Published on : January 15, 2014
Set Up For Success: Experience Real Results
It is no surprise that as healthcare costs continue to rise, organizations are looking for new ways to manage and control costs. One popular idea to combat these escalating costs is to offer a wellness program. Many believe that offering a wellness program that provides a financial reward for individuals who participate in a program is a great way to impact costs. I think that approach may be a good first step to create awareness but ultimately, it misses the mark. Let me share with a little story.
In December, I was asked to speak at a high school entrepreneurial class. The students were wide-eyed and attentive that morning, but perhaps this was only because of the snacks I brought with me. Nonetheless, I spoke about how the idea for Bravo Wellness came about and the nature of what we do. The teacher exclaimed that the staff takes part in a similar type of wellness program. In fact, the month prior was “stop drinking soda” month for $10 off their insurance premium. I realized this was a perfect teachable moment, so I quickly asked how he did. I then asked what would happen if instead of drinking soda, he drank three milkshakes - would he still get the reward? The answer was “yes.” What if he gained 10 pounds that month because of his substitute drink? Would he still get the discount on his insurance premium because he did not drink soda? You guessed it, the answer was “yes.”So is that type of wellness program the best approach to influencing employer costs if the participant’s reward comes simply fromparticipation orcompletion and not personal health improvement? I don’t think so either. This is what outcomes-based wellness incentive programs are all about and why evidence suggests that,it is not only changing lives, itsreducing claims costs.
This past summer, the Affordable Care Act (ACA) introduced clarifying rules to support workplace wellness programs that effect plan years starting on or after January 1, 2014. Although outcomes-based rewards were permitted in 2007, these amended rules now outline standards for nondiscriminatory health-contingent wellness programs that generally require individuals to meet a specific standard related to their health in order to receive a reward. However, the question must be asked if employers are even interested in a program that incentivizes their employees for good health?Statistics from the 18th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care1say yes! Actually,in 2014, 47% are considering implementing an outcomes-based wellness incentive plan that rewards or penalizes based on biometric outcomes other than smoker, tobacco-use status. That is 31% higher than last year’s response! Organizations see the value in outcomes-based incentives.
In my opinion, the most significant change included in the ACA wellness regulations is the requirement that an alternative way to qualify for a health standard in an outcomes-based wellness program is required for all participants, even in the absence of a medical issue. Thankfully, the alternative provided is permitted to be a modified, easier-to-achieve health standard. For example (as stated in the regulations), “if the initial standard is to achieve a BMI less than 30, a reasonable alternative standard for the individual could be to reduce the individual’s BMI by a small amount or a small percentage over a realistic period of time.” If a person cannot achieve the standard or the alternative standard, the individual’s personal physician can provide a second alternative standard, consistent with medical appropriateness. This is a high-touch, complex way to measure, track, and administer such programs but it is the only way to achieve most employers’ goals in implementing an outcomes-based design in the first place: the desire to only reward results instead of simple activities that may or may not have any real or lasting impact.
I applaud the regulators for making sure that no employee is left with a hopeless goal they have little to no chance of achieving in their employer wellness program. Requiring employers to reward meaningful, reasonable progress is the perfect solution and it is worth the extra effort. Coaching, departmental challenges lunch and learns, and health risk assessments are all valuable tools that should be made available as optional ways to help employees overcome obstacles and gain the education they need on their wellness journey, but like any well run managed business objective, you cannot afford to mistake activity for success. Reward the progress not the tool.
Here is another example; many employers have implemented programs that offer a premium discount or a Health Reimbursement Account deposit to individuals who complete a series of health challenges, log a certain number of pedometer steps or complete five telephonic coaching sessions, regardless of the individual’s actual results or improved health. An employee who does not use their pedometer and hires a personal trainer instead of the company’s telephonic health coach may not qualify for a penny of the reward even though they dropped 20 pounds and ran a marathon. The rub comes when they hear their co-worker share how they earned a $500 incentive for recording their steps and making some phone calls while they continue to smoke and gain weight. Enough is enough! Should not we recognize what people accomplish instead of what methods they chose to help them get there?
Personally, I am a big fan of health coaching; especially those programs that offer personalized meal planning and offer stress management solutions that get to the root causes. I just do not think it is fair to reward program completion when the goal was personal health improvement. The new Affordable Care Act wellness regulations provide great flexibility and guidance to reward participation, improvement and outcomes. Carefully designed programs will provide resources to help everyone succeed, but will also provide rewards to everyone who achieves improvement – even if they chose a path the employerdid not create for them.
So how does one begin a successful incentive program and make sure it is compliant? Perhaps the first question to ask is how do you define success? If your intention is simply to reward the participation in a program, you can breathe in a sigh of relief because you will not have to worry about the compliance laws. However, you may end up struggling to validate true ROI and savings. Yet, if your intention is to actually reward the result or the achievement towards a result, than you had better be sure you understand the wellness regulations and confirm that your program is legal before you start dancing for joy over the thought of decreased healthcare costs. Consider how you will protect the privacy of your employees and minimize potential employer legal and compliance backlash, because penalties associated with wrongful discrimination, GINA violations and privacy breaches can be massive. Be sure you or your wellness vendor closely monitors emerging ACA regulations, affordability regulations, EEOC concerns and tax implications.
It’s January 2014 - are you running a compliant outcomes-based wellness incentive program? If so, I know you will be looking forward to a great year of improved health in your employees and savings in your healthcare costs.
ABOUT THE AUTHOR:
Jim Pshock is the founder and CEO of Bravo Wellness and IncentiSoft Solutions. His career spans over 20 years in the health insurance industry. He has developed a comprehensive and unique expertise in the regulations related to governing wellness programs and the practical application of incentives to improve employee health.