Use of Outcomes-Based Health Incentives Growing

41% use or plan to use incentives tied to goal achievement

By Stephen Miller, CEBS May 8, 2013

A national survey on employee health incentives and penalties found that 82 percent of employers offer some form of incentives or disincentives, with 41 percent using or planning to use outcomes-based incentives to increase engagement and participation in employer-sponsored programs (for instance, linking incentives to the achievement of targeted biometric goals), according to the May 2013 report, EmpEloyer Survey on Incentives, Disincentives & Outcomes-Based Incentives. The survey, sponsored by the not-for-profit Midwest Business Group on Health (MBGH), was fielded in April 2013 among businesses from a variety of industries and sizes.

Most employers find that unless they offer some form of incentive, employees and dependents often don't participate in programs that are meant to prevent and reduce chronic disease, resulting in millions of benefits dollars being wasted,” said Larry Boress, MBGH president and CEO.

Key findings from the responding employers follow below.

Outcomes-based Incentives:

  • 13 percent of respondents offer outcomes-based incentives, and 28 percent are planning to launch programs over the next one to two years, while 40 percent indicated interest but needed more information.
  • Of those currently offering outcomes-based programs, 54 percent tie incentives both to achieving specific outcomes-based measures (i.e., a body-mass indexof 25) and improvements in outcomes (i.e., a percentage reduction in body-mass index).
  • Onsite clinical screening programs are used by 94 percent of employers as the way to capture biometrics, with the top measurements among respondents being:

Blood pressure (used by 86 percent).

Body-mass index (81 percent).

Cholesterol (73 percent).

Glucose and Hemoglobin A1c (68 percent).

Waist circumference (59 percent).

  • 18 percent of employers experienced participation levels of over 90 percent for outcomes-based programs, while the majority (60 percent) experienced participating levels of 40 to 80 percent.

Offering incentives/disincentives:

  • Of the 18 percent of employers who reported not offering incentives or disincentives, 53 percent indicated this was not part of their corporate culture; 47 percent said they were not sure incentives work.
  • For those employers offering incentives, 62 percent reduce premiums, 38 percent use gift cards, and 35 percent offer merchandise.
  • Of those employers that use disincentives, 43 percent increase employee share of premiums for non-compliance and 14 percent have higher plan deductibles or out of pocket fees.
  • Activities that most employers link to incentives include biometric screenings (70 percent) and health risk assessments (78 percent), with the greatest disincentive (78 percent) focusing on tobacco use.
  • The monetary value of incentives programs varies widely:

$250 to $500 for 27 percent of those offering programs.

$100 to 250 for 22 percent.

$500 to $1,000 for another 22 percent.

  • 71 percent of employers found their incentive strategy “very successful” or “successful;” 45 percent viewed their disincentive strategy as “very successful” or “successful.”
  • With the Patient Protection and Affordable Care Act (PPACA) allowing employers to increase their incentives from 20 to 30 percent of total premium costs (employer plus employee) beginning in 2014, almost 67 percent said they were “very likely” or “likely” to do so, and almost 36 percent were “not very likely” or “not likely.”
  • For tobacco users, the PPACA allows employers to increase the value of incentives from 20 to 50 percent of premium costs, with employers indicating 48 percent “very likely” to “likely” to do so and 52 percent saying “not very likely” to “not likely.”

Stephen Miller, CEBS, is an online editor/manager for SHRM.​

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