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Institute Report
Innovation in Diabetes Care Technology: Value-based Agreements
Dec 21, 2020
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About the Report


The increasing use of digital technologies for diabetes indicates the health system has entered a new era of diabetes care. Increased digitalization, and particularly the use of digital medicine products such as connected devices and digital applications, offers many potential benefits such as improved health outcomes, increased care efficiency, and improved quality of life for people with diabetes. However, in order for the value of these tools to be realized, health policy and healthcare practice must continue to modernize to allow for improved patient access and use. In the area of reimbursement, value-based agreements (VBAs) show promise as one way to realize the value of digital medicine product innovations while also generating further evidence for the healthcare system.

Report Summary


Within the U.S. healthcare system, the prevalence of chronic conditions such as diabetes is increasing, as are diabetes care expenditures. In order to improve health outcomes associated with diabetes and to better manage care expenses, novel reimbursement mechanisms such as VBAs can help improve access to and use of new innovations. In its most simple form, value-based healthcare focuses on improving care outcomes and value realized from care expenditures. Operationally, VBAs can act to align health system stakeholder interests, ideally improving health outcomes and reducing care costs in the target patient population. 

VBAs between manufacturers and payers can largely be categorized as either performance-based or differential pricing-based VBAs. The former links payment to the demonstrated patient outcomes, while in the latter, pricing varies based on the clinical value relative to existing treatments. In both cases, incentives are greater for products that work and less for those that do not. VBAs are gaining some traction and use in the U.S. healthcare system, but they can be more complex to implement than traditional rebate or discount agreements. Challenges can include defining which outcomes to measure, aligning on agreement terms, tracking performance, overcoming insufficient data infrastructure, and navigating potential regulatory concerns. To allow for more widespread uptake and adoption of VBAs, educational opportunities to learn about VBAs, the establishment of basic frameworks, federal policies, and efforts to appropriately share real-world experience with VBAs and their impact will all be helpful.

Key Findings


Value-based agreements can streamline access to and use of diabetes care innovations, including digital medicine products 
  • Digital medicine products such as connected devices and digital applications may provide more seamless and continuous care for people with diabetes, with the potential to achieve better care efficiency and outcomes. 
  • Ideally, the relationship between benefits realized and costs incurred can be recognized by all stakeholders in the health system across the diabetes care spectrum: People with diabetes (PwD), the HCPs who collaborate in their care, the health system that administrates care, the payer for the care, and the innovator company that produced the digital medicine product.
  • In one recent example of a digital medicine product VBA, a diabetes digital health company agreed to provide Blue Cross Blue Shield Minnesota (BCBSMN) members with improved access to their smart continuous glucose monitoring (CGM) system, and would provide rebates to BCBSMN if those members spent more than an agreed-upon amount of time outside target glucose ranges. It is possibly the first publicly-announced VBA with compensation tied to Time in Range (TIR).

VBAs may reduce financial risks for payers to introduce new innovations — many with developing evidence — into systems of care, thereby offering advantages to patients.

  • Use of VBAs may help expand use of digital medicine products by overcoming challenges, such as alignment of stakeholder incentives, insufficient data infrastructure, and regulatory concerns.
  • VBAs can also increase patient access to innovative diabetes digital medicine products by helping payers to eliminate or reduce prior authorization requirements and improving patient affordability. They may also benefit the health system by generating individual or population-level insights on disease burden or the real-world effectiveness of innovations.
  • Challenges associated with implementing VBAs can include defining outcomes, aligning on agreement terms, tracking performance, overcoming insufficient data infrastructure, and navigating potential regulatory concerns.  

Diabetes is well-suited for VBA agreements as stakeholders can leverage both outcomes metrics and clinical metrics like HbA1c which are well-defined, and increasingly TIR

  • In addition to clinical metrics, improved outcomes from VBAs can be measured by tracking diabetes-related healthcare expenditures, diabetes-related hospital admissions, and diabetes-related complications, among others. Along with reducing the costs associated with diabetes care, VBAs would likely have a positive impact for multiple stakeholders.
  • VBAs can be structured in a way that enables payers, PwD and their care teams to improve value and produce the best possible outcomes from integrating digital medicine products, while reducing the risk assumed by any one stakeholder.
  • Increasing availability of digital diabetes ecosystems of care may be particularly well suited for a VBA-based approach as all care components can be considered and evaluated via a single VBA construct.  
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