Pay-to-shop health care incentives gaining traction

Laurie Cook went shopping recently for a mammogram near her home in New Hampshire. Using an online tool provided through her insurer, she plugged in her ZIP code. Up popped facilities in her network, each with an incentive amount she would be paid if she chose it.

Paid? To get a test? It’s part of a strategy to rein in health care spending by steering patients to the most cost-effective providers for non-emergency care.

State public employee insurance programs were among the early adopters of this approach. It is now finding a foothold among policymakers and in the private sector.

Scrolling through her options, Cook, a school nurse who is covered through New Hampshire’s state employee health plan, found that choosing a certain facility scored her a $50 check in the mail.

She then used the website again to shop for a series of lab tests. “For a while there, I was getting a $25 check every few weeks,” said Cook. The checks represented a share of the cost savings that resulted from her selections.

Lawmakers in nearby Maine took the idea further, recently enacting legislation that requires some private insurers to offer pay-to-shop incentives, part of a movement backed by a conservative foundation to get similar measures passed nationally.

Similar proposals are pending in a handful of other statehouses, including Virginia, West Virginia and Ohio.

“If insurance plans were serious about saving money, they would have been doing this stuff years ago,” said Josh Archambault, a senior fellow at the Foundation for Government Accountability, a limited-government advocacy group based in Naples, Fla., that promotes such “right-to-shop” laws. “This starts to peel back the black box in health care and make the conversation about value.”

Still, some economists caution that shop-around initiatives alone cannot force the level of market-based change needed. While such shopping may make a difference for individual employers, they note it represents a tiny drop of the $3.3 trillion spent on health care in the U.S. each year.

“These are not crazy ideas,” said David Asch, professor of medicine, medical ethics and health policy at the Penn Medicine Center for Health Care Innovation in Philadelphia. But it’s hard to get consumers to change behavior — and curbing health care spending is an even bigger task. Shopping incentives, he warned, “might be less effective than you think.”

If they achieve nothing else, though, such efforts could help remove barriers to price transparency, said Francois de Brantes, vice president and director of the Center for Value in Health Care at Altarum, a nonprofit that studies the health economy.

“I think this could be quite the breakthrough,” he said.

Yet de Brantes predicts only modest savings if shopping simply results in narrowing the price variation between high- and low-cost providers: “Ideally, transparency is about stopping folks from continuously charging more.”

Among the programs in use, only a few show consumers the price differences among facilities. Many, like the one Cook used, merely display the financial incentives attached to each facility based on the underlying price.


Advocates say both approaches can work.

“When your plan members have ‘skin in the game,’ they have an incentive to consider the overall cost to the plan,” said Catherine Keane, deputy commissioner of administrative services in New Hampshire. She credits the incentives with leading to millions of dollars in savings each year.

Several states require insurers or medical providers to provide cost estimates upon patients’ requests, although studies have found that information can still be hard to access.

Now, private firms are marketing ways to make this information more available by incorporating it into incentive programs.

For example, Vitals, the New Hampshire-based company that runs the program Cook uses, and Healthcare Bluebook in Nashville offer employers — for a fee — comparative shopping gizmos that harness medical cost information from claims data. This information becomes the basis by which consumers shop around.

Crossing Network Lines

Maine’s law, adopted last year, requires insurers that sell coverage to small businesses to offer financial incentives — such as gift cards, discounts on deductibles or direct payments — to encourage patients, starting in 2019, to shop around.

A second and possibly more controversial provision also kicks in next year, requiring insurers, except HMOs, to allow patients to go out-of-network for care if they can find comparable services for less than the average price insurers pay in network.

Similar provisions are included in a West Virginia bill now under debate.

Touted by proponents as a way to promote health care choice, it nonetheless raises questions about how the out-of-network price would be calculated, what information would be publicly disclosed about how much insurers actually pay different hospitals, doctors or clinics for care and whether patients can find charges lower than in-network negotiated rates.

“Mathematically, that just doesn’t work” because out-of-network charges are likely to be far higher than negotiated in-network rates, said Joe Letnaunchyn, president and CEO of the West Virginia Hospital Association.

Not necessarily, counters the bill’s sponsor, Del. Eric Householder, who said he introduced the measure after speaking with the Foundation for Government Accountability. The Republican from the Martinsburg area said “the biggest thing lacking right now is health care choice because we’re limited to our in-network providers.”

Shopping for health care faces other challenges. For one thing, much of medical care is not “shoppable,” meaning it falls in the category of emergency services. But things such as blood tests, imaging exams, cancer screening tests and some drugs that are administered in doctor’s offices are fair game.

Less than half of the more than $500 billion spent on health care by people with job-based insurance falls into this category, according to a 2016 study by the Health Care Cost Institute, a nonprofit organization that analyzes payment data from four large national insurers. The report also noted there must be variation in price between providers in a region for these programs to make sense.

Increasingly, though, evidence is mounting that large price differences for medical care exist — even among rates negotiated by the same insurer.

“The price differences are so substantial it’s actually scary,” said Heyward Donigan, CEO of Vitals.

At the request of Kaiser Health News, Healthcare Bluebook ran some sample numbers for a Northern Virginia ZIP code, finding the cost of a colonoscopy ranged from $670 to $6,240, while a knee arthroscopy ranged from $1,959 to $20,241.

Another challenge is the belief by some consumers that higher prices mean higher quality, which studies don’t bear out.

Even with incentives, the programs face what may be their biggest challenge: simply getting people to use a shopping tool.

Kentucky state spokeswoman Jenny Goins said only 52 percent of eligible employees looked at the shopping site last year — and, of those, slightly more than half chose a less expensive option.

“That’s not as high as we would like,” she said.

Still, state workers in Kentucky have pocketed more than $1.6 million in incentives — and the state said it has saved $11 million — since the program began in mid-2013.

Deductibles, the annual amounts consumers must pay before their insurance kicks in and are usually $1,000 or more, are more effective than smaller shopping incentives, say some policy experts.

In New Hampshire, it took a combination of the two.

The state rolled out the payments for shopping around — and a website to look for best prices — in 2010. But participation didn’t really start to take off until 2014, when state employees began facing an annual deductible, said Deputy Commissioner Keane.

Still, the biggest question is whether these programs ultimately cause providers to lower prices.

Anecdotally, administrators think so.

Kentucky officials report they already are witnessing a market response because providers want patients to have an incentive to choose them.

“We do know providers are calling and asking, ‘How do I get my name on that list’ [of cost-effective providers]?” said Kentucky spokeswoman Goins. “The only way they can do that is to negotiate.”

Read the article.

Appleby J., Kaiser Health News (5 March 2018). "Pay-to-shop health care incentives gaining traction" [Web blog Post]. Retrieved from address

Top healthcare benefit trends to watch

Original post

The number of employers offering a healthy living/incentive program grew in 2015, and is one of several trends to watch as the year 2016 unfolds, analysts say.

Plan design changes and programs such as incentive and wellness were of increasing interest to employers last year and most “continue to turn to their brokers and consultants to learn more about new health plan benefit designs and distribution models,” says Tiffany Wirth, executive director of the Healthcare Trends Institute.

“Helping employees better understand the value of provided benefits and making cost-conscious benefit decisions continues to remain important to employers,” she says.

The number of employers offering a healthy living/incentive program grew from 29.8% in 2014 to 34.6% in 2015, according to the HTI’s 2015 Healthcare Benefit Trends Benchmark Study.

During a webinar unveiling the results, Wirth said 21.8% of employers are considering such a program and 16.7% are still learning about them. About 1 in 4 employers (24.7%) indicated they weren’t interested in offering such a program.

“We’re starting to see these types of programs take hold as [healthcare] reform is being adopted and companies are pushing employees to understand their decisions, their purchases, and all of the different things that go along with healthcare benefits,” she says.

As part of incentive program tracking, HTI has also been examining what sort of wellness programs companies are implementing, Wirth says.

Almost half (44.6%) offer at least one type of wellness program, the survey found. Thirty-one percent offer biometric screenings and about 30% offer an opportunity for health risk management.

Key differences from the 2014 benchmark study, Wirth says, included the ranking of top benefits offered by employers. The three highest company-offered employee benefits in 2014 (PPO, family plan and prescription drug) continued to rank high in 2015, but dental came in at No. 1 this year, with about 74% of employers offering it.

More than half (52.1%) of respondents said they had some familiarity with defined contribution plans and private exchanges, with the majority of those who indicated they were interested in offering a DCP identifying 2017 as the year they would likely do so.

Wirth says continued interest is growing among employers to learn and understand more about DCPS.

More employers use workplace wellness programs to reward healthy behavior


Originally posted January 18, 2015 by Matt Dunning on

As employers pursue effective workplace wellness programs, their embrace of results-based financial incentives and other emerging health management strategies is likely to broaden this year.

Twenty-three percent of large employers polled in a survey released in December by Mercer L.L.C. said their wellness programs include incentives tied to an employee's achieving — or at least demonstrating progress toward — a certain health status or biometric reading, up from 20% in 2013.

Similarly, a September survey by Towers Watson & Co. found that 18% of employers already use outcomes-based wellness incentives, while another 10% plan to do so this year.

Outcomes-based incentives are “where we've been heading for a while now, and I don't see that changing,” said Jill Micklow, a Chicago-based wellness consultant at Schaumburg, Illinois-based Assurance Agency Ltd. “I think you're definitely going to see more of the same this year and into next year from employers.”

Another 48% of employers plan to add a results-based incentive strategy to their wellness program by 2016 or 2017, according to Towers Watson's survey.

“The days of giving employee small tokens like gift certificates or T-shirts are long gone,” said Lisa Weston, director of wellness promotion at human resources consultant Bagnall Co. in Phoenix.

Ms. Weston said most employers migrating toward outcomes-based incentive designs thus far have been larger firms.

Another recent development experts say could gain substantial momentum this year is the burgeoning popularity of value-of-investment metrics as an alternative way to measure a wellness program's positive and/or negative effects.

“Over the last two years, we've seen this debate rise up over the ROI of wellness, and I think there is a healthy level of skepticism to apply there,” said Ron Leopold, the Atlanta-based national practice leader for health outcomes at Willis North America Inc.

Unlike the cost/benefit-oriented return-on-investment assessments many employers use to gauge their wellness programs' financial viability, experts say value-of-investment assessments examine the breadth of a wellness program's cost-effectiveness relative to an employer's other operations.

“I think there's a growing recognition among employers that wellness is a marathon, it's not a sprint, and there are far more targeted ways to put in programs in order to lower your medical costs,” Mr. Leopold said. “The lion's share of what's in a wellness program ... does pay dividends over time.”

“There's also a growing body of evidence that suggests that companies that do invest in good health and wellness programs correlate with better business returns and greater profitability when compared to peer companies that have not invested in wellness,” he said.

As much as 32% of employers polled last year by Arthur J. Gallagher & Co. indicated they already use one or more of the most common value-of-investment metrics — including employee engagement, lost work time and lost productivity — to evaluate their wellness program.

“It gets to all of what comes out of all of the resources invested in wellness programs,” said LuAnn Heinen, a Minneapolis-based vice president at the National Business Group on Health. “It gives you a look at what your business results are, beyond the medical trend.”



Five trends in wellness incentives for 2013

By Mark Hall

Five trends in wellness incentives for 2013

Employers want return of investment for their wellness programs. They want to know what incentive dollars are really being used for. Here are five trends to look for in wellness incentives in 2013.

1. Personalization of incentives

The idea of incentivizing people to participate in wellness programs is one of the few to be embraced with equal enthusiasm across the board.

While the concept held enough innovation and promise to spur health plans and employers to spend over $60 billion last year to motivate consumers to engage in health, incentives have often been primitive in execution. Incentive dollars flow to plan members as reward or encouragement for healthy behaviors, but what consumers do with that money has until now been largely a mystery to employers and health insurers.

A 2009 survey conducted by MasterCard and Harris Interactive found 61% of employees participate in a wellness program if incentives are offered versus only 26% when there is no added incentive. Additionally, 25% of employees reported that being incentivized was actually the driver and the very reason they agreed to enroll in a wellness program at all.

Instead, the answer is to better tailor the incentives to fit the person, and to provide incentives that motivate while driving program ROI. A recent study from the Journal of Economic Psychology shows consumers prefer to be incentivized with cash. Yet the utility of cash (even cash rebated to a paycheck) leads many to decisions that fail to drive long-term engagement, satisfaction and ultimately outcomes.

2. Incentives tailored around health related products and services

Health incentives need to focus on an emotional affinity felt by participants toward earned rewards—a paradigm that has the potential to create the initial embrace of health behavior change and perpetuate it. Yet, today’s healthcare dollars are stretched thin, and employers want to make sure every dime spent on health and wellness programs is targeted to accomplish health goals. They have increasingly offered discounts to fitness clubs, healthy foods, supplements and Weight Watchers as incentives.

3.  New focus on analytics

The Patient Protection and Affordable Care Act (PPACA) increases the cap on wellness incentives—now at 20% of an employee’s total health insurance premium cost—to 30% and then 50% by 2014. This provides an opportunity to create an incentive program with influence.

Yet as increasing dollar amounts are being driven towards wellness/incentive programs; understanding exactly how funds are being spent; what they are being spent on; and how the actual spending is impacting outcomes and ROI will be critical to understanding the overall impact and success of wellness incentive programs. To that end, rich new data sets being driven by innovation in payments technology will play a key role over the next 18 to 24 months in determining how funds can better be allocated within programs to achieve results.

4.  Deeper integration of wellness incentives into overall care continuum

Through a richer data set of spend analytics tied back into larger Big Data initiatives focused on efficient healthcare dollar allocation, the role of wellness incentives, their impact on behavioral economics, and ultimately their importance within the overall care continuum will be far better understood. Health plans and employers will increasingly have the ability to design and integrate highly targeted incentive dollar programs to reduce costs, and improve outcomes.

5.  Continued focus on gamification

The recent gamification of wellness programs, employee challenges and the role that both competition and fun in wellness program engagement will continue, as these wellness tools have proven successful in driving initial and—in many cases—longer term engagement and results. That said, there will be an increased focus in 2013 on the actual currency being offered as rewards.

According to a March 2012 study by Fidelity and the National Business Group on Health, employers on average are spending a $169 per-employee per-year on wellness platforms. Yet they are spending nearly three times that on the actual incentive, or $460 per-employee per-year. The incentive dollars represent the single greatest investment into wellness programs. Until now, these dollars have been limited in their ability to be tangibly measured and evaluated for their effectiveness. This will be a critical area of change in 2013, and one that will fundamentally shift how actual incentive dollars are perceived and utilized across all aspects of healthcare to drive cost reduction.

Want wellness? Offer some motivation



By their very definition, incentives serve as motivation to elicit specific actions.

When used by employers as part of a medical management program—particularly wellness and disease management—incentives are proven to significantly raise participation rates, leading to improved member health, increased productivity, reduced health care spending and, ultimately, positive returns on their investment.

The challenge is determining how to structure an incentive program to deliver the desired results.

Studies and our experience have shown that incentives of $50 per employee per month, or $600 per employee annually, yield participation levels of 75 percent or better when the member answers the call. In other words, with the right incentive, you can lead a horse to water, and you can expect him to drink, at least three-fourths of the time.

Successful medical management programs target high-risk plan members with medical conditions or lifestyle behaviors that drive costs for employers. When implementing an incentive program, however, it is wise to cast a wider net.

Although it might seem counterintuitive to offer incentives to employees who are already healthy, it’s important to engage the entire member population. Doing so deepens the pool from which you can identify candidates with chronic conditions or emerging lifestyle risks who would benefit from one-on-one coaching from a registered nurse or behavior-change specialist.

Remember, about 75 percent of those you engage will agree to participate. So if you are able to reach a larger percentage of the overall population, your participation rate will increase proportionately. Plus, even the healthiest of plan members can benefit from learning more about how the decisions they make can influence their personal health and well-being.

Consider a plan structure with a primary incentive that appeals to the total population, complemented by a secondary incentive used to target the at-risk population. Primary incentives often are distributed in the form of premium reductions or additional dollars applied to an employee’s paycheck, a health savings account or as part of a value-based benefit plan.

These incentives typically are used to motivate members to complete clinical health risk assessments and biometric health screenings, both of which help identify individuals for potential coaching intervention.

These at-risk or high-risk individuals are candidates for secondary incentives. They may have a chronic medical condition, such as diabetes, heart disease or asthma. They may have a higher likelihood of developing complications during pregnancy. Or they may have one or more lifestyle risks, such as obesity, tobacco use or a lack of physical activity.

Secondary incentives can encourage these members to work with a health coach toward managing their medical condition or making health sustainable changes to their behavior.

Their participation may be required in order to remain eligible for premium reductions, or they may receive secondary incentives in the form of gift cards or reduced or waived copayments or coinsurance for:

  • Therapeutic class medications used to treat chronic diseases
  • Diabetic supplies
  • A newborn’s inpatient stay following delivery
  • Nicotine replacement therapy gum or patches
  • Weight loss or fitness club memberships

Our experience shows that, on average, more than 80 percent of those who enroll in coaching will complete the process, equipping them with healthy habits and techniques that are sustainable for a lifetime.

When combined with an effective medical management plan, the right incentives will help employers move employees’ personal wellness forward, move their corporate health culture forward, and reduce their plan costs long-term.



The British Are Coming!

If you live in New England, like I do, you tend to look over your shoulder when someone shouts that familiar phrase.  But in the case of sports these days it’s a fresh and inviting thing.  With Bradley Wiggins winning the Tour de France this year, as the first Brit to win and a couple weeks later capture a gold medal in the Olympics, you would say the British are here.

Looking at the major accomplishments of Bradley, from France, to back home in London for the time trials there, it got me thinking about goals, measurements, and performance, and how we reward our employees.

You see where I’m going with this right?

So what do you do when it comes time for raises, or increases, or reviews as some organizations call them?  Do you look at the dollars in the budget and divvy them up evenly among the workforce?  Do you send out the reviews a couple weeks before they are due to your managers and tell them to fill them out the best they can?  Or do you have everything documented in a Workforce Management system that shows you the employees’ profile information, tenure, past performance ratings, goals you set for them for the quarter or year and how they are doing with those documented goals,  and the ability to assess your employees in a timely fashion? Then have that all tied together with your budget for the year that is sent to the managers so they can link the performance reviews with compensation reviews and send that seamlessly to payroll.

Some of you are saying “British said what?”

Performance and Compensation Management is something that every company wants to do, and at some level you do it; either through spreadsheets and Word docs, homegrown databases, or with a fully functioning system that ties all the pieces together.  The key to all of it is communication.

Just as each of the members of the Tour de France teams communicated with each other in some way, shape, or form; or as far back as the militia communicated in every little township to make sure everyone was on the same page with defeating the red coats…

You too can communicate with your workforce.  In the end, when the loop is closed and you have your managers talking to your employees and vice versa and HR talking with both of them; you find the trifecta of communication keeps employees informed and you’re able to use the tools provided to assess, retain, reward great employees.

In the spirit of the times – Go for the Gold !!