Diabetes management company Virta Health announced today that the company will offer its service to employers and health plans at 100 percent risk — that is, customers will only pay if the company succeeds in its goal of reversing Type 2 diabetes and getting patients off of expensive diabetes medications.

“Whoever pays the healthcare bill today, we say to them, 'Wouldn’t it be awesome if we could reverse Type 2 diabetes and save lives, and also save money? And on top of that, wouldn’t it be awesome if you only paid for results on an individual patient basis?' Unsurprisingly, it’s pretty well-received,” CEO Sami Inkinen told MobiHealthNews. “Because disease management for the last 30 years has been PMPM, PMPY and everyone’s selling their stuff and platforms and saying ‘We did this pilot and we were able to save money, so you pay us PMPM and you’re going to save money’. But we say, ‘We’re so confident about our results that if we don’t deliver them on an individual patient basis, you don’t pay’. I don’t think anybody else does that.”

Specifically, clients will be charged an enrollment fee only once a certain engagement threshold is met. Then, further fees will be directly tied to metrics like A1C reduction. The company estimates that it can save $9,600 per patient in medical and pharmaceutical savings in the first two years for payers.

Virta Health differs greatly from other diabetes management companies because it combines a digital offering — with tracking, coaching and remote monitoring — with an entirely different treatment modality, a nutrition-based ketogenic diet. Inkinen says the company's way of operating is another reason they've embraced a unique pricing structure.

"We’re not fee for service for two fundamental reasons," he said. "One, I don’t think it’s the way healthcare should work. And the second reason is, you can’t shoehorn the Virta model into a fee-for-service infrastructure. Because our physicians look at monitors and they spend seconds and minutes on every single case and all the interventions that we do, there’s no CPT codes for us."

The company has data showing that the treatment reduced A1C levels and drug reliance in 60 percent of patients after one year, and eliminated 77 percent of prescribed diabetes medications across the cohort. The company’s three-year data is still under peer review, but Inkinen says it’s similarly promising.

The approach — and the claim of reversing Type 2 diabetes — is not without its critics. In a recent interview with MobiHealthNews, Livongo CEO Glen Tullman said the company isn’t forthright about how demanding the dietary changes are, and maintains that they simply won’t be adopted by most people. He believes the company’s messaging of “reversing diabetes” is harmful and deceptive.

“Virta basically says ‘Hey, … if you change your entire diet and go on what’s called the ketogenic diet, if you do that then your blood sugar will drop,'” Tullman said. “But that’s no different than saying to someone who’s overweight, 'If you lose 30 to 40 pounds you’re going to be healthier.' Doctors have been saying that to people for years. But how many people in America are going to do that?”

But Inkinen says Virta sees an 83 percent patient retention rate, owing to the stickiness of the digital delivery model. He hopes the company's success with a risk-based pricing model will speak for itself.

“Since we don’t just meet the patient every six months or eight months or 12 months, we have visibility to, in a smart way, either nudge you in the right direction or just engage you,” he said. “It means that if you are off track we can reach out in a way that elicits a response from you. Which is very different than seeing your primary care doctor; your doctor tells you to take some amount of metformin, and you say ‘Yeah, I did that.'”