Not yet a Member?
HR Magazine is highlighting the next generation of HR leaders.
Is your employee handbook ready for the New Year? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
30+ HR education programs, including 4 NEW programs on hot topics, are available for registration.
Join us in Chicago for the latest trends and technology in talent management, and what to expect in the future.
Structure, monitor, measure and modify a wellness program that's appropriate for your organization
Most health benefit plans include some kind of wellness program. As costs rise, plan administrators hope that their wellness programs will help stem and reduce rising health plan costs. Plan administrators might harbor over-optimistic expectations of what a wellness initiative can deliver, however.
We can rank approaches to wellness as low, moderate and high impact.
Low-impact wellness programs generally have little or no cost to the employer. They are strictly voluntary and employee-focused. They do not include engagement of dependents and offer few, if any, incentives to participate. Examples include passive distribution of wellness materials, worksite events such as health fairs, promotion of healthy eating, coordination with an on-site cafeteria, and sponsorship or promotion of community health events such as runs and walks.
Although low-impact wellness initiatives can help create a culture of wellness, because they are passive few people participate and it is difficult to measure the success of the program. Return on investment (ROI) is difficult, if not impossible, to realize, so low-impact programs tend to serve as initial steps toward preparing the population for more-comprehensive wellness initiatives. The primary expectations for a low-impact wellness program should be to build awareness about healthy behavior and to improve workplace morale, rather than to reduce costs in the near term.
Moderate-impact programs cost more and engage more individuals. They are still mostly voluntary but provide incentives for those who participate. Like low-impact programs, they are employee-focused but can include dependents in limited areas of the program.
Examples include health risk assessments, biometric screenings, plan design incentives like low and no co-payments for annual visits with a primary care physician, incentive rewards for tobacco cessation, and weight control and disease management. Incentives might be somewhat passive, like rewards for participating in smoking cessation or disease management programs, with no requirement that the individual quit smoking or meet some quantitative goal.
Moderate wellness programs duplicate the primary expectations of low-impact programs but cover individuals who are taking actions to promote healthy behavior and measuring those actions in a rudimentary fashion.
Planning and patience are important for a moderate-impact wellness program. Expectations should be set at a three-year horizon for the planning implementation, execution, analysis and measurement of ROI for the program, as follows.
Year One: Build and Develop
• Assess needs. Establish a wellness committee to facilitate decision making, define the scope and components of the program and establish a communication strategy.• Engage vendors. Work with medical plan vendors to design and implement any benefit changes.• Select other vendors. As needed, select and contract with vendors for web portals, biometric screenings, etc.• Communicate to employees any plan changes and program details for open enrollment.
• Assess needs. Establish a wellness committee to facilitate decision making, define the scope and components of the program and establish a communication strategy.
• Engage vendors. Work with medical plan vendors to design and implement any benefit changes.
• Select other vendors. As needed, select and contract with vendors for web portals, biometric screenings, etc.
• Communicate to employees any plan changes and program details for open enrollment.
Year Two: Administer, Monitor and Modify
• Begin wellness programs (for example, screenings, health risk assessments, lifestyle coaches); analyze engagement statistics and vendor reports.• Revise/adjust scope of wellness offerings, employee incentives and communication strategy as needed; engage vendors as needed.• Communicate changes for open enrollment.
• Begin wellness programs (for example, screenings, health risk assessments, lifestyle coaches); analyze engagement statistics and vendor reports.
• Revise/adjust scope of wellness offerings, employee incentives and communication strategy as needed; engage vendors as needed.
• Communicate changes for open enrollment.
Year Three: Initial ROI; Continue to Modify
• Analyze screening results via vendor reports. • Measure financial results.• Make adjustments, including review of vendor performance.
• Analyze screening results via vendor reports.
• Measure financial results.
• Make adjustments, including review of vendor performance.
Savings resulting from a moderate impact program are difficult to attribute to any one facet, as the programs and data produced by them are not personalized. For example, data would include numbers of people who had their cholesterol measured or how many fell into various risk categories but generally would not indicate who lowered their cholesterol and by how much.
The annual cost of a moderate impact program should range from $46 to $150 per employee per year. Assumed savings after two years should range from $69 to $225 per employee per year.
Because of the global nature of the engagement and ensuing data, savings are assumed to be reflected in benefit costs that are avoided in areas such as emergency room visits, specialist visits and disability costs.
The high-impact approach focuses on improving health while reducing health risks and costs, and measures outcomes with continuous redesign. It is easier to attribute the savings that result to the various programs because interventions are targeted, personalized and directed where the need is greatest. The focus is on an entire population, including dependents. Individuals are selected and engaged based on data (enrollment, claims, health history, lab values, screening results, etc). Participation, which is steered rather than voluntary or passive, is prompted by major plan design contribution or through benefit differentials, such as targeting tobacco users or those who fail to complete screenings or participate in risk assessments and incentives. Penalties are contingent on measured outcomes.
High-impact programs are based on data that identifies those in the population who are healthy, healthy with certain conditions or poor habits, chronically ill and at high risk. Unlike low- and moderate-impact programs where one size fits all, the programs targeted to these groups differ. They include:
• Motivating those who are healthy to promote continued health.• Targeting health improvement of those who have poor health habits or who are living with certain conditions to prevent those conditions from worsening.• Coordinating and managing the care of those who are chronically ill to ensure the best outcomes at the lowest cost.• Intense assistance and coordination of care for those who are at high risk in order to reduce their risk.
• Motivating those who are healthy to promote continued health.
• Targeting health improvement of those who have poor health habits or who are living with certain conditions to prevent those conditions from worsening.
• Coordinating and managing the care of those who are chronically ill to ensure the best outcomes at the lowest cost.
• Intense assistance and coordination of care for those who are at high risk in order to reduce their risk.
The high-impact approach identifies episodic care and seeks to find efficiencies for better cost control of shock claims, regardless of an individual’s population group.
Structuring a Successful High-Impact Program
To realize the highest ROI, a program must be structured to include executive leadership, governance and commitment of human and capital resources. It should incorporate strategic planning, budgeting, program management, data warehousing and analysis.
The high-impact program encompasses the same functions in the first three years as does the moderate impact program, albeit with greater detail and additional resources. High-impact features include the following targets:
• Establish a data warehouse to house lab values, screening results, claim data, etc.• Develop and structure a steerage program through benefit and contribution design.• Seek and analyze medical, case and disease management vendors for possible carve-outs.• Establish a baseline quantitative measure of the population and quantifiable program goals based on data analysis of the population.• Communicate changes at open enrollment.
• Establish a data warehouse to house lab values, screening results, claim data, etc.
• Develop and structure a steerage program through benefit and contribution design.
• Seek and analyze medical, case and disease management vendors for possible carve-outs.
• Establish a baseline quantitative measure of the population and quantifiable program goals based on data analysis of the population.
• Communicate changes at open enrollment.
• Require employees to complete health risk assessments and biometric screening for contribution differentials.• Provide incentives for participations in various health management and lifestyle management programs.• Pilot or seek alternative care delivery and coordination programs, such as a patient centered medical home model for steerage of key individuals.• Measure results against a baseline and goals.• Communicate changes at open enrollment.
• Require employees to complete health risk assessments and biometric screening for contribution differentials.
• Provide incentives for participations in various health management and lifestyle management programs.
• Pilot or seek alternative care delivery and coordination programs, such as a patient centered medical home model for steerage of key individuals.
• Measure results against a baseline and goals.
• Expand alternative care delivery and coordination system to other groups of key individuals.• Develop clinical integration programs within the health plan for condition management of ailments such as diabetes and hypertension.• Measure results and revise programs.
• Expand alternative care delivery and coordination system to other groups of key individuals.
• Develop clinical integration programs within the health plan for condition management of ailments such as diabetes and hypertension.
• Measure results and revise programs.
Savings under the high-impact approach are quantifiable because the programs are based on data and targeted to individuals who the data has shown require intervention to save costs and improve care.
In the near term, multiple metrics are compared before and after implementation of the program. Among them are hospital and ambulatory utilization, lab testing, physician utilization, in- and out-of-network utilization, generic prescription drug substitution rates, coordination of benefits and subrogation, outpatient care in lieu of inpatient care and reduced length of stay.
In two to three years, data should begin to indicate certain cost avoidance, such as an individual identified as a diabetic whose clinical data and lab values show that the disease is under control; an individual with back pain who has not had surgery and has shown improvement through physical therapies; or other chronic patients who show clinical progress toward defined goals based on key measurements.
In three to five years, the program should begin to show detection of chronic conditions through health assessments and biometric screenings, enrollment in lifestyle improvement and wellness programs and evidence-based care compliance for newly discovered or first-time health concerns. For example, patients who are indentified as hypertensive might show evidence of medicine compliance or lifestyle changes that reduce blood pressure measurements as indicated by clinical data.
The high-impact approach leverages data for continuous cost and quality improvement and results in lower costs. These are achieved by better management of chronic conditions, reducing disease progression for high-risk members and members in the early stages of disease, reduction of the medical cost increase trend, improving member satisfaction and reducing disability costs.
Cost reductions are quantifiable based on targeted categories that have been identified through data. Categories include reduced length of stay, improved health related behaviors and reduced inpatient costs, medically necessary review and steerage to network provider.
Wellness is becoming increasingly important for stemming the rising tide of health care costs in group health plans. Health plans cannot continue to deploy a passive/reactive approach, waiting until individuals are ill before intervening, or engaging in inefficient treatment of those who are ill or experience sudden unforeseen catastrophic illnesses.
Bob Marcantonio is a consultant in the health and welfare practice at Cammack LaRhette Consulting.
© 2012, Cammack LaRhette Consulting.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Become a SHRM Member
SHRM’s HR Vendor Directory contains over 3,200 companies