Employers Explore Health Promotion to
Offset Escalating Premiums

As premiums increase year to year, we look for creative ways to manage your benefits costs. While there are a variety of plans changes that can be made at renewal to alter benefit levels, shift greater cost-sharing to your employees or self-fund a portion of your benefits, many employers are now putting a greater emphasis on wellness as a more long-term solution to cost containment. We are seeing a shift in focus from rate management to wellness promotion designed to improve the overall health of your employee population and therefore reduce the need for healthcare services. There are several ways to focus on wellness and disease prevention.

Disease Management
It has long been known that a small percentage of health plan members account for a disproportionately large percentage of medical costs- otherwise known as the 80/20 rule. What has challenged health plans for some time is how to identify these members before they generate large claims and how best to keep them from actually becoming so costly.

Many disease management programs target the higher-risk employee population. Employees suffering from chronic conditions such as asthma, diabetes, coronary artery disease and heart disease can often generate larger claims resulting from acute episodes of their illnesses.

Most carriers have programs in place to target the higher risk groups. The traditional method of targeting members for intervention is to establish cost triggers. If a member exceeds a specified dollar amount in claims within a certain time period, he or she automatically becomes a candidate for medical management.

A new way of managing disease is through a technique called predictive modeling. The goal of any disease management program is to find the right intervention for the right person at the right time. Many plans now have the tools to make accurate predictions using sophisticated software to analyze data about plan members. For example, someone who had four emergency department visits in five months and takes four prescription drugs may not exceed any cost triggers, but could be headed for a high-cost, acute care hospital stay and will be targeted for preventive intervention.

Health Risk Assessments
A health risk assessment (HRA) is another approach employers can use to identify employees at risk. Several vendors have developed complex questionnaires that employees may complete to determine whether they are at risk for certain types of diseases or injuries. Employees answer various questions concerning their lifestyle (e.g., exercise, smoking habits), current health, and blood test results (cholesterol). Some of these programs may be coupled with the availability of on-site mobile laboratories to run laboratory tests.

Employees are then given a report outlining their health risks with recommendations to discuss with their physicians. Sometimes an HRA is coupled with a “coaching” program where employees classified as high risk (e.g., smokers, diabetics) are called by coaches and encouraged to adopt a healthy lifestyle, stop smoking, start exercising, etc. HRAs may also be tied to incentives, including reduced premiums for taking the HRA. This year, about 10% of employers rolled out an incentive program for workers who complete a health risk assessment, according a Hay Group report.

Wellness Programs
Although HIPAA prohibits discrimination against participants in group health plans on the basis of health status, a plan can establish a premium discount or otherwise alter copays or deductibles in return for adherence to programs of health promotion and disease prevention, known as bona fide wellness programs. To qualify as non-discriminatory under HIPAA, a program must:

	Limit the total reward given to an individual, The suggested limit of 10-20% discount on the total cost of employee-only coverage may be appropriate;
	Be reasonably designed to promote good health or prevent disease for individuals in the program;
	Be available to all similarly situated individuals. More specifically, the program must allow any individual for whom it is unreasonably difficult due to a medical condition to meet the wellness program standard an opportunity to satisfy a reasonable alternative standard AND;
	Disclose all plan materials describing the terms of the program and the availability of a reasonable alternative standard.

Employee Incentives
According to the Hay report, about 18% of employers give cash, Flexible Spending Account or Health Reimbursement Arrangement credit or other financial incentive to complete a health risk assessment, while 17% provide a financial incentive to participate in other wellness programs.

Ask your RSI consultant to discuss the wellness and health promotion programs that would best suit the needs of you and your employee population.