Jury still out on outcomes-based incentives

I’m going to ruffle some feathers. The bird has flown the coop. The duck is waddling out of the pond.  Why? Because I’m not fond of outcomes-based incentives. Yes, you read that correctly. I will not be jumping on the next flight out to lovely cholesterol, blood pressure, and weight-loss target land.

Don’t get me wrong. I’m all for promoting a healthy workplace and encouraging wellness. I’ve read scholarly publications on population health management; shook hands and enjoyed some fantastic chats with Mr. Dee Edington from the University of Michigan (very nice chap by the way); and read Total Value, Total Return: Seven Rules for Optimizing Employee Health Benefits for a Healthier and More Productive Workforce (authored by some real pros who worked with Pitney Bowes). Funny, but I don’t recall anyone recommending that I collect different premium rates for those not meeting national health guidelines.

According to the 2012 Employer Survey on Purchasing Value in Healthcare Study, a joint effort by Towers Watson and the National Business Group on Health, 10% of employers surveyed reported having  rewards (or penalties) for cholesterol and weight loss achievements; and further, 23% of employers are considering plan design changes in 2013 towards this direction. I listened to one such employer earlier this year at a conference. The speaker explained how the organization used a combination approach of consumer driven health care with incentives for weight loss targets, desired cholesterol and glucose levels, and tobacco-free lifestyles. I raised my hand and asked if they knew how many members could achieve these goals. Response? They were hoping for a positive result but in reality, could count on a certain percent of the population to provide additional funding in the plan.   

While health habits are a challenge, employers reported other cost concerns in managing their plans: over one-quarter (29%) were concerned about specialty drugs expense, 30% expressed concern over the cost of preventive services, and 44% said they were concerned about catastrophic cases. I manage a self-insured plan. There’s risk tied to every person who is enrolled – any one of our members could join the million-dollar claim club. It’s the same risk for slender, chubby, young, or old. When I reflect on the past decade I’ve spent managing different plans, I’ve always felt distraught when the large unexpected claims – transplants, leukemia, premature births – occur. Most claims like these are unpreventable – and not caused by a high body mass index.

The American College of Occupational and Environmental Medicine published a joint consensus statement last month titled: Guidance for a  Reasonably Designed, Employer-Sponsored Wellness Program Using Outcomes-Based Incentives. The eight-page publication says “a wellness program should not be used in a way that threatens an employee’s ability to maintain health insurance because any resulting decrease in access to care would be a direct conflict with the primary objective of improving employee health.”  They attempt to remind employers that evidence on using outcomes-based incentives is not yet adequate, and creating large premium differentials could discourage enrollment. Even the doctors are worried.

Do your top performers have high cholesterol? Does it prevent them from adding value to your organization? My guess is not likely. I’m sure someone is going to disagree with me and remind me that it’s part of a long-term strategy. For now, I’m going to keep focusing on overall wellness and the mechanics of the health plan. Some birds of a feather flock together but I think I’ll stick to my own perch for now.

Karrie Andes, SPHR, CBP, is the senior benefits manager for PGi and a savvy self-funding health care gal. She’s located in the Kansas City Area and can be reached at karrie.andes@pgi.com.

How do you feel about outcomes-based incentives? Are they a useful tool to encourage long-term behavior change? Or is the jury still out? Share your thoughts in the comments.