Wellness and Health Promotion Programs Use Financial Incentives To Motivate Employees

By the Innovations Exchange TeamIntroduction:

Increasingly, employers are providing wellness and health promotion programs to reduce their health care costs. Seeking to engage employees in improving their health, many employers offer financial incentives that range from cash payments to discounts on health insurance premiums. The Patient Protection and Affordable Care Act allows health plans and self-insured employers to use up to 30 percent of their health benefit premiums in 2014 to incentivize employees to participate in wellness programs.¹

To learn how employers design and evaluate their wellness programs and use financial incentives, the Innovations Exchange team interviewed Ryan Picarella, MS, SPHR, President of the Wellness Council of America, which provides workplace wellness resources, and John Riedel, MPH, MBA, President of Riedel Associates and Consultants, which specializes in employee health and productivity management.

Innovations Exchange: What is the difference between employee wellness and health promotion programs?

Ryan Picarella, MS, SPHR: Many people use the terms health promotion and wellness interchangeably to describe programs that strive to improve the health and quality of life of employees through a prevention-focused approach. One difference between the two concepts is that some health promotion programs include a disease management component to address chronic conditions such as type 2 diabetes and obesity.

Are nutrition and fitness common features of wellness programs?

Picarella: Employees should have access to services and resources that facilitate making healthy choices. Depending on the size and budget of the employer’s wellness program, employees might be offered onsite fitness centers or classes, a cafeteria that provides healthy food choices, and clinics that provide health care or rehabilitation services. Large organizations are increasingly employing a registered dietician to help with cooking classes, food service menus, and individual counseling sessions. Additional staffing resources may include health coaches, personal trainers, and nurses.

What health assessments do employers typically use in wellness programs?

Picarella: A health risk appraisal and a biometric screening are commonly used tools in wellness programs. A health risk appraisal is an online or paper assessment that provides employees with a personal snapshot of their health and helps to identify health risks that may need immediate attention. A biometric screening is an assessment of a person's basic health status that provides the participant with metrics such as blood pressure, height, weight, and body mass index, as well as blood lipid and cholesterol values and blood glucose levels. Employees who complete both a health risk appraisal and a biometric screening have a comprehensive health assessment that can be used to develop an action plan and establish health improvement goals. Aggregated health assessment data provide employers with overall trends in employee health, so they can effectively target and design appropriate interventions and measure improvements over time.

What financial incentives do employers use to motivate employees to participate in their wellness programs?

John Riedel, MPH, MBA: Employers with health and wellness programs use a variety of participation-based financial incentives, such as cash and discounts on health insurance premiums. For example, employees who complete a health risk appraisal or a biometric screening or who enroll in a disease management program may receive an additional $200 in their paycheck or a cash deposit into their pre-tax health saving account. In 2010, cash payouts made up 63 percent of the incentives offered by employers to employees for completing a health risk appraisal compared with 35 percent of the incentives offered by employers in 2009.²The average amount of the incentive to employees increased from $318 in 2009 to $386 in 2010.³

Participating employees also may receive a discount on their monthly insurance premiums. The featured health promotion program offered to employees of the State of Connecticut and the comprehensive wellness program developed by Quality Health Solutions both use these types of participation-based incentives.

Has research shown that offering financial incentives to employees increases their participation in wellness programs?

Riedel: The research demonstrates that financial incentives increase participation rates in these programs. The rate of participation increases with the amount of the incentive. For example, a survey showed that an employer who provides a $100 incentive to employees for completing a health risk appraisal experiences a 15-percent increase in participation, while an employer who provides a $600 incentive experiences a nearly 100-percent increase in participation.⁴ The amount of the incentive matters.

However, researchers don’t know whether providing financial incentives has any impact on behavior change over time. The best approach to health behavior change is to offer employees both “extrinsic” features such as financial incentives and “intrinsic” features that focus on what motivates employees to achieve their goals, such as having enough energy to play with their children or the ability to run a marathon.

Do employers provide financial incentives to employees who achieve health goals?

Riedel: Yes, a growing number of employers are providing financial incentives to employees who make progress in meeting certain health targets, such as reducing their cholesterol level or blood pressure. Some employers are starting to use “outcome based” financial incentives to reward employees who achieve evidence-based targets, such as when their cholesterol or blood pressure measurements fall within the acceptable range.

What makes a wellness program successful?

Picarella: A multipronged approach works best. For example, employers can offer financial incentives, give employees access to the right resources to manage their health, and establish reasonable goals for employees to achieve so they can be successful. The program also needs senior leadership support to champion the program and foster a culture of health. Development of strong program champions and a culture that embraces all aspects of the program are essential to drive meaningful participation and ultimately to improve employee health.

Do employee health promotion and wellness programs need to be on site to be effective?

Picarella: The programs do not necessarily need to be on site, but it is important that the organization supports employees’ participation in the programs, including allowing more flexible work schedules so employees can take classes in the morning or evening, or use their lunch hour. If an organization provides onsite food services such as a cafeteria or vending machines, it should offer healthy food choices.

How do employers fund their wellness programs?

Picarella: Employers use various methods to fund their programs. Some employers charge employees more for their health benefits if they don’t participate in wellness services, which helps fund the programs. Some employers include wellness services in their total health benefit package, while other employers engage in cost-sharing with employees.

What outcome measures are commonly used by employers?

Riedel: Employers are beginning to focus on such outcomes as absenteeism, presenteeism (less than optimal performance at work due to health-related issues), and disability and their productivity consequences. A recent article by the Integrated Benefits Institute identifies a set of ten metrics for employers to understand the total cost of poor health.⁵ These metrics are organized as follows: leading indicators (health risks, biometric screenings, and chronic conditions), care indicators (preventive screenings, program participation, employee engagement, and health care use), and outcome indicators (health care expenditures, absenteeism, and presenteeism).

How are employees assessed on these measures?

Riedel: Most employers use questionnaires that provide measures of lost productivity. About ten well-designed questionnaires are available; the most commonly used include the Work Productivity and Activity Impairment (WPAI) Questionnaire (http://www.reillyassociates.net/WPAI_General.html), the World Health Organization Health and Work Performance Questionnaire (HPQ) (http://www.hcp.med.harvard.edu/hpq/ External Link

), and the Work Limitations Questionnaire (WLQ) (https://www.tuftsmedicalcenter.org/Research-Clinical-Trials/Institutes-Centers-Labs/The-Health-Institute/Available-Questionnaires.aspx). These validated instruments use self-reported data because it is difficult to get objective measures of productivity. Although self-reporting is subject to bias, aggregated data allow an employer to gain useful insights into employee health from a population health perspective. The WPAI and HPQ, in particular, are effective at monetizing the costs of lost productivity, which allow employers to see the impact on their bottom line.

About Ryan Picarella, MS, SPHR:

Mr. Picarella is the president of the Wellness Council of America, a national not-for-profit organization that serves as a resource for workplace wellness. As a national speaker and health care consultant with a career that spans over a decade in the health and wellness industry, he has designed and executed award-winning wellness programs. Previously, Mr. Picarella served BlueCross BlueShield of Tennessee for 9 years, working in health promotion, organizational development, human resources, strategy and planning, and account management.

About John Riedel, MPH, MBA:

Mr. Riedel is the president of Riedel and Associates Consultants, which creates and helps deploy employee health and productivity management strategies. He has more than 30 years of experience in the fields of disease prevention, consumer empowerment, and disease management. Mr. Riedel, who helped pioneer the concept of holistic health care by creating and evaluating 14 community-based holistic health centers, has been on the forefront of translating workforce health into measurable productivity outcomes.

Disclosure Statements:

Mr. Picarella and Mr. Riedel reported having no financial interests or business/professional affiliations that are relevant to the work described in this article.

Footnotes

¹ Terry P, Anderson DR. The role of incentives in improving engagement and outcomes in population health management: an evidence-based perspective. 2011;5. StayWell Health Management.

² Hewitt Associates. The road ahead: under construction with increasing tolls, 2010. Survey Findings.

³ Marlo K, Dannel D, and Lykens C. Large employers’ 2011 health plan design changes. Washington, DC: National Business Group on Health. August 2010.

⁴ Nyce S. Boosting Wellness Participation Without Breaking the Bank. Towers Watson Web site, Insider. Watson Wyatt. July 2010.

⁵ Parry T and Sherman B. A pragmatic approach for employers to improve measurement in workforce health and productivity. Popul Health Manag. 2012;15(2):61-4. [PubMed]

Last updated: January 15, 2014.