Financial incentives

The Department of Labor has issued new guidelines concerning the wellness provisions of the Affordable Care Act (ACA) that relate to the use of financial incentives, and the Office of Health Plan Standards and Compliance Assistance is seeking public comment. This document proposes “amendments to regulations, consistent with the Affordable Care Act, regarding nondiscriminatory wellness programs in group health coverage." These regulations increase rewards for wellness participation or outcomes from 20 to 30% or up to 50% related to reducing tobacco use. (Federal register)

In the past several years, StayWell Health Management has published several studies concerning the use of financial incentives in wellness programs, so my colleagues, Drs. David Anderson, David Gregg, and I, felt obliged to offer some reactions to the proposed new language. All public comments will be posted at: http://www.dol.gov/ebsa/. By way of summary, we commended the department for its painstakingly earnest attempt to placate the detractors of the original proposal who believe that incentives could too readily become a subterfuge for insurance underwriting. Still, we believe their attempt to divide incentives into participation based or health contingent models may well shed more heat than light on the matter.

Proposed regulations

The proposed regulations regarding a health-contingent wellness program include a provision that appears to say members must be offered the total reward even when they have no medical condition that would make it unreasonably difficult to meet the health standard or medically inadvisable to attempt to do so, based solely on meeting a participation-based alternative standard. StayWell believes this effectively negates any substantive programmatic difference between a participation-based and health-contingent wellness program. Participation in a wellness program by an individual is, in effect, a default option for anyone who is not inclined to make an effort at even making reasonable progress toward the standard, much less achieve it. In effect, the health-contingent wellness program is fundamentally a participation-based program with a provision that allows an employer to waive the participation requirement for individuals who already meet the health standard.    Read more »

This post is not about coronary artery disease. Nor is it about the
“stiff” ventricles in diastolic heart failure.

Like “Never Rest”, which I posted several weeks ago, this brief discussion was inspired by Saturday morning Torah study. “Harden Heart” refers to the Pharaoh at the time of Moses and the Exodus from Egyptian slavery. What struck me from our discussion on Saturday morning that relates to health plans and health benefits is that those of us who have responsibility/authority over what is reimbursed, or not, how it is reimbursed, and at what level are — metaphorically — in a parallel role to the Higher Power in the Torah passage. Those whom the purchasers and payers are influencing, or who are on the receiving end of attempts at influence by the purchaser or payer are, metaphorically, in the position of Pharaoh (No implication or suggestion intended about virtue or lack thereof on either side of this analogy!). They are employees, plan members, health care professionals and facilities, ancillary providers, and any other entities that are being paid for services.

In the story, it takes many sticks (no carrots) to ultimately influence Pharaoh to free the Jews. The question that we discussed and debated is to what degree God hardened Pharaoh’s heart and to what degree did Pharaoh, using free will, refuse to set the slaves free even in the face of punitive actions — the plagues.

And in health care, we use sticks too, but also carrots, to influence patients. People who are managing care are involved in plan design that employs disincentives like higher premiums for people using tobacco products or greater cost sharing for certain services or products, and incentives like premium reduction, direct payment, or any of a panoply of other methods of encouraging the desired health outcomes. Are these patients acting with free will, or have we hardened their hearts?

And the same question can be asked of managed care’s dealings with providers. With respect to reimbursement of health care professionals, facilities, ancillary providers, devices, and medications, the purchaser and payer decision-makers may inadvertently harden hearts toward behaviors that are not achieving better, more affordable care. But the providers, using their free will, may resist or, it is to be hoped, see the incentives and disincentives as movement toward better, more affordable care.

We must critically and thoughtfully analyze the impact of our decisions that are intended to influence or shape behavior, course-correct for unintended negative consequences, sharpen and refine interventions that are effective, and appreciate that competing influences, rewards, or disincentives will invariably muddy the waters.

Steven R. Peskin, MD, MBA, FACP
executive vice president and chief medical officer
of MediMedia, USA, which publishes Managed Care

Paul Terry PhD
The Affordable Care Act codified the worksite wellness exemption to the federal medical underwriting provisions in the group health plan market. This means companies are allowed to use an “outcomes-based” incentive model that provides financial rewards for those who satisfy a prescribed health standard such as a BMI of less than 30 or who meet a “reasonable alternative standard” or obtain a waiver from their physician. What some see as “rewards” others view as penalties or surcharges and, given the absence of evidence to confirm the role of such incentives in actually improving population health, the new provisions have unleashed a debate about the ethics and putative effectiveness of the new provisions.

Many view the current and more common use of participation-based incentives as too easily exploited and insufficient to break intractable health habits. Others see the emerging trend toward use of outcomes-based incentives as draconian and a subterfuge for insurance cost shifting. I think the wisdom is in the middle and, with my colleague David Anderson, have argued that we need move beyond these opposing views by proposing an alternative "progress-based" incentive model that we believe can increase employee accountability and engagement while preserving fairness and equity in the use of incentives: “Finding common ground in the use of financial incentives” (http://www.ajhpcontents.org/doi/pdf/10.4278/ajhp.26.1.c2)

In contrast to the commentaries from the American Heart Association and the American Cancer Society in the above link that argue that incentives should be confined to participation only, we believe that a “progress-based” incentive strategy will provide a participant-centered, risk-adjusted and safer approach to achieving population health goals.

In a “progress-based” model, the attainment of a reasonable individually-tailored health goal, such as losing 10 percent of body weight, offers participants who fail to satisfy the health standard with an opportunity to earn incentives regardless of how far from the recommended health standard they begin their journey. Confining rewards to only those who hit the outcome target risks alienating those at highest risk who have the furthest to go and generate the highest costs to the organization. A “progress-based” approach, on the other hand, has the potential to engage everyone in setting achievable, measurable targets that yield health improvements.

What are your thoughts on the best use of financial incentives? The new provisions of the Affordable Care Act seem to signal a conviction that employees' accountability for their health should be bolstered. Has Congress inadvertently put employers in the role of insurance cost shifting?

Paul E. Terry, Ph.D., CEO, StayWell Health Management