What Incentives Improve Employee Health?

As more employers are looking to wellness programs for their employees as a way to encourage better health and help contain health care costs. The question that often arises is: Do financial incentives improve the success of company wellness programs? Here’s one example of how a wellness program tied to incentives was just what the doctor and CEO ordered.

Neighborcare Health is the largest provider of medical and dental care for low-income and uninsured families in the Seattle area. While caring for others, the company noticed rising health care costs among their own employees. So, Neighborcare partnered with Group Health (now Kaiser Permanente) to roll out strategies—including financial incentives—that promoted preventive care and encouraged healthier behaviors.

Problem: Rising Employee Health Care Costs

As a provider of health care to the underserved, Neighborcare Health knows the value of developing more cost-effective ways to deliver high-quality care and the importance of an accountable care model. So when the company itself started experiencing rising health care costs among their employees, they collaborated with us to help reverse the trend.

Solution: Incentivizing Smarter Care Choices

At the same time that Neighborcare approached us, we were developing a new benefit strategy designed to promote preventive care, encourage self-managed health maintenance, and support effective evidence-based care. Neighborcare Health was a willing partner in putting this value-based benefit design (VBBD) to the test in a pilot program.

Two incentives played an important part in the success of the program. Employees were granted a $20/month reduction on premiums for engaging in specific wellness actions—such as health coaching calls, wellness classes, and preventive care screenings—that would lead to a better understanding of their health and actions they could take for improvement. Additionally, eliminating cost shares for primary and preventive care provided workers with an incentive to seek timely care—helping to lower financially demanding health risks.

Results: Engaged Employees, Better PMPM Cost Trends

After implementing the wellness and VBBD incentives, Neighborcare Health experienced exceptional employee participation and a positive impact across its business. Ninety-four percent of employees completed a health profile that formed the foundation of the program.

Prior to the program, Neighborcare Health was experiencing per member per month (PMPM) costs that were increasing up to 23 percent annually. After working with us for two years to motivate their employees to make healthier decisions and adopt healthier behaviors, Neighborcare Health decreased PMPM costs by 6 percent. In addition there were noticeable reductions in high-cost interventions such as ER visits and hospitalizations.

Rising healthcare costs

Says the HR Director

“I always knew Group Health Cooperative as being the one organization that covers preventive care—which was the attraction for us and part of the reason to go with Group Health in the beginning,” said Theresa Norris, Director of HR at Neighborcare. “We feel we are turning that curve on premiums by getting people more engaged in their health, giving them the ability to be more in touch with information about their health.”