Beyond Billing Codes: How Startups Are Winning with Payer Programmatic Spend

In the early days of any digital health launch, there’s a question that hovers in every investor meeting and payer conversation: How will this be paid for?

Traditional reimbursement pathways often don’t exist for novel solutions—no billing code, no defined payment mechanism, no clear precedent. But that doesn’t mean there’s no path forward. Increasingly, startups are plugging into payer programmatic spend: discretionary budgets allocated to priority areas like maternal health, health equity, and social determinants of health.

What Do We Mean by Programmatic Spend?

Programmatic spend exists outside the familiar logic of claims-based reimbursement. It does not flow through CPT or HCPCS codes, nor is it governed by the rigid rules of medical billing.

Instead, it reflects payer business planning and capital allocation decisions, where executives have flexibility to direct funds toward initiatives that:

• Advance strategic priorities (e.g., closing maternal mortality gaps, expanding behavioral health access).

• Improve member experience across Medicaid, Medicare, and commercial lines.

• Demonstrate measurable ROI in outcomes that are often non-clinical but high-impact (e.g., improved adherence, reduced ER visits, higher satisfaction scores).

Framework:

Programmatic spend typically supports non-clinical solutions that enhance access, affordability, and experience but fall outside the traditional medical loss ratio (MLR). Because MLR requires a high percentage of premiums to be spent directly on clinical care, these discretionary budgets are often smaller in size, unless the initiative is a major strategic priority for the plan.

Viewed through the payer financing cycle, programmatic allocations align less with claims adjudication and more with strategic planning, RFP timelines, and annual budget reviews. 

Why Programmatic Spend Exists 

Payers carve out discretionary budgets because not all health outcomes can be improved through fee-for-service coding. Some of the most pressing health challenges, like equity gaps, diabetes prevention, maternal health, and social care, live in the spaces between those codes.

Programmatic budgets allow executives to:

• Test innovative solutions before codes exist.

• Address reputational and regulatory priorities (CMS stars, NCQA quality metrics).

• Create “early wins” for populations that drive disproportionate cost and inequity.

Think of it as a bridge between today’s reimbursement gaps and tomorrow’s coding pathways.

How Startups Can Plug In

From my work with startups and payers, the ones who succeed with programmatic spend follow a disciplined playbook:

• Research payer priorities. Scan annual reports, Medicaid waiver applications, or community health needs assessments. These often highlight where discretionary budgets are targeted.

• Map your value to payer strategic priorities. For example, if a plan has set aside funds for diabetes prevention, demonstrate how your program directly addresses that.

• Quantify both hard and soft benefits. Deferred hiring and improved member trust may sound “soft,” but when linked to opportunity cost, they translate into tangible ROI.

• Prepare ROI cases in payer language. Show not just cost offsets, but improved access, engagement, and equity.

• Understand the payer financing cycle. Time your approach with budget cycles. Programmatic funds often align with strategic and capital planning timelines, so knowing when those decisions are made is key.

• Show actuarial rigor. Don’t stop at saying your product saves money. Prove it. Build models in ways that payers’ actuaries would nod along to and can validate.

Case Snapshots

Papa Health – Social Support at Scale (The Startup Perspective)

Papa is a prominent example of a company built on programmatic spend. Papa works exclusively with health plans (including Medicare Advantage, Medicaid, and Special Needs Plans) and offers companionship and non-clinical support through Papa Pals. Their pitch is simple but powerful: “We reduce loneliness, close care gaps, and improve member engagement.”

What makes Papa a programmatic success story:

• Positioning: Marketed as a supplemental / social-support benefit, not a clinical service.

• Integration: Highly configurable - plans can define which populations, which benefits, and how deeply Papa is embedded.

• Proof: They emphasize ROI metrics tied to cost reduction, retention, and Stars performance.

• Infrastructure: Tech-enabled visit coordination, compliance checks, and analytics reassure payers that it’s safe to scale.

Papa shows how a non-clinical service (companionship) can attract significant payer dollars when positioned as a lever for engagement and compliance.

Priority Health – Diabetes Management (The Payer Perspective)

Priority Health, a provider-sponsored plan with roughly 640,000 members, decided not to wait for the system to catch up. Long before traditional coverage pathways for diabetes management were fully in place, the plan invested its own programmatic dollars into population health.

They segmented members by risk, layered in tools for glycemic control and medication adherence, and funded pilots that improved self-management for high-risk patients. The program was justified through both clinical outcomes and reduced hospitalization risk. It’s a simple but powerful example of using classic programmatic budgeting to address a costly chronic condition.

The Bigger Picture: Programmatic Spend as an Innovation Engine

These examples show that programmatic spend is real, varied, and highly strategic. It allows payers to test, refine, and scale solutions that codes and regulations haven’t caught up to yet. For startups, it’s a lifeline to prove value and pave the way for broader adoption.

Ultimately, successful companies view programmatic spend not as a one-off, but as the first mile of a longer reimbursement journey—one that moves from discretionary budgets to codes, coverage, and mainstream adoption.

Conclusion

Payers are putting real dollars behind ideas that don’t yet have billing codes: diabetes management, nutrition support, maternal health, opioid recovery, and social care solutions.

What unites them is:

• A clear alignment with strategic priorities (employer retention, maternal outcomes, chronic disease burden).

• An internal champion with budget discretion.

• Evidence (hard or soft) that supports impact on cost, equity, or experience.

Digital health reimbursement isn’t about codes alone. By understanding how payers think about programmatic spend, startups can unlock doors that once seemed closed. The startups that thrive will be those fluent in the language of payers and come to meetings prepared to demonstrate ROI, strategic alignment, and long-term sustainability.