Frequently Asked Questions: Part I
The Health and Wellness Industry
Wellness Exists at the intersection of Contentment and Aspiration. To live there, You Must First Choose to Move Out of the Village of Someday…
Over the years I’ve been asked a number of questions about the health and wellness industry. This is Part I of a two-part commentary featuring the top 10 most frequently asked questions. The responses are, of course, neither right nor wrong. They are simply my impressions from over 35 years of field experience.
QUESTION #1: Reflecting on your experience as a former senior executive in the health insurance industry, did the industry’s less-than-favorable profile with members adversely impact your ability to deliver health and wellness products and messages?
RESPONSE: While it is true that people often view insurance (of any kind) as a necessary evil, it’s important to remember that living a healthy lifestyle benefits everyone. When the payer is the employer, assuming fully-insured, the return is in the form of productivity and a favorable bargaining position when it comes to renewal discussions. When the payer is an individual, the return is improved quality of life, reduced out-of-pocket expenses, and the potential for marginal annual premium increases.
Quite frankly, I had more of a challenge “selling” the health and wellness message internally than I did to the community at large. In general, the health insurance industry is decidedly conservative and tends to change slowly and with considerable resistance. Historically (and simplistically), the focus of the health insurance industry is claims processing; a transactional activity centered on collecting premium dollars from payers and using the funds to pay healthcare providers. The insurers retain administrative and reserve dollars to cover operating expenses and to protect against unforeseen and catastrophic future claims.
Wellness (community health promotion and disease prevention) is a relatively new activity with weak controls and questioned/skeptical return on investment. Most, if not all, insurers agree that they should provide these services—if only because members request/demand that they do—but few have applied the rigorous business standards needed to justify and grow “Wellness” as a necessary cost of doing business and/or as an independent profit silo. By and large, the general public understands the value of living a healthy life; it’s the inside corporate folks that still need convincing.
QUESTION #2: Assuming support and commitment to wellness as a cost of doing business and/or a potential profit center, how does an insurance company influence members to make healthy lifestyle choices and to participate in program offerings?
RESPONSE: In a variety of ways including:
- Premium discounts for participation in wellness programs, i.e., health risk assessments, tobacco control, weight management.
- Promoting healthy living in their member communications, advertisements, and promotions.
- Offering physician incentives based on prevention interactions with patients.
Keep in mind that social marketing (selling an intangible) is, increasingly, just as much about science as it is about art. Study, understand and apply lessons learned from the emerging field of behavioral economics. We are under the false impression that we are rational beings who emote instead of the fact that we are emotional beings with the capacity to think rationally … and even more importantly, meta-rationally.
QUESTION #3: In your opinion, what makes a health and wellness initiative successful and how do you measure the success of health and wellness initiatives?
RESPONSE: The five key features of a successful (sustainable) corporate health initiative are as follows:
- High Participation ( > 80% )
- Measurable Results Demonstrating either Biometric Improvement or Symptom & Medical Event Stability (Zero Trends)
- Alignment with the Corporate Mission & Vision
- A Supportive Corporate Culture (infrastructure) including Physical Plant, Cafeteria Choices, Senior and Middle Management Participation and Encouragement
- True Transformation and Design Focus from A Corporate Health Initiative Driven by Wellness Programs, Supportive Policies and Management Endorsement to A Population of Healthy People driven by Subjective Wellbeing, Healthy Habits, and Sustained Engagement
Organizations must frame wellness in context and in consort with their corporate mission and margin. Does the “Wellness Strategy” contribute to key employee retention and acquisition? Does it show measurable impact on the claims experience (including that of dependents)? Does it serve to bend the healthcare cost trend? Do employees enjoy the programs and participate in significant numbers? Does it support the company’s mission, vision, and core principals? Keep in mind the fact that subjective, as well as objective, measurements determine success.
In the first year of a wellness strategy, success may be measured by participation alone. However, beginning as early as year two, a successful program needs to show value beyond participation. What percentage of smokers kicked the habit? Relative to claims data, do you see positive trending (or zero trending) in the areas of obesity, hypertension and high serum cholesterol? Is there a correlation between employee performance reviews and participation in the wellness program offerings?
It’s important to note that with a comprehensive initiative (designed with long-term mission and margin objectives in mind) you will actually see an increase in healthcare costs during the first couple of years. This is due to increased awareness, growing medical self-responsibility (age and gender appropriate screenings), early detection and early intervention. After three full years of operation, data shows that a comprehensive wellness initiative will provide a return in the area of 2:1 (two dollars saved for each dollar invested in the initiative). However, if the wellness strategy simply broke even, the company wins, everybody wins (accept the healthcare system that depends upon all of us presenting with illness early, often, and with increased complexity).
QUESTION #4: Is it possible to measure ROI?
RESPONSE: Yes, but it is also possible to measure DNA. DNA is a “Do Nothing at All” strategy. Since the year 2000, the cost of insuring a family of four has risen 114%. A “Do Nothing at All” strategy is simply not tenable. Primordial prevention and primary care cost pennies; secondary care and prevention costs dollars, and tertiary care ¾ associated with chronic illness ¾ cost bags of gold. This is another variation of the “Pay me now…or, pay me later” question.
To measure ROI, you need a 5Ws framework. You must ask and answer these questions:
- What’s Happening? – Current State Analysis
- So What? – Trends and Consequences
- What Do We Do Now? – Triage & Emergency Action Plan
- What Do We Do Next? – Strategic Intent and Tactical Plan ***
- What Difference Does it and Will it Make? – Continuous objective and subjective evaluation involving lifestyle-related claims monitoring, employee acceptance, participation rate, and measuring the correlation between participation and employee work performance evaluations.
- attitude and interest surveys
- personal health assessments
- incentive and culture transformation strategy and plan
- program component development/selection
- launch rollout plan including promotion campaign
Caution: Office politics are critical and numbers are slippery.
The CEO (or worse, the CFO) doesn’t buy into the basic intuitive logic or accept the published economic findings supporting the value of health promotion and disease prevention…
Middle management considers your initiative bothersome and counter-productive to their mission…
Your battle is doomed to fail. In fact, it maybe advisable to scrap or delay rollout until the “C” Suite and middle management are on-board.
QUESTION #5: Nationally, are H&W programs starting to be considered core business (as opposed to “nice-to-have-but expendable” activities)? If the answer’s yes, what’s driving this? Health reform and its emphasis on prevention? Group demand? Other reasons?
RESPONSE: Yes. Reasons are many, including:
- Employees expect worksite wellness programs as part of an insurance bundle (often at no additional fee).
- Credible data supports health promotion, disease prevention initiatives.
- Among the few areas of bipartisan agreement in the new Patient Protection and Affordable Care Act (PPACA; P.L. 111‐148) are measures aimed at constraining the growth trend in medical treatment spending and costs through health and wellness promotion and prevention initiatives.
Essential Benefits, Elimination of Co‐Payments for Screenings and Preventative Care – Starting back in September of 2010, employer‐sponsored (and other) group health plans and health insurance issuers were prohibited from requiring co‐pays for all preventative services recommended by an independent expert panel, the United States Preventative Services Task Force. Co‐pays were also eliminated for certain recommended immunizations, breast cancer screenings, and other preventative care/screenings for women and children. However, this requirement does not apply to “grandfathered” health plans, which are defined in PPACA as any plan in which at least one individual was enrolled in as March 23, 2010.
Additionally, Congress put in place beginning in 2014 “essential health benefits requirements” that most individual, employer and Health Insurance Exchange plans must cover. The Secretary of Health and Human Services (HHS) is tasked with defining the essential health benefits, however such benefits are required to include certain general categories, including: emergency services, hospitalization, maternity and newborn care, prescription drugs, laboratory services, mental health services, preventive and wellness services and chronic disease management.
Employee Wellness Discounts – Previously, a provision in the 1996 Health Insurance Portability and Accountability Act (“HIPAA”) permitted employers to reduce the cost of health insurance premiums for employees practicing healthy behaviors. The provision, which provided for a reduction of up to 20% of the employees’ regular premium cost, allowed employers to reward workers who met certain criteria “reasonably designed to promote health and prevent disease.” This typically includes employees who refrain from smoking, maintain a healthy weight, and keep blood pressure and cholesterol levels low.
Starting January 1, 2014, the PPACA enhances such wellness discounts by permitting group health plans to give reductions of up to 30% of the cost of premiums to employees who participate in such wellness programs. This may be expanded to 50% subject to the discretion of the Secretary of HHS.
Employee Wellness Grants to Small Business – The law established $200 million in wellness grant funding to be distributed to eligible small employers for fiscal years 2011 to 2015. Eligible employers are defined as those who employ less than 100 employees that work 25 hours or more per week, and also who did not have a wellness program in place as of March 23, 2010 (the date of enactment).