternative pricing model to Per Member Per Month (PMPM) contracting that is gaining popularity among digital health startups. PEMPM contracts pay startups based on the level of engagement they achieve with health plan members, rather than a fixed payment per member per month. This model offers several benefits for digital health startups, including:

Per Engaged Member Per Month billing models can lead to improved health outcomes: PEMPm contracting incentivizes digital health startups to deliver better health outcomes through their platforms or services, leading to reduced healthcare costs and better outcomes for members.

For digital health providers, PMPM billing can provide fixed recurring revenue, enhancing stability and becoming a SaaS business. Although value-based and per-engaged member billing seems to make more sense for health plans, many resist the risk associated with variability in costs.