With health care costs widely expected to increase by an average 20 percent this year, payers need to make their benefits dollars as productive as possible.
Yet, the typical health plan sponsor still pays an average 97 cents of every dollar on treatment for the small percentage of enrollees who are ill. Only about 3 percent of total claim dollars are spent on keeping plan participants well or reducing health risk to ward off future expenditures.
Today, forward-thinking employers are investing in demand management and health risk management programs in order to proactively manage these claims.
The most often-asked question when considering health improvement programs is, “When will we see the benefits?” Wellness programs of the past have been less than successful in demonstrating true savings. A new breed of programs takes a more active approach in managing the health of a population and can show a meaningful return on investment both the short- and long-term.
Reduce demand
Multiple studies have demonstrated that providing consumers with information and guidelines about self-management, combined with educational prevention, can lower rates of use in services as much as 17 percent.
A Health Enhancement Research Organization study shows that on average, 27 percent of claim dollars are directly related to bad health habits.
Programs that help participants improve the management of chronic conditions have seen returns as high as $12 for every dollar invested. Savings from demand management services such as a 24-hour nurse line or medical self-care guides will see an average $3 for every dollar invested, even within the first year.
Maximize participation through incentives
A critical factor in getting the most out of your investment is to get the majority of eligible employees involved.
Traditional wellness programs have taken a more passive approach, showing 50 percent participation in on-site health screenings. A well-managed and communicated program with incentives can expect to see an average 80 percent to 90 percent participation rate.
Define participation
What constitutes participation is at the discretion of the employer. At a minimum, employees are expected to complete a short questionnaire that asks about chronic conditions and health habits.
More progressive managers require employees to complete a health screening to qualify for an incentive. The HIPAA laws are restrictive in rewarding participants for making health changes; therefore, employers must always be mindful of discrimination based on health status.
Typical measurements for participation include:
* Completion of a health risk assessment and a health screening
* Utilization of a home medical guide
* Attendance at onsite workshops
* Participation in health action campaigns
Incentives that work
Incentives are considered the most important component of a successful employee-managed health program because they increase program participation.
The rate of return is driven by participation, so high participation is critical for reaching at-risk individuals and reducing costs. As participation increases, the return on your investment in health management programs increases as well.
Incentives range from T-shirts to cash; most experts believe $250 is the magic number. Successful incentives include:
* Offering premium discounts ranging from 5 percent to 25 percent
* Increasing maximum out-of-pocket costs for nonparticipants
* Reducing the deductible
* Making additional contributions to a flexible spending account
* Offering cash awards
By far the most effective incentives are those that tie participation to the plan design. Emerging research indicates the most important indicator of success is participation in multiple programs. Getting individuals engaged over a long period of time is important for long-term cost savings and indicates that those who participate in multiple wellness activities have lower health care costs.
Also remember that many benefits of health improvement programs are not so easily measured. It is necessary to understand the indirect costs associated with health care claims to determine the effectiveness of health improvement programs. Employee satisfaction, reduced absenteeism, increased productivity and “presenteeism” must also be considered in determining a return.
Employees who feel supported and understand that their employer is concerned about their health and well-being are going to be more willing to step up to the plate and be a part of the solution. Sally L. Stephens, R.N., is president of Spectrum Health Systems. Stephens and her husband, Mark, founded Spectrum Health Systems, an independent health management company, in 1997 to provide Fortune 100 quality health risk management programs to middle-market employers. Reach her at (317) 573-7600 or [email protected].
