outcomes based wellness programs

Outcomes-based Wellness Programs

All wellness programs are outcomes-based, or at least they should be. The phrase outcomes-based wellness program may be confusing. Most employers start a wellness program to improve employee health, improve employee productivity, or reduce their health care costs. Since every company with a wellness program is trying to produce one of these outcomes, aren’t they all outcomes-based wellness programs?

When people use the phrase outcomes-based wellness program, what they are really saying is “We want our wellness incentive plan to be based on employees attaining a specific health outcome such as not smoking or attaining certain results on biometric screenings.” So an outcomes-based wellness program is really not a wellness program at all, it is an incentive strategy. In this sense, outcomes-based wellness programs are really just wellness incentive plans used to motivate employees to improve their health.

The goal of every wellness program should be to help employees adopt and maintain healthy behaviors. If wellness programs are successful, they will improve employee health and reduce healthcare costs. As you can see in the chart below, a comprehensive wellness program includes way more than just an incentive strategy.

Incentives or outcomes- based incentive plans are a small part of a much larger wellness strategy. This chart puts incentives or outcomes-based plans into their proper perspective.

wellness pie graph
Effective Wellness Programs Include Much More Than Just Incentives

 

The purpose of any wellness program should be to improve the health of employees. That means the program should be focused on behavior change. A wellness program that is focused on behavior change will raise an employee’s health awareness, motivate them, provide the tools and skills they need to succeed, and support them with an environment that makes it easier to maintain healthy behaviors for life.

This time-tested model for behavior change includes motivation, an important part of every wellness program. Outcomes-based wellness incentive plans are the basis for much of employee wellness motivation.

We know an awful lot about how to use incentives to motivate employees to improve their health. I’ve already written about many of the best incentives and incentive activities that are being used in the nation’s best wellness programs. The purpose of this blog is to demonstrate how biometric data can be successfully integrated into an incentive strategy.

Employers are Scared of Outcomes-based Wellness Programs / Incentive Strategies

With the passage of the Affordable Care Act and subsequent guidelines from various federal agencies, it is clear that outcomes-based wellness programming incorrectly done can create trouble with the law. Recent clarifications, designed to help employers better understand how to integrate incentive strategies into a wellness program, have done nothing but scare employers to the point of immobilization.

Nobody wants to do anything that might get them in trouble with the law so more companies are suffering from program paralysis by legal analysis. Employers have been scared away from discussing outcomes-based incentives altogether but this does not have to be the case.

Outcomes-based wellness incentive programs can be a fun and effective part of every wellness program. Yes, there are some basic guidelines, such as be nice to people, use carrots instead of sticks to motivate people, and make participation in your wellness program voluntary. Once you start forcing people to comply or punishing them because of non-compliance, morale will suffer, health will not improve, and it is very unlikely that healthcare costs will be reduced.

Here are the basic rules that any wellness program should follow:
1) Allow employees to qualify for the reward at least once per year.
2) The reward must not exceed 30% (50% if the program is designed to prevent or reduce tobacco use) of the total cost of health care coverage.
3) The wellness program must be designed to improve health
4) Offer and communicate the availability of a reasonable alternative standard

If you’re in the wellness industry, you probably already understand these rules. Let me shed a little additional light on one of these rules. WellSteps has hundreds of clients using our wellness solutions and incentive programs. In over three decades in the wellness industry, I have yet to see a company offer incentives that total up to 30% of the total cost of their healthcare spend.

A typical cost for health insurance is between $5,000 and $6000 per employee per year.  30% of this amount is $1,500-$1,800 and represents the maximum amount that can be used as a program incentive. It is extremely rare for a company to pay out more than $1500 as a wellness program incentive.

What has caused problems are the few companies that have tried to penalize employees by more than $15oo because they failed to meet outcomes-based guidelines. This is just not what nice people do! Besides, an effective wellness program can improve employee health and lower health care costs by offering incentives much lower than 30% of healthcare costs. Here’s a worksite that used a fraction of that amount and had some of the nation’s best wellness outcomes.

Sample 3 Year Outcomes-based Wellness Program/Incentive Strategy

Here is an example of a three-year outcomes-based incentive plan that we encourage groups to use. It includes activities that are selected by the wellness coordinator and the wellness committee within each company. Every plan is customized to each particular company. It is extremely important that the wellness committee have input and ideas that are adopted as part of this process so they get a sense of ownership over the incentive strategy.

 

Sample 3-Year Outcomes-based Incentive Strategy
Year 1: 100 points needed to earn the incentive
complete biometric screening
complete personal health assessment (PHA)
Points
50
50
Year 2: 100 points needed to earn the incentive
Have no elevated health risks (BP, CHOL, GLU, BMI, tobacco use)
Participate in behavior change campaign #1
Participate in behavior change campaign #2
Complete preventive cancer screening
Attend behavior change webinar/presentation #1
Attend behavior change webinar/presentation #2
Go to the gym 4 times a month for 6 month
Meet with physician to discuss elevated health risk
Track your activity with a wearable device
Complete smoking cessation program
Complete an approved alternate activity
Points
70
20
20
20
20
20
20
20
20
50
20
Year 3: 100 points needed to earn the incentive
Have no elevated health risks (BP, CHOL, GLU, BMI, tobacco use)
Participate in behavior change campaign #1
Participate in behavior change campaign #2
Participate in behavior change campaign #3
Complete preventive cancer screening
Attend behavior change webinar/presentation #1
Attend behavior change webinar/presentation #2
Go to the gym 4 times a month for 6 month
Meet with physician to discuss elevated health risk
Track your activity with a wearable device
Complete smoking cessation program
Complete an approved alternate activity
Complete health coaching
Complete Weight Watchers
Points
70
20
20
20
20
20
20
20
20
20
50
20
40
50

If outcomes-based incentive plans are supposed to be based on biometric outcomes, why doesn’t this three-year plan includes specific biometric outcomes? That is a very good question. But it is the wrong question to ask. The right question is, “How do I motivate my employees to adopt and maintain healthy behaviors for the rest of their lives?” If I’m going to provide monetary incentives to my employees what are the best and most important things to incentivize?

Actually this is not an outcomes-based wellness program. Legally, it is a health-contingent wellness incentive program with combined activity-only and outcomes-based objectives. Wow, that’s a mouthful. In other words, it’s a time-tested, effective wellness incentive program that treats employees with respect and helps produce positive wellness results.

It does not punish people who have high LDL cholesterol, who are obese, hypertensive, or who have high blood glucose. Yet it is still based on biometric data. Rather than focus on the specific values of each risk, it simply asks the question, “Do you have elevated health risks?” Yes or No. Those who do not have elevated health risks automatically earn 70% of the points they need to earn their incentive. This is exactly what we want from all of our employees.

health and wellness programs

We want employees to have low health risks and we want to reward them when they do. If they do have elevated health risks they can still earn the full amount of the incentive but they have to show some effort by participating in just a few of the many activities that will help them adopt and maintain healthy behaviors.

This incentive strategy is outcomes-based and it does use biometric data. But rather than focus on the details of the biometric data, it focuses on helping people do the right kinds of things to get and stay healthy.

By avoiding the details and clinical probing that comes from looking at each specific personal health risk, we avoid many concerns of privacy, data confidentiality, and security. Done correctly, the employer will never see any employee’s biometric data, only a yes or no regarding a cluster of health risks.

Simpler is Always Better

This outcomes-based wellness incentive strategy includes many activities that can be easily verify using today’s technology. Using our WellSteps Rewards platform, employers can easily verify who has completed a biometric screening, who has watched or participated in a presentation, who has completed a behavior change campaign, who is using their wearable device to monitor physical activity, and a whole host of other activities that can be reported with electronic data.

This three-year example of an outcomes-based incentive program is really not an example at all, it’s a copy of the actual rewards activities that many of our clients currently use. Employees participate with ease because most of the activities are automatically verified and they can use the WellSteps rewards platform and the WellSteps app to easily report or upload their data. The best outcomes based incentive strategies work when they don’t probe into personal data and make it really easy for employees to report and monitor their progress.

outcomes-based-wellness-programs
Rewards and app

 

Sometimes employers require their employees to provide additional verification that some activity has been completed. To make this process simple, the WellSteps app allows employees to take a picture of the verification and have it automatically uploaded to their account.

So What?

If the wellness goal is to improve employee health and bend the medical cost trend, employee behavior must change. An outcomes-based wellness program/incentive strategy will increase program participation and effectiveness. A combination of biometric data and health promoting activities can encourage health behaviors while giving employees lots of different ways to qualify. If you treat people with respect and don’t force them to participate, your employees will love your wellness program and employee morale will get a big boost.

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About The Author

Dr. Steve Aldana

Dr. Aldana is the CEO of Wellsteps, a worksite wellness solution that leads the nation in wellness program deployment and engagement. Dr. Aldana authored over 75 scientific papers and 7 books on health risk management, healthy living, and health promotion programs. He has given over 350 keynote speeches across the U.S. on the ability of good nutrition and regular exercise to prevent, arrest, and reverse many chronic diseases. Email him at: steve@wellsteps.com