The real opportunity today is in marrying incentive strategies with health care consumerism initiatives that are permeating the benefits landscape. It is no surprise that wellness programs, or more accurately health optimization programs, are the point of entry for many employers into the world of health care incentives, but their applications are endless.
U.S. industry spent $46 billion on incentives. That's right: $46 billion. Or, for perspective, more than the annual sales of GlaxoSmithKline Novartis, Roche, AstraZenca, Merck, or Abbott. This dollar figure, courtesy of Incentive Federation means that organizations are embracing incentives to reward, motivate, recognize, and engage employees, which ultimately help businesses reach their goals. Although the health care industry has been slower than others to adopt employee or consumer-directed incentives, we are in the midst of a major attitudinal shift away from the belief that incentives are beneath the venerable image of health care.
Preventative medicine has become a critical health issue, therefore it is no surprise that wellness programs, or more accurately health optimization programs, are the point of entry for many employers into the world of health care incentives. They are a powerful tool to engage and reward employees as they begin to take on greater control of their own health care options and be more accountable for the costs of their decision-making. Once employers and insurers see how effective and measurable incentives are in advancing wellness programs, they are ready to pursue other incentive applications.
While the introduction of incentives to activate wellness engagement and participation in health risk assessments and health improvement programs can dramatically improve the overall effectiveness of such programs, the real opportunity today is in marrying these strategies with health care consumerism initiatives that are permeating the benefits landscape. Studies by Mercer, Watson Wyatt and Towers Perrin all point to the escalating introduction and adoption of consumer directed health plan initiatives. This is not without pain however as consumers increasingly acknowledge confusion and fear as it relates to the financial liability to which they are exposed with such plans.
Whether combined with Healthcare Reimbursement Account (HRA) or Health Savings Account (HSA) based insurance plans or more traditional plans with higher deductibles and limited or no copays, consumers are being swept into a new healthcare purchasing environment that is forcing greater consumer accountability for spending and diagnostic and therapeutic treatment decision making than ever before.
Fact is, most consumer directed health care strategies involve a shift of control over decision making and spending to the consumer. Premium savings derived from the introduction of significantly higher deductibles, some of which qualify for significant tax savings under the Qualified High Deductible rules which allow for the establishment of a pre-tax Health Savings Account (HSA), are being re-directed to the consumer for payment of medical and prescription drug expenses that fall within their designated deductible corridors. Most such plans include no or very low cost preventative medical care such as annual physicals for men, women and children (including immunizations), all of which should be encouraged. Beyond these services and expenses, however, the consumer is on the hook for the care choices made and costs incurred up to satisfaction of the deductible, after which coinsurance kicks in resulting in no cost or a small percentage of cost for the consumer.
But what does this have to do with the use of incentives in the wellness and health promotion space? To be honest, ”first generation” wellness and health promotion programs, many of which were launched with great intentions and expectations more than 20 years ago, had limited impact . Unfortunately, with many of these programs the only people who benefited were already. With the advent of healthcare consumerism, American are being dragged, albeit grudgingly in many instances, into an environment where they have to confront the stark realities associated with the personal expense related to unhealthy lifestyles or indiscriminate healthcare utilization. However, with average total family health care premiums exceeding $13,000, more than 60% of Americans overweight and obese, and a shrinking percentage of Americans prepared for the healthcare and living expenses associated with retirement, the environment is rich with opportunities for incentivizing and rewarding engagement and behavior change.
The use of incentives and rewards can be used to promote engagement in choosing health plans, making medical care decisions and utilizing health planning and improvement tools and programs, all of which connect to the ultimate goal of lowering costs and improving population health.
Shifting Control of Health Benefits from Employer to Employee Consumer
Although dissenters frequently suggest that healthcare consumerism is about shifting cost to employees, evidence from most successful migration, such as that achieved by Humana and other national employers, suggest that it really is about shifting control. The key, of course, as with successful execution of most employee benefits strategies, is careful and thoughtful strategic consideration and well-executed communication and education initiatives that equip employees and their partners with the information, tools and decision support to make decision that is right for them. All steps of these processes are practically tailored for the use of incentives and rewards. For example, employers can motivate and reward employees for:
- Acceptance and opening of print or electronic enrollment materials
- Completion of surveys that demonstrate fundamental knowledge of benefits options
- Utilization of benefit and premium and out of pocket cost comparison tools or advisory services
- Adoption of high deducible traditional healthplan or Qualified High Deductible Healthplan (QHDHP) plan options
- Commitment or maximization of HSA contributions
- Activation of membership ID or debit cards
- Establishment or first utilization of spending accounts
- Investigation of cost-savings brand or generic drug alternatives and/or diagnostic or therapeutic treatment alternatives
- Evaluation of HSA investment options and/or allocation of initial investments
Sound Rx to Engage Employees
As evidence-based practice becomes the norm, it makes sense that incentives are being identified as a highly measurable cause-and-effect tool for health care improvement and processes solutions. When deployed and communicated strategically, incentive programs are a powerful tool to help reach specific business goals. Consider the following incentive-driven results from the International Society of Performance Improvement:
- Significant goal achievement – An overwhelming 92 percent of workers surveyed indicated that they achieved their goals because of incentives. In addition, 57 percent of corporations surveyed reported that objectives were met or surpassed, and 92 percent reported objectives were surpassed, met or at least partially met.
- Quality and quantity goals are affected equally -- Incentive programs have an equal, positive impact on both quality and quantity goals.
- Employee input valuable -- Incentive programs structured with employee input work best; however, only 23 percent of incentive systems are selected with employee input.
- Long-term incentives are ideal -- Long-term incentives are more powerful than short term (44 percent gain for programs beyond a year versus a 20 percent gain for programs less than one month).
- Design and implementation key to success -- While even poorly designed incentive programs can improve performance, proper analysis of the performance issue, the design and implementation of the incentive program are critical for success.
Many organizations putting rewards and recognition programs online are exploring economies of scale asking how they can utilize these points-based programs for other initiatives. Web-driven wellness programs fill that need perfectly. Companies are pursuing telephonic/email health coaching and online courses to engage employees to take a lead role in their health. The health and economic benefits of wellness programs can not be overstated but companies are now realizing another benefit: the cost-efficiencies of piggybacking online wellness programs onto other online programs. Employees and family members accrue points, and ultimately rewards, each time they engage in specific activities. Depending on the specific program, they may also receive a reduction in premium costs, discounts on prescriptions, yoga mats, exercise balls or even days off work. Online wellness programs are just the tip of the iceberg when it comes to the ways the health care industry can engage employees and their families. Once wellness incentives are in play and companies see measurable improvement, the often start looking at how incentives can be deployed to engage employees in a myriad of other health care related online and offline actions:
- Completion of Health Risk Assessments (HRAs)
- Engagement of health coaches for interpretation of HRA results
- Creation and maintenance of individual health plans, including participation in recommended health and disease management programs.
- Participation in regular screenings: eye exams, mammograms, colonoscopies, etc.
- Using generic prescriptions
- Regular use of fitness centers
Based on their success in helping other industries achieve specific goals, it makes sense that incentives could have the same impact on employee health care. It’s a matter of choosing programs that truly engage and educate today’s broad employee base. Consider this possible future scenario: a society of healthy people with body masses lowered, fewer smokers, paying less for benefits, shopping around for optimal health care treatments, consistently putting funds away for retirement health care needs, and on and on. A utopia? Perhaps. But we can definitely move towards this scenario with incentives, which are measurable and cost-effective, playing a huge part.
Dan Hoemke has twenty-five years of diverse health care, employee benefits and insurance experience. Hoemke has successfully implemented consumer directed health care business and marketing distribution strategies for leading health care, pharmacy benefits management, spending account administration and information technology companies. Former President & CEO for Humana’s Western Region, Regional Vice President for Aetna and UnitedHealthcare, and CMO for Cole Managed Vision. Dan has also been named a Pathfinder Fellow at Incentive Logic. www.incentivelogic.com
