I couldn't believe my eyes.
I stood a mere three feet away from the mentalist Alain Nu, who lightly pinched the handle of the heavy, solid spoon between his thumb and fingertip. As I watched in amazement, the curved handle of the spoon . . . slowly began to . . . bend! . . . and it continued to bend . . . without Nu touching it.
Soon the handle of the spoon was curved to almost a 45-degree angle! No wonder this astounding entertainer had starred in several television specials.
Bending the cost curve
I am reminded of my moment of astonishment because some of the most innovative brokers are driving their clients' benefits strategy with aggressive wellness programs to almost magically bend the client's medical cost curve. And, not surprisingly, voluntary benefits are playing an integral role.
Last month's column dealt with a proven strategy to drive down medical costs using a cutting-edge plan design. This month's strategy bends the actual cost curve by modifying not the plan design, but rather employee behavior.
Where are the results?
Workplace wellness has been given renewed emphasis with PPACA health reform. But most wellness programs have been long on promises and short on measureable ROI. Employers rarely see meaningful impact on health care costs.
Wellness programs fail to reduce health costs because most are "process-only" plans that reward employees for participating in the program, regardless of the results.
More and more employers are asking how they can take their wellness program to the next level - to produce measurable results that drive down health care costs and create a sustainable benefits plan.
Wellness with teeth
The most progressive brokers are moving employers into aggressive "results-based" wellness plans, which require employees to demonstrate results if they want to earn discounts or avoid surcharges. Results-based programs have been proven to deliver meaningful ROI, actually bending the employee health trend and, by extension, bending the employer's medical utilization and cost curve.
These results-based plans, what I call "wellness with teeth," are effective because they focus on results and monetize wellness incentives to modify employee behavior.
Employers are asking how to structure wellness incentives that both are legal and have the greatest impact to change employee behavior.
Results-based programs reward wellness in a variety of ways, such as a reduced payroll contribution, a better health plan, a deductible credit or HRA deposit, or an HSA contribution. These plans generate around 95% participation.
Think of results-based wellness as a good-driver discount for group health. Employees know that auto insurance costs more if they have a bad driving record and that life insurance costs more if they are a smoker. Explained this way, all employees may not like results-based wellness, but they understand and accept the need for it.
Treating benefits like workers' compensation
Some employers, especially HR professionals, often balk at results-based wellness over what they consider punitive and intrusive measures. Employers, however, already impose aggressive and intrusive safety programs to control workers' comp costs. When asked why they don't manage their far more expensive health plan costs in a similar fashion, the light bulb tends to go off.
With results-based wellness, an employer utilizes sophisticated methodologies to drive employee engagement and to identify, measure, reduce and manage risk within its employee population.
While wellness tools like biometric testing and health risk assessments are well known, less familiar will be such tools as predictive analytics, predictive modeling, risk stratification and premium differential that allow employers to leverage biometric and HRA data. There's not space here to explain their details, but contact me if you want to know more.
Analytics allow employers to mine disparate data sources, such as biometric tests, plan experience data, absenteeism records, etc., to present an accurate, fact-based picture. The key point here is that C-suite executives find factual data actionable and are now willing to take forceful, proactive steps related to managing their employee health trend.
Employers are using these tools to increase employee accountability in compliance with the 2008 final HIPPA regulations that have been upheld repeatedly by the courts, most recently in April of this year by a U.S. District Court in Florida.
Risk stratification enables employers to develop new benefit packages that offer incentives and/or payment for participation in wellness activities and compliance with preventive health measures.
Predictive modeling allows employers to zero in on which intervention programs are needed and which employees have care gaps, then adjust health coverage accordingly.
The voluntary benefit play
In a case where musculoskeletal problems are a key cost driver, forward-thinking brokers are recommending that the employer purchase a voluntary accident plan for all employees to provide first-dollar coverage, encouraging employees to treat a $400 musculoskeletal problem before it becomes a $40,000 problem.
Likewise, for employee groups that present with a high risk for cardiovascular events, these savvy brokers are urging employers to buy a critical illness policy for all employees to provide first-dollar coverage in the event of a heart attack or stroke.
Of course, now the accident or CI plan is no longer "voluntary," and the broker is being paid commission on 100% employee participation.
Another innovative strategy for voluntary involves using the so-called "wellness benefit" rider on certain accident and CI plans to fund the biometric testing for each employee. To promote preventative testing, wellness riders pay a cash benefit ranging from $50 to $150 payable for certain health screening tests, including a biometric exam.
Creative brokers are having the employer purchase an accident or CI plan for all employees and arranging for the carrier to pay the wellness benefit to the employer instead of the employee. The employer then submits the cost of biometric testing for reimbursement. The accident or CI plan now does double duty, offsetting the cost of the biometric testing while providing first-dollar coverage for employees.
A Meaningful bend of the curve
The financial impact of a results-based wellness program is now well documented. In groups as small as 50 lives to very large organizations, results-based wellness has proven that it can improve the employee health trend and, thus, bend the health care cost curve down.
A case study involving a manufacturer with almost 1,900 employees is representative. After just a year of a results-based wellness program, the employer realized over $500,000 in bottom-line savings.
Although the maximum financial impact on employees was just $50 monthly, the use of financial incentives produced an astounding 99.6% employee participation in the wellness program.
The employer tied four wellness categories to financial incentives: tobacco/nicotine, blood pressure, cholesterol and body mass index. A monthly premium contribution penalty was assessed based on results in these four areas. This cost-shifting to more at-risk employees generated "hard-dollar" net savings to the employer of over $200,000.
At the end of the year, all four incentive categories had improved. This reduced risk produced "soft-dollar" savings to the employer of more than $320,000 in the form of lower claims.
It's time that brokers and employers get aggressive in driving the benefits strategy. Results-based wellness and voluntary benefits are a powerful and proven combination that actually bends the health cost curve down and creates an affordable and sustainable employee benefits plan.
Griswold is a leading authority on consultative selling and cross-selling voluntary. He can be reached at firstname.lastname@example.org.
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