Moving beyond feel good initiatives like the biggest loser and 10,000 steps a day, employer-based wellness programs are entering a new phase that make use of targeted incentives to create specific outcomes.
The first decade of employer wellness included a variety of efforts aimed at helping employees gain a better understanding of their health, in the hope that they would take an active role in reversing national trends toward obesity, high blood pressure, high cholesterol and smoking. But these undertakings typically added cost to the benefit program and, according to recent studies, took longer to achieve a return on investment than the average employee’s tenure. In addition, the information collected through Health Risk Assessments or Biometrics was rarely integrated with the healthcare delivery system.
Increasingly, employers are moving to simpler programs that deliver tangible results with nearly immediate cost savings. These wellness efforts are gaining traction partly due to the Affordable Care Act, which legitimizes tobacco and wellness surcharges and mandates free preventative care for all health plans. But the key to their success is having the appropriate technology in place.
Up to 40% of employees do not visit their primary care provider (PCP) in a given year, according to recent health plan statistics. While health plans have significant resources to assist in the management of high risk situations, because these employees and their dependents do not engage with the delivery system until their condition becomes acute, these programs are rendered less effective at managing risk and cost.
Making use of surcharges
The simple answer? Use financial penalties to sway employees to see their PCP. If they don’t, charge them a surcharge to join the health plan. If they do, all health risk assessment and biometric data becomes available to their doctor who, if specific risks are identified, recommends the appropriate follow-up actions. These actions generate claims that alert the employee’s health plan to the risk, which can then offer a suitable wellness plan.
Where does the role of technology come in? For this strategy to be truly effective, it must be supported by the benefits communication, enrollment and administration processes. Sounds easy, but many employers find their existing benefit administration systems are not up to the task.
First, employees must be able to opt-in or out of these programs during open enrollment. On average, 8 to12% of employees will opt out and elect to pay the surcharge, which is based on complex rate tables for both the employee and her dependents. Next, the applicable rates must be calculated and provided in real time, so the employee can see how the surcharge will affect her paycheck.
If the employee chooses to participate in the program, the system has to verify her compliance, a process that typically entails multiple reminders, follow-up communications and documentation from the PCP.
If the employee fails to comply, she must pay the surcharge, and it is this practice that encourages higher participation rates than traditional wellness programs and generally results in a positive ROI for these programs during their first year. But for this to happen, the benefit system must be able to seamlessly accept information from the verification process, calculate and apply surcharges, and then communicate the appropriate information to the payroll system. These actions and the rules they are based on must also be integrated into the process of handling qualified life events.
After a decade of investing in wellness with few tangible results, employers now have the option of adopting a simple wellness strategy that addresses specific health risks and provides an immediate ROI. Advisers can help them succeed by providing a benefits administration platform that can manage all the underlying complexity.
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