Increasing mHealth Usage Through Strategic Payer Incentives for Providers and Patients

Problem definition: Innovations in digital and mobile health (mHealth) services are transforming chronic care delivery by improving health outcomes and efficiency. However, despite the proven benefits of mHealth, usage remains hindered by a critical challenge: patient engagement after adoption. Without timely and frequent patient data, mHealth apps become ineffective, preventing providers from making optimal interventions. This lack of patient engagement leads to health complications that are expensive, especially for payers. Timely provider interventions are essential to mitigate these costs. Our study explores how payers can leverage targeted incentives to enhance patient usage of mHealth technology. Methodology/results: Using a game-theoretic model, we analyze how payers can design contracts to increase patient usage of mHealth. Our study examines key factors such as disease progression, rewards, premium, copay, and the effectiveness and efficiency of mHealth apps. From our analysis, two optimal strategies emerge: (i) a reward-based strategy in which direct incentives are provided to patients to encourage mHealth usage and (ii) a reminder-based strategy in which contracts are designed to incentivize providers to remind patients to use mHealth apps. The effectiveness of these strategies depends on the ability to facilitate rapid and impactful mobile interventions, which we define as mHealth technology productivity (mHTP). Our findings indicate that, when mHTP is low, payers benefit more from a reminder-based strategy, supported by higher capitation payments to providers. When mHTP is high, a reward-based strategy is more effective with patient rewards increasing as mHTP improves. Managerial implications: Our study highlights how payers can foster a mutually beneficial relationship with patients by involving providers, leading to improved health outcomes and increased payer profitability. By designing optimal incentive structures, payers can drive sustained mHealth engagement, ultimately improving healthcare efficiency and reducing costs.

Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2025.0182.