RewardPenalty Plans for Wellness

1
Reward/Penalty Plans for Wellness

• Reward/Penalty Plans in Employer-Sponsored and
  Medicaid Coverage
• Claire McAndrew
• Families USA
• January 26, 2008

2
Background Plan Design

• Plans are based on
• Participation goals, OR
• Health status
  or behavioral goals

3
Background Rewards and Penalties in the Workplace

• Small incentives or prizes
• Cash incentives or penalties
• Health insurance premium discounts or surcharges

4
The Laws of the Land

• New HIPAA clarifications
• The Americans with Disabilities Act and the Civil
  Rights Act

5
The Best Way to Promote Health?

• Rewards for encouraging one-time health behaviors
  have generally worked well.
• Evidence on actually changing behaviors is mixed.

6
The Best Way to Promote Health?

• Many proven interventions exist.
• Provide comprehensive insurance coverage.
• Most employer coverage is lacking.

7
Concern Access to Care

• Surcharges could make health coverage
  unaffordable altogether.
• When people have to pay more, they are more
  likely to forgo services that they need.

8
The Cost of Wellness

• For health status or behavior goals, rewards and
  penalties can be 20 of the value of an
  individuals health insurance premium.
• There are no limits on rewards for participation.

9
The Cost of Wellness

• An average employee health plan costs 4000 a
  year. If an employer charges a 20 premium
  surcharge as a penalty, in addition to current
  costs, an individual would have to pay an
  out-of-pocket surcharge of
• 4000 x 0.20 800
• For a family plan, the average 20 surcharge
  would be over 2000 a year.

10
Doctors in the Middle

• Reward/penalty plans may jeopardize trust between
  doctors and patients.
• Knowing that health care costs depend on health
  habits could hinder communication.

11
No One-Size-Fits-All Model for Wellness

• Different responses to wellness plans
• Employees may feel that they have no choice

12
People Facing Unique Barriers

• Children
• Individuals with Budget Constraints
• Individuals with Language Barriers
• Individuals with Special Health Needs

13
Reward/Penalty Plans in Medicaid The Laws of the
Land

• The Deficit Reduction Act of 2005

14
Examples Reward/Penalty Plans in Medicaid

• Florida Enhanced Benefits Accounts
• West Virginia Medicaid Member Agreements

15
Concerns about Reward/Penalty Plans in Medicaid

• Doctor/patient relationship concerns
• Insufficient coverage
• Barriers related to having a low-income

16
Conclusion

• Make sure that consumers- not costs- are top
  priority!
• Provide coverage for disease prevention and
  health promotion services.
• Proceed with caution!

17
References

• National Archives and Records Administration,
  Nondiscrimination and Wellness Programs in
  Health Coverage in the Group Market Final
  Rules, Federal Register 71, no. 239 (December
  13, 2006) 75014-75055.
• Robert L. Kane, Paul E. Johnson, Robert J. Town,
  and Mary Butler, A Structured Review of the
  Effect of Economic Incentives on Consumers
  Preventive Behavior, American Journal of
  Preventive Medicine 27 (2004) 327-352 as cited
  in Jessica Green, Medicaid Efforts to
  Incentivize Healthy Behaviors, Center for Health
  Care Strategies, INC, pub 299 (July 2007) 1-17.
• United States Preventive Services Task Force,
  The Guide to Clinical Preventive Services, The
  Agency for Healthcare Quality and Research,
  September 2007, available online at
  http//www.ahrq.gov/clinic/pocketgd/gcps1.htm.
• Agency for Health Care Research and Policy,
  Treating Tobacco Use and Dependence Clinical
  Practice Guideline, (Washington, D.C U.S.
  Department of Health and Human Services, June
  2000), available online at http//www.ncbi.nlm.nih
  .gov/books/bv.fcgi?ridhstat2.chapter.7644.
• Mary Ann Bondi, Jeffrey R. Harris, David Atkins,
  Molly E. French and Beth Umland, Employer
  Coverage of Clinical Preventive Services in the
  United States, American Journal of Health
  Promotion 20, no. 3 (January- February 2006)
  214-22.
• MichaelE. Chernew, Mayur R. Shah, Arnold Wegh,
  Stephen N. Rosenberg, Iver A. Juster, Allison B.
  Rosen, Michael C. Sokol, Kristina Yu-Isenberg,
  and A. Mark Fendrick, Impact of Decreasing
  Copayments on Medication Adherence Within a
  Disease Management Environment, Health Affairs
  27, no. 1 (January/ February 2008) 103-113.
• 109th Congress, S. 1932--Deficit Reduction Act of
  2005, (2005), available online at
  http//thomas.loc.gov.
• Florida Medicaid, Introducing the Enhanced
  Benefits Account Program, Florida Agency for
  Health Care Administration, (August 2007),
  available online at http//ahca.myflorida.com/Medi
  caid/medicaid_reform/index.shtml.
• West Virginia Department of Health and Human
  Resources, West Virginia Medicaid Member
  Agreement, September 13, 2005, available online
  at http//www.wvdhhr.org/medRed/handouts/WVMedicai
  dMemberAgrmnt.pdf Robert Steinbrook, Imposing
  Personal Responsibility for Health, New England
  Journal of Medicine 355, no. 8 (August 24, 2006)
  753-56.
• Adam Gilden Tsai., Sharad Mansukani,, Andrew
  Cucchiara, and Michael Schaffer, Availability
  of Nutrition Services for Medicaid Recipients in
  the Northeastern United States Lack of
  Uniformity and the Positive Effect of Managed
  Care, American Journal of Managed Care 9, no. 12
  (December 2003) 817-821.