Traditional health plans are designed around the idea of treating sickness and chronic conditions. Your employees get sick, go to the doctor, get treated, the explanation of benefits statements is sent out, and employees try desperately, and many times unsuccessfully, to understand the EOB (how much do they owe and to whom?) and then the cycle starts all over again.

Seventy percent of all health care costs are due to lifestyle choices. In fact, just four health conditions - cardiovascular disease, cancer, diabetes and obesity - account for three-quarters of American health care costs. By placing a focus on regular health screenings, we can make a positive impact on keeping employees healthier and reducing health insurance costs.

Many employers have worked with their health plans in recent years to put in place employee incentives to promote wellness. Wellness programs have included gym memberships, weight loss programs and health education initiatives. While these efforts are all good and well- intentioned, they've often proved unsuccessful in moving the needle because they've failed to truly engage employees to take personal action.

Value-based insurance design programs take us in a different direction. This new approach is focused on reducing health care costs by integrating incentives into the plan's design to encourage individuals to use preventive services, follow recommended treatment plans and adopt healthy behaviors. Employers have the flexibility to design a program that best meets the health needs of their organization. For instance, some employers may choose to design a program around a prevalent chronic condition, such as diabetes, and use cash incentives to encourage adherence to condition-specific treatment plans; others may focus solely on encouraging prevention and use enhanced benefits to encourage participation in wellness examinations and diagnostic testing.

Value-based insurance design actually enables employers to offer health benefits focused on getting more health for the health-care dollar by making high-valued services more accessible and affordable, which in turn produces better health and increased productivity.

This approach to VBID not only differs by providing specific financial rewards to employees for participating in wellness and preventive care, but it's also fundamentally different in how it approaches early detection. By aggressively screening for the medical conditions that we know in advance are most likely to affect your employees, three important things happen:

* Earlier detection of cervical cancer, breast cancer, prostate cancer and colon cancer means you will help save lives;

* Smarter and more aggressive intervention to treat chronic illnesses means your company will experience greater employee productivity; and

* Faster treatment of serious diseases means your medical costs will be lower and premiums will be reduced.


Results show promise

One New Jersey-based health system, JFK Health System (formerly known as Solaris Health System), has seen results from implementing VBID.

"We set out to build a culture of wellness at JFK by putting in place a number of things to help our employees lead healthier lives. This included increasing awareness, engaging employees in activities that promoted health and wellness, and making our employees more aware of health management," explains Pat Cooke, director of human resources at JFK Health System. "One of our goals was to really make an impact on how our employees managed chronic illnesses."

One crucial piece in this effort was to gain an understanding of how to truly engage JFK's employees at an individual level. Cooke partnered with SeeChange Health Solutions to design a plan option for employees that created unique rewards for those who took specific steps to manage their personal health. This plan enabled JFK to identify employee needs and track their compliance with individual health actions so they could reward those employees who became engaged with the wellness program.

"Forty percent of our employees are now in a VBID plan and the premiums for the individuals in that plan have remained flat or within one percent year over year," says Cooke. "By contrast, the employees in our other health plans have experienced a nine to 10 percent increase in annual premiums."

In 2011, based on the financial performance of the VBID plans, Cooke was able to inform the employees in the JFK Health Plan that they were receiving no increases in deductibles or copays, a first that she can recall. Employees in the VBID plans also received no increase in employee cost-sharing for the fifth year in a row. Moreover, since partnering with SeeChange in 2008, the number of JFK employees in the VBID plan being screened for colon and breast cancer has nearly doubled.

"We make it very simple for our employees - they can choose the healthy way or they can choose to pay," says Cooke. "And let's face it, it's not like the VBID plan asks a lot of them - just see your doctor, get your cancer screenings and blood work, monitor your health, take your medication and follow any additional guidelines if you have an illness. Those are all things that make for a happier and more productive life anyway, but we provide them with financial rewards for doing it."

Janice Rahm is president of SeeChange Health Solutions, which provides administrative services to self-funded employers seeking to offer value-based insurance programs to their employees. She can be reached at

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