MLR Myth-Busting: Why Digital Health Hasn’t Delivered the Savings Health Plans Expected

For years, digital health has been positioned as a solution to rising healthcare costs. According to recent industry analysis, health plans were told that virtual care, digital therapeutics, and evidence-based coaching programs would reduce utilization and improve Medical Loss Ratios (MLR) while supporting value-based care models. Yet for many plans, the healthcare ROI has been modest at best, and in some cases, nonexistent.

This disconnect has led to an understandable question: if digital health is supposed to lower costs, why hasn't it consistently improved MLR? The issue isn't that digital health doesn't work. It's that most programs were never designed to deliver measurable, claims-based savings.

The engagement-only trap

One of the most persistent myths is that digital health automatically reduces medical spend. Many programs are built to increase engagement or awareness, not to directly manage utilization. In some cases, digital tools surface unmet needs or undiagnosed conditions, which can temporarily increase claims. That isn't failure, but without a cost strategy, those outcomes don't translate into MLR improvement or PMPM reduction.

Research from leading employers shows that while digital health adoption has grown, clinical outcomes tied to cost containment remain inconsistent. The disconnect lies in how programs are measured and deployed.

Why more point solutions don't equal better MLR

Another common misconception is that more point solutions equal better results. Over time, health plans have layered digital programs across conditions, populations, and vendors. While each solution may perform well individually, fragmentation limits financial impact. Overlapping populations, redundant fees, and disconnected engagement strategies dilute outcomes and make it difficult to measure total cost-of-care savings.

The proliferation of point solutions creates administrative burden, member confusion, and analytical complexity. Without care coordination across vendors, the potential for actuarial savings is lost in the noise.

The measurement gap: engagement doesn't prove savings

Measurement itself is a major barrier. Many digital health vendors rely on proxy metrics such as engagement rates, satisfaction scores, or self-reported improvements. While useful for understanding experience, these metrics don't prove medical claims reduction or improved clinical outcomes.

Without rigorous actuarial methodology including claims integration, matched control groups, and time-adjusted analysis, savings claims remain theoretical. For CFOs and actuaries evaluating PMPM impact, engagement data alone doesn't satisfy the burden of proof. Finance teams need to see verifiable reductions in utilization, not just increased app logins.

Integration, not just implementation

At the core, digital health has often been bolted onto the healthcare system rather than integrated into it. Programs were not designed with population-level accountability, longitudinal care pathways, or financial guardrails tied to utilization. The result was activity without predictable financial impact.

True integration means aligning digital health interventions with HEDIS measures, risk stratification models, and existing care management workflows. It means ensuring that medical claims data flows bidirectionally between digital vendors and health plans, enabling real-time visibility into cost trends and member trajectories.

What actually works: claims-validated digital health

Health plans that are seeing results take a different approach. They curate digital health networks through strategic vendor partnerships instead of accumulating point solutions. They design risk-stratified care pathways using predictive analytics instead of standalone programs. And they measure outcomes using claims-validated analysis, not engagement alone.

Most importantly, incentives are aligned around reducing avoidable utilization and managing total cost of care through structured care coordination models. These plans treat digital health as part of a broader value-based care strategy, not as a separate initiative.

The most successful programs share several characteristics:

• ‍Network curation over vendor accumulation. Rather than contracting with dozens of digital health companies, leading plans work with a curated ecosystem of evidence-based programs that complement rather than compete with each other.
• ‍Condition-based pathways over isolated interventions. Programs are designed around care journeys, not just single touchpoints. A member with diabetes and hypertension receives coordinated digital support across both conditions, with shared data and aligned incentives. ‍
• Claims-based accountability over engagement metrics. Vendors are held to outcomes tied to utilization and cost, not just member satisfaction. Pay-for-performance models ensure that financial risk is shared when savings don't materialize. ‍
• Longitudinal measurement over point-in-time snapshots. Success is measured across 12-18 months, accounting for regression to the mean and seasonal variation. Short-term claims spikes are contextualized within longer care trajectories.

The path forward: accountability as the new standard

Digital health can support MLR improvement, but only when it is deployed as part of a deliberate cost strategy. The next phase of digital health isn't about more tools. It's about integration, accountability, and proof.

For health plans, success depends on aligning digital programs with how cost is actually measured, managed, and controlled. That means demanding claims-based evidence, rejecting vanity metrics, and structuring contracts around shared financial accountability.

The health plans that treat digital health as a cost management strategy rather than a member experience add-on are the ones seeing measurable impact. They understand that healthcare ROI requires more than innovative technology. It requires operational discipline, analytical rigor, and a willingness to hold vendors accountable for outcomes that matter.

The question is no longer whether digital health can improve MLR. It's whether health plans are willing to demand the integration, measurement, and accountability necessary to make it happen.

Ready to see how claims-validated digital health can improve your plan's MLR? Connect with Solera to explore network-based approaches that deliver measurable cost savings.

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