What the study counted, and what it did not
The paper asks a narrow but consequential question: how do pediatric digital health companies actually get paid? The authors define a payment model as the terms under which money is paid to the company for offering a service. That definition is deliberately about revenue streams, not about prices, margins, or whether a business is viable.
The sample came from PitchBook, a structured database of private and venture-backed companies. A keyword query combining pediatric and early-childhood terms while excluding adult and elderly terms produced 171 companies. The authors then removed 42 whose primary business was outside pediatric healthcare, 49 whose products were not primarily digital, 3 that were not yet generating revenue, and 4 that were out of business, leaving 73 companies for analysis.
Because these companies are mostly privately held, the team did not use financial statements. Instead, two reviewers with pediatrics and health-technology expertise read publicly available marketing materials and press releases and assigned each company non-mutually-exclusive payment-model tags, with a third reviewer resolving disagreements. The information is accurate as of January 5, 2026. This design can show which revenue streams a company uses; it cannot show how much each stream contributes.
Non-insurance revenue is the norm, not the exception
Across all 73 companies, the single most prevalent payment model was capitated sales to providers and health systems, used by 44 companies (60%). In a capitated arrangement, a payer or provider organization pays a fixed amount per person or per period rather than paying per service, so the digital health vendor is paid for taking on part of the care function. Direct-to-consumer sales followed at 35 companies (48%), and reimbursement from private insurance at 28 (38%).
The median company used two payment models, with an interquartile range of one to four. That spread is important: the headline percentages describe how many companies touch a given revenue stream, not how diversified a typical company is, and they say nothing about the relative size of each stream.
The authors read this pattern as evidence that many pediatric digital health products do not fit neatly into fee-for-service billing. They note that prevention, coordination, and other value-based care activities are frequent value propositions for digital health, yet these services often lack a clean billing code. The paper's interpretation is that non-insurance revenue is filling a gap left by procedure-based reimbursement, not that these companies have found a more profitable path.
Medicaid is the clearest mismatch in the data
The sharpest comparison in the paper is between public and private insurance. Among companies with insurance-billable services, 28 (38%) accepted private insurance while 18 (25%) accepted Medicaid. Capitated Medicaid streams were rarer still: 8 companies (11%) reported state-wide Medicaid access revenue and 9 (12%) reported Medicaid managed care organization subscriptions, compared with 44 (60%) for capitated sales to providers and health systems.
The authors frame this as a mismatch between population need and commercial incentive, citing that nearly half of all children are enrolled in public insurance. Their explanation is structural rather than attitudinal. Medicaid reimbursement is generally lower than commercial rates, and a company serving Medicaid patients must adapt to each state and often each county, with separate enrollment processes for each managed care organization, state-specific reporting and data requirements, and separate claims systems.
That explanation is the authors' interpretation, supported by their reading of the payment landscape rather than by measured cost data in this study. The paper does not test whether Medicaid entry barriers cause the low prevalence it observes. It reports the prevalence and then argues the barriers are a plausible driver.
Mental and behavioral health depends most on schools
Aggregating all 73 companies hides meaningful differences by clinical domain. Companies offering developmental pediatrics and therapy services were the most likely to generate revenue from insurance-reimbursable care (11 of 16, 69%), followed by mental and behavioral health (16 of 27, 59%). General pediatrics was lower on that measure (8 of 30, 27%).
Mental and behavioral health stood out in a different direction: 14 of 27 companies (52%) drew revenue from schools, community organizations, or government, the highest share of any clinical domain and well above the 26% overall. The authors connect this to the multidisciplinary nature of children's health, where care is delivered across healthcare, education, and public sectors.
The paper also reports service-level patterns, but these rest on small denominators. School-based health services, for example, appear with only five companies, and remote patient monitoring with nine. Those percentages are best read as descriptions of a handful of firms rather than stable estimates of a service category.
Why capitation may fit pediatric digital health
The authors make a case that capitated models deserve more attention in pediatrics. Their reasoning runs through quality metrics: many digital health payment models tie reimbursement to quality performance, and the prominent Medicare examples, the ACCESS model and the TEMPO pilot, are built for older adults. Comparable pediatric quality metrics are less developed, which the authors say contributes to the innovation gap.
Medicaid managed care organizations, which often operate under capitation themselves, could in principle benefit from the cost savings digital health promises. The paper suggests that pediatric-specific incentives supporting capitated, subscription-based models could help these technologies reach more children.
This is a policy argument, not a tested intervention. The paper does not evaluate any capitated pediatric program, and it explicitly calls for future work that quantifies the financial weight of each payment model and tracks outcomes of state-level pilots. Readers should treat the capitation recommendation as a hypothesis grounded in the observed prevalence of capitated sales, not as a demonstrated fix.
The wrong-pocket problem limits school-based funding
Only about a quarter of companies overall (19, 26%) used school, government, or community-benefit organization revenue, even though the authors argue this is underused given how multidisciplinary children's care is. Their explanation is what they call the wrong-pocket problem: the sector that pays for an intervention is not the sector that captures the benefit.
The paper points to evidence that improving children's health in school settings early in life can produce long-term health and economic returns, but those returns often land outside the healthcare sector. In adult medicine, Medicare and employer-sponsored plans align the payer with the beneficiary of improved health; the authors say fewer such mechanisms exist for schools.
Existing state-level efforts such as Integrated Care for Kids and the ASPIRE payment models are described as steps toward additional reimbursement mechanisms, but the paper states that pathways enabling shared savings across child welfare, schools, justice, and health are still missing. That is the authors' assessment of the policy landscape, not a result measured in the 73-company sample.
What these percentages cannot tell you
The most important limitation sits next to the method: using PitchBook favors venture capital-backed firms and may exclude small, self-funded, or state-focused Medicaid providers that never appear in the database. The authors state that this selection bias likely underestimates Medicaid penetration and overestimates non-insurance and direct-to-consumer models. The 25% Medicaid figure should therefore be read as a floor suggested by this sample, not a population estimate.
A second limit is depth. The analysis relies on what companies publish online, so additional revenue streams may exist that are not reported. The authors also note there is no accepted taxonomy for digital health payment methods; they built their own framework, and a different set of reviewers might have categorized companies differently.
Finally, the study has no revenue-share data. Every percentage in the paper describes prevalence, meaning how many companies use a payment model, not how much money that model generates. The authors explicitly cannot infer profitability or sustainability. A company tagged with Medicaid revenue may earn most of its income elsewhere.
Where the paper places the priority
The paper's closing judgment is a priority ordering for payers and policymakers, and it follows from one comparison rather than from the full result set. The gap between the share of children on Medicaid and the 25% of companies billing Medicaid is the finding the authors treat as most actionable. Their first recommendation is therefore close coordination with public payers, ahead of adapting adult capitated quality incentives and ahead of building cross-sector shared-savings mechanisms.
That ordering is a judgment about where the largest mismatch lies, not a claim that the other two levers are unimportant. The authors pair it with a concrete next step: quantifying the financial weight of each payment model and tracking state-level pilots. Until that work exists, the defensible reading of this study is that pediatric digital health revenue currently flows mostly around public insurance, and the size of that gap is the number most worth watching.
Sources used in this answer
Payment models in pediatric digital health and their implications for innovation, policy, and access
Among 73 PitchBook-identified US pediatric digital health companies, capitated sales to providers and health systems (60%), direct-to-consumer sales (48%), and private insurance reimbursement (38%) were the most common payment models, while Medicaid-covered services (25%) and Medicaid capitated streams (11-12%) were less common.