4
Approaches to Improving Value— Consumer Incentives

INTRODUCTION

Previous discussions at this workshop series, such as the stakeholder perspectives described in Chapter 2, highlight the importance of consumers in reorienting health care in the United States toward a value-driven system. It was heard that consumers play a critical role in the medical decision-making process and make multiple decisions in the path of care that ultimately impact the value of care delivered on both individual and societal levels. The presentations in this session focused on specific examples of consumer-focused approaches to achieve greater value, exploring the research to date and the evidence of impact.

A. Mark Fendrick emphasizes the continued underutilization of highvalue health services, with research indicating that U.S. adults receive only about 50 percent of recommended care (McGlynn et al., 2003). He discusses the potential for value-based insurance design—which focuses on consumer choices, adjusting patients’ out-of-pocket costs for specific services based on an assessment of the clinical benefit achieved (with the more clinically beneficial interventions associated with lower out-of-pocket costs)—to be utilized as a tool for increasing value in health care.

Building on the concept of value-based insurance design, Melinda Beeuwkes-Buntin discusses consumer-directed, high-deductible health plans (CDHPs). This presentation elaborated on the mechanisms though which CDHPs attempt to provide patients with financial incentives to make wiser healthcare choices while spurring them to take greater responsibility for their care. The impact of evolving “consumer-directed” plan designs on



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4 Approaches to Improving Value— Consumer Incentives INTRODUCTION Previous discussions at this workshop series, such as the stakeholder perspectives described in Chapter 2, highlight the importance of consumers in reorienting health care in the United States toward a value-driven system. It was heard that consumers play a critical role in the medical decision- making process and make multiple decisions in the path of care that ulti- mately impact the value of care delivered on both individual and societal levels. The presentations in this session focused on specific examples of consumer-focused approaches to achieve greater value, exploring the research to date and the evidence of impact. A. Mark Fendrick emphasizes the continued underutilization of high- value health services, with research indicating that U.S. adults receive only about 50 percent of recommended care (McGlynn et al., 2003). He discusses the potential for value-based insurance design—which focuses on consumer choices, adjusting patients’ out-of-pocket costs for specific services based on an assessment of the clinical benefit achieved (with the more clinically beneficial interventions associated with lower out-of-pocket costs)—to be utilized as a tool for increasing value in health care. Building on the concept of value-based insurance design, Melinda Beeuwkes-Buntin discusses consumer-directed, high-deductible health plans (CDHPs). This presentation elaborated on the mechanisms though which CDHPs attempt to provide patients with financial incentives to make wiser healthcare choices while spurring them to take greater responsibility for their care. The impact of evolving “consumer-directed” plan designs on 

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2 VALUE IN HEALTH CARE expenditures, access to care, and clinical outcomes is also reviewed, with gaps in knowledge and future areas of needed research identified. Approaches such as pharmaceutical or hospital tiering programs have attempted to increase the transparency of value of different medical inter- ventions and providers. Dennis Scanlon describes in further detail how tiering classifies healthcare providers, pharmaceuticals, or treatments on the basis of objective or subjective criteria such as cost, quality, and value, and engages patients and consumers in making informed decisions. One example discussed in detail is a hospital tiering program and the impact of the program on consumer choices and quality of care. Concluding the session, Ronald Goetzel details the value of worksite health promotion and chronic disease prevention programs, indicating that they can yield significant health and economic benefits for employers and employees. In addition to discussing how workplace wellness programs can serve as vehicles for health behavior change, he outlines recommenda- tions to increase employer engagement in providing evidence-based health promotion programs to their employees. VALUE-BASED INSURANCE DESIGN: RESTORING HEALTH TO THE HEALTHCARE COST DEBATE A. Mark Fendrick, M.D., University of Michigan Medical Center, and Michael E. Chernew, Ph.D., Harvard Medical School As healthcare premiums escalate, both private and public purchasers are forced to decide how best to address this unsustainable economic burden. Unfortunately, value—the clinical benefit achieved for the money spent—is frequently excluded from the dialogue on how to manage the growth of healthcare spending. If the desirable clinical effects of health insurance are ignored, con- straining healthcare cost growth can be achieved simply by providing less generous coverage or no coverage at all. In fact, the numbers of Americans who are uninsured or underinsured is at an all-time high, reflecting the trade-off between the high cost of health benefits and remaining viable in today’s economy (Kaiser Family Foundation, 2005). Although rising healthcare costs are the main impetus behind the redesign of health benefits, concerns regarding the quality of care share the limelight. This clear and unresolved tension between cost containment and suboptimal quality of care has led to two prevailing trends in benefit design: 1. Cost containment strategies that use financial incentives to alter patient and provider behavior: This approach includes increases in cost sharing (e.g., deductibles, copays, coinsurance rates) in exist-

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 CONSUMER INCENTIVES ing plan designs and the introduction of high-deductible health plans that allow employees to set aside tax-free money for health expenses. A recent Kaiser Foundation Employer Benefit Survey showed relative moderation in the growth in healthcare premiums, largely attributable to increasing cost shifting from employer to beneficiary (Kaiser Family Foundation, 2005). 2. Improving the quality of care and keeping individuals healthier longer: Employers and insurers are implementing wellness and dis- ease management (DM) initiatives to help individuals manage their health in an effort to avoid more costly care. Pay-for-performance (P4P) programs, which pay providers more for adhering to evi- dence-based clinical practices and delivering specific health out- comes, are disseminated widely. While many proponents of these initiatives contend that better health will lead to lower spend- ing, fiscal savings from quality-oriented interventions have not materialized. Since higher patient cost sharing discourages use of high-value medi- cal services, these two trends inherently conflict. The main challenge is to devise benefit packages that openly address the problem of spending growth, yet explicitly aim to optimize the health of beneficiaries through the incorporation of features that complement each other in the effective and efficient delivery of care. Role of Cost Sharing From the patient perspective, increased cost sharing is the principal instrument of change. There is little debate over the economic theory that an increase in out-of-pocket expenses will lead to less consumption of healthcare services. Many studies demonstrate that when confronted with higher costs, individuals will purchase less care (Gibson et al., 2005). Ideally, higher patient copayments would discourage only the utilization of low-value care. For this important assumption to be achieved, patients must be able to distinguish between high-value and low-value interven- tions. However, when this ability to differentiate among services does not exist, increased cost sharing has the potential to cause negative clinical outcomes. A large and growing body of evidence demonstrates that in response to increased cost sharing, patients decrease the use of both high- value (e.g., immunizations, cancer screening, appropriate prescription drug use) and low-value services, and may have worse health outcomes as a result (Figure 4-1).

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 VALUE IN HEALTH CARE s mic es s siv t de san tics lipi ten a es per per e m epr iab sth tihy tihy tid tia tid An An An An An 0 Change in drug days supplied (%) –5 –10 –15 –20 –25% –26% –26% –25 –32% –30 –34% –35 Analysis of pharmacy claims data from 30 employers and –40 52 health plans. FIGURE 4-1 Impact of out-of-pocket costs on adherence. SOURCE: Goldman et al., 2004. Value-Based Insurance Design In response to the adverse clinical effects of “one-size-fits-all” cost shifting, we propose “value-based insurance design” (VBID), a system that bases patients’ copayments Figure 4-9.eps on the relative value—not the cost of the clinical intervention (Chernew et al., ctor editable ve2007; Fendrick and Chernew, 2006). In this setting, cost sharing is still utilized, but a “clinically sensitive” approach is explicitly employed to mitigate the adverse health consequences of high out-of-pocket expenditures. Originally referred to as the “benefit-based copay” for prescription drugs, VBID has broadened to all sectors of health- care delivery. The principle tenets of a VBID program are that (1) medical services differ in the clinical benefit achieved and (2) the value of a specific intervention likely varies across patient groups. We believe that more effi- cient resource allocation can be achieved when the amount of patient cost sharing is a function of the value of the specific healthcare service to a targeted patient group. Although cost sharing may be ill advised in certain clinical circum- stances, it would be absurd to completely ignore the need for interventions to reign in spending. Increased cost sharing seems inevitable given the lack of demonstrated savings from, or unwillingness to adopt, other approaches. In the VBID paradigm, patients’ out-of-pocket costs are determined by the costs and benefit of care—zero or low copayments for interventions of highest value (e.g., mammogram for women with a first-degree relative

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 CONSUMER INCENTIVES with breast cancer, lipid-lowering therapy for an individual with a his- tory of myocardial infarction) and higher cost sharing for interventions with little or no proven healthcare benefit (e.g., total body computed tomographic scanning). This more sophisticated benefit design is made possible by advances in health information technology and comparative effectiveness research. While some believe that such benefit packages are too complex to be accepted by consumers or too difficult to create in certain clinical conditions, the inability to construct the perfect program should not lead to abandonment of key VBID principles. The cost of maintaining the status quo, in terms of higher spending and worse health outcomes, is staggering. Barriers to VBID implementation certainly exist and create several chal- lenges (Chernew et al., 2007). From experience in the field, VBID programs are feasible, are acceptable to all stakeholders, and have been very well received by beneficiaries. VBID can address several important inconsisten- cies in the current system and work synergistically with other initiatives such as high-deductible health plans, disease management, patient-centered medical home, and P4P programs. By allowing different cost-sharing provi- sions for different services, value can be enhanced without removing the role of cost sharing in the system overall. Types of VBID Programs In practice, there are two general approaches to VBID programs. The first simply targets services known to be of high value (e.g., ACE [angiotensin converting enzyme] inhibitors). While some users of the ser- vices have the target high-value condition(s) (e.g., congestive heart failure, myocardial infarction), others do not (e.g., essential hypertension), and the system does not attempt to differentiate between these patient groups. The second approach targets patients with select clinical diagnoses (e.g., coronary artery disease) and lowers copays for specific high-value services (e.g., statins, beta-blockers) only for those patient groups. This diagnosis- driven strategy, which requires more sophisticated data systems to imple- ment, creates a differential copay based on patients’ health conditions. A controlled evaluation of a VBID program that lowered copayments for all users of five high-value pharmaceutical classes, demonstrated signifi- cant increases in patient compliance (Chernew et al., 2008) (Table 4-1). The financial impact of VBID programs on healthcare spending is under investigation. Economic effects depend on the level and precision of targeting and the extent or direction of the changes in copayments. Since many clinical services provide higher value for a select subset of patients, the better the system is at identifying those patients, the greater is the like- lihood of achieving a high financial return. Employers with more targeted

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 VALUE IN HEALTH CARE TABLE 4-1 Copay Reductions Increase Adherence to High-Value Drug Classesa % MPR % Reduction in Medication MPR Increase Baseline MPR Increase Nonadherence ACE/ARB 2.59 (p .001) 68.4 3.8 8.2 < β-blockers 3.02 (p .001) 68.3 4.4 9.5 < Diabetes 4.02 (p .001) 69.5 5.8 13.2 < Statins 3.39 (p .001) 53.0 6.3 7.1 < Steroids 1.86 (p = .134) 31.6 5.9 2.7 NOTE: ACE = angiotensin coverting enzyme; ARB = angiotensin receptor blocker; MPR = medication possession ratio. a When a large services industry employer reduced copays for certain classes of drugs, nonadherence rates decreased by 7-14%. Copayment rates for generic medications were reduced from $5 to $0; copayments for brand-name drugs were cut in half for five classes of drugs. A similar employer with identical disease management offerings and similar, but stable, copayments served as a control group. SOURCE: Copyrighted and published by Project HOP/Health Affairs as Chernew, M. E., M. Shah, A. Wegh, S. Rosenberg, I. Juster, A. Rosen, M. Sokol, K. Yu-Isenberg, and M. Fendrick. 2008. Impact of decreasing copayments on medication adherence within a disease management environment. Health Affairs 27(1):103-112. The published article is archived and available online at www.healthaffairs.com. programs incur lower treatment costs, because fewer individuals are eligible for copay reductions and the targeted patients who receive copay relief are most likely to benefit from increased utilization. Offsetting these direct costs of copay reduction are the savings incurred by reductions in future services avoided due to better clinical outcomes. For example, savings due to fewer emergency room visits for acute asthma exacerbations would offset the direct costs of lower copays for asthma con- troller medications, at least partially. The net financial benefit improves if the underlying risk of an adverse outcome is high, if the cost of that adverse outcome is high, if consumers are responsive to lower copays, and if the service is effective at preventing the adverse outcome. Additional return on investment accrues if the nonmedical benefits of improved health (e.g., reduced disability and absenteeism, enhanced productivity) are included. The following financial scenarios are likely to occur, depending on the goals of the VBID program and the willingness to raise copayments on low-value services: • Targeted copay reductions will result in higher value for each market basket of services only if there are incentives to use services that produce high levels of health benefit. There will be an uncer- tain effect on total healthcare cost trends.

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 CONSUMER INCENTIVES • Copay reductions with global or targeted copayment increases to offset short-term costs of increased utilization of targeted services (actuarial equivalence) will result in higher value for each market basket of services due to incentives to use services that produce high levels of health benefit. Total healthcare costs will be equal or lower, depending on the extent of savings yielded due to offsets from improved health and lower utilization of low-value services as a result of higher copays. Efforts to control costs should not produce preventable reductions in quality of care. Multiple private and public sector employers, health plans, and pharmacy benefit managers have implemented VBID programs encourag- ing the use of high-quality services. In 2001, Fortune 500 employer Pitney Bowes lowered copayments for asthma and diabetes medications, reporting to the Wall Street Journal a $1 million savings from reduced complica- tions (Furhrman, 2007). The city of Asheville, North Carolina, Marriott Corporation, Mohawk Carpets, Wal-Mart, CIGNA, the State of Maine, and the University of Michigan are among those who have implemented VBID. Leading health plans and health benefit consultants are working to make these packages accessible nationwide. Conclusion Payers desiring to optimize health gains per dollar spent should avoid “across-the-board” cost sharing and instead implement a “value-based” design that removes barriers and provides incentives to encourage desired behaviors for patients and providers. Targeted efforts to reduce utilization of low-value services are more likely to contain cost growth while maintain- ing quality of care. We do not expect VBID to solve the nation’s healthcare crisis. Techno- logical advances will continue to generate upward pressure on costs, and the ability of individuals and their employers to afford such coverage will increasingly be strained. That said, the alignment of financial incentives— for patients and providers—would encourage the use of high-value care, while discouraging the use of low-value or unproven services, and ulti- mately produce more health at any level of healthcare expenditure.

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 VALUE IN HEALTH CARE CONSUMER-DIRECTED HEALTH PLANS: WHAT ARE THEY, WHAT DO WE KNOW ABOUT THEIR EFFECTS, AND CAN THEY ENHANCE VALUE? Melinda J. Beeuwkes-Buntin, Ph.D., RAND Health The health insurance options available to Americans have changed dramatically in the last five years. Higher deductibles and personal health savings accounts—either health reimbursement accounts (HRAs) or health savings accounts (HSAs)—are increasingly popular features that are intended to make patients more cost conscious in their healthcare choices. Plans with these features, often referred to as consumer-directed health plans, are intended to engage consumers in understanding the costs of care and in making healthcare choices.1 Critics charge, however, that they are currently little more than a device to shift costs to enrollees. This paper sketches the scope of consumer-directed care, discusses what is known about the effects on CDHPs to date, and concludes with some thoughts about how consumer-directed care might be used to increase the value of the healthcare services we receive. Scope of Consumer-Directed Care Consumer-directed health plans emphasize the role consumers can play in making decisions about their healthcare choices. These plans usually provide patients with upfront financial incentives to choose care wisely in the form of deductibles that are typically higher than those of traditional plans—the typical consumer-directed plan has a single deductible of $1,000 or more. In addition, as mentioned above, they are often coupled with personal savings accounts that roll over if funds in them are not spent; this gives patients additional incentives to save for future expenses rather than consume care in the current period. Proponents of consumer-directed plans hope these measures will spur patients to take greater responsibility for their own care and seek information about care options. They also point out that more informed and motivated consumers can in turn spur healthcare providers to compete for their business on the basis of higher quality and/or lower costs. Since the advent of CDHPs early in the decade, an increasing number of employers have offered them either exclusively or as a choice among 1 In this discussion, the term “consumer-directed health plans” refers to private plans that have higher-than-average deductibles, but may not necessarily meet federal requirements for a plan that can be paired with an HSA. The term “high-deductible health plan” (HDHP) refers specifically to HSA-qualified plans that meet the requirements set out in regulations issued by the U.S. Treasury.

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9 CONSUMER INCENTIVES FIGURE 4-2 Proportion of firms offering a CDHP option, by size. SOURCE: Kaiser Family Foundation and the Health Research Educational Trust, 2008b. Figure 4-1.eps Bitmapped fixed image other types of insurance. Large employers are more likely than midsize and small businesses to provide CDHPs as an option. In 2008, almost a quarter of firms with 1,000 or more workers offered CDHPs, compared to 15 percent of midsize and 13 percent of small firms (Figure 4-2). Half of very large firms with more than 5,000 enrollees offer a CDHP option (Watson Wyatt/RAND, 2007). Across the board, the rate of firms offering CDHPs has increased substantially since 2005 when U.S. Treasury regula- tions laid out the criteria for HSAs. However, despite employer enthusiasm for CDHPs, consumer take-up remains relatively low. In 2007, 11 percent of Americans were enrolled in a high-deductible health plan (HDHP). Only 2 percent of Americans were enrolled in a CDHP featuring an HDHP plus an HRA or an HSA (EBRI/Commonwealth, 2008). Economic forces, employer choices, and evolving plan designs all have the potential to change this picture. Even before the extent of the economic downturn was known, a survey of human resources executives in early 2008 indicated that companies are still warming to the idea of CDHPs and see them becoming more important in the future. Nearly nine-tenths of respondents were optimistic about the future of CDHPs at their firms: 34 percent anticipated more employees in a CDHP, 26 percent anticipated

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20 VALUE IN HEALTH CARE offering a “full replacement” CDHP (i.e., offering only a CDHP to their employees), and 29 percent anticipated a “majority” of employees in a CDHP (Figure 4-3). All of these rates represented an increase from 2007, and now that companies are more financially stressed, they are reportedly even more interested in CDHPs (Watson Wyatt/RAND, 2007). Finally, given that CDHPs are still relatively new products in the market, it may not be surprising that interest in them is growing as offerings are refined. For example, most CDHP plans now exempt some or all preventive care services from the deductible and vendors are offering more sophisticated incentive programs designed to help people stay healthy and manage chronic illnesses. In short, although CDHP enrollment has been lower than many in the industry had initially expected, it is still growing and forces may now be aligned to help it expand more quickly. Research to Date on CDHPs Given the growing enrollment in CDHPs and the increased focus on improving the value of health services delivered, what is known about the effects of CDHPs on healthcare costs and quality? The most authoritative estimates of their likely effects come from the decades-old RAND Health Insurance Experiment (HIE). The HIE found that higher deductibles could reduce spending by about 5-10 percent (Newhouse, 1992). The reductions in care use implied by these savings came through reductions in patient- initiated visits, however, not through the choice of more cost-effective treat- ments. Indeed, the reductions occurred in all types of services—preventive care, routine chronic care, and care deemed necessary by physician experts as well as care deemed unnecessary. Yet these reductions in care use had little effect on health outcomes during the evaluation period. The exception was for patients who were both sick and poor; their health declined more in the higher cost-sharing plans. There are reasons, however, why the effects of today’s CDHPs might differ from the high-deductible plans studied in the RAND experiment. First, medical technology has advanced dramatically since the experiment began in the early 1970s and, thus, the consequences of going without care could be more severe. Second, the Internet has made medical information much more widely available, potentially increasing the ability of patients to make informed decisions about care. Third, new consumer-driven designs often emphasize prevention and are coupled with other programs such as disease management programs and health risk assessments. Finally, personal savings accounts could provide patients with the liquidity they need to initiate care. Still, despite these changes, it is important to know that the overall financial risk borne by CDHP enrollees is likely greater than that borne by the origi- nal HIE participants, because the latter were compensated for enrolling in

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2 CONSUMER INCENTIVES 2007 Majority of Full employees in replacement CDHP, 15.0% CDHP, 27.5% Wait and see what develops, 12.5% Employees in More a variety of employees in plans, 7.5% CDHP, 30.0% Other, 7.5% 2008 Majority of Full employees in replacement CDHP, 28.6% CDHP, 25.7% More employees in Wait and CDHP, 34.3% see what develops, Employees in 5.7% a variety of plans, 5.7% FIGURE 4-3 Most human resources executives remain committed to CDHPs. SOURCE: Watson Wyatt/RAND, 2007. Figure 4-2.eps vector editable

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2 VALUE IN HEALTH CARE even those who do implement well-structured and evidence-based programs may not always be sure these programs work because they have not put effective measurement systems in place. Making the Business Case for Workplace Health Promotion Many employers are familiar with a growing body of literature showing that theory-based and empirically sound programs can improve workers’ health, lower their risk for disease, save businesses money, and improve an organization’s competitiveness (Goetzel and Ozminkowski, 2008). How- ever, others lack the hard evidence necessary to convince program spon- sors and company management that investing in workers’ health is “worth it”—not just from a humanitarian point of view but also because it is good for their business. How might a health promotion program champion respond when confronted by the boss who says, “Convince me—why should a business invest in the health and well-being of its workers?” The response may take the form of a series of statements supported by a growing body of empiri- cal evidence. The logic flow for worksite health promotion can be articulated as fol- lows. A large proportion of the diseases and disorders affecting workers is preventable (Partnership to Fight Chronic Disease, 2008). Modifiable health risk factors are precursors to a large number of diseases and disorders and, at the extreme, premature death (Amler and Dull, 1987). Many modifiable health risks are associated with increased healthcare costs and reduced worker productivity within a relatively short time window (Goetzel et al., 1998a). By utilizing a workplace-sponsored health promotion and disease prevention program, employers can target modifiable health risk factors and achieve improvements in the health risk profile of their population that can lead to reductions in healthcare costs and improvements in productiv- ity (Goetzel et al., 2002; Heaney and Goetzel, 1998; Ozminkowski et al., 1999). Finally, worksite health promotion and disease prevention programs thus save companies money and produce a positive return on investment (ROI) (Aldana, 2001). Where is the evidence supporting each of the above statements? What follows is a synopsis of the research linked to each of the major points. There is little argument that poor health costs employers significant amounts of money and that many chronic health conditions, such as heart disease, Type 2 diabetes, and certain cancers, are largely caused by behavior and lifestyle (Mokdad et al., 2000). Excess spending has its source in increased and avoidable healthcare services, employee absenteeism, short- and long- term disability payments, higher accident rates, and diminished worker pro- ductivity (Goetzel et al., 2004). There is also growing evidence that workers

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 CONSUMER INCENTIVES 100 75 70.2 46.3 50 34.8 Percent 21.4 19.7 25 14.5 11.7 10.4 – 0.8 – 3.0 – 9.3 0 Depression Stress Glucose Weight Tobacco-Past Tobacco Blood pressure Exercise Cholesterol Alcohol Eating –25 –50 FIGURE 4-10 Incremental impact of 11 modifiable risk factors on medical expenditures. NOTE: Independent effects after adjustment, N = 46,026. Figure 4-10.eps SOURCE: Goetzel et al., 1998a. vector editable broadside at higher risk for modifiable conditions such as obesity, inadequate physical activity, smoking, poor diet, unmanaged stress, and high biometric values for cholesterol, blood pressure, and glucose also cost more than those lacking these risks (Anderson et al., 2000) (Figure 4-10). Further, employees exhibit- ing several risk factors cost significantly more than employees with fewer risk factors. These higher costs affect not only employers but also employees, since the dollars spent on health care and other employee benefits are sub- tracted from employee salaries and total compensation. Thus, improving the health risk profile of workers can benefit employers and employees alike. Workplace Programs as a Vehicle for Behavior Change What is the evidence supporting the positive effects of workplace health promotion on health risks and behaviors? A systematic literature review commissioned by the U.S. Centers for Disease Control and Prevention (CDC) in 1995, and more recently in 2007, concluded that well-designed, evidence-based programs built on behavioral theory can achieve long-term health and productivity improvements in employee populations (Soler et al., 2009). In an earlier review, Catherine Heaney and I examined 47 peer-

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 reviewed studies over a 20-year period and found that workplace programs, in spite of their variability in terms of comprehensiveness, intensity, and duration, achieved long-term behavior change and risk reduction among workers (Heaney and Goetzel, 1998). The most effective programs were those that offered individualized risk reduction counseling to the highest- risk employees within a “healthy-company” workplace environment in which broader health awareness initiatives were already under way. The review released in 2007 by the CDC Community Guide Task Force examined data from more than 50 studies that reported workplace program participation outcomes based on a range of health behaviors, physiological measures, and productivity indicators. The review was largely positive with sufficient and strong evidence supporting the view that workplace programs exerted a positive effect on poor behaviors and biometric values. When measured at an individual level, many of the changes in these outcomes were small, but at the population level they were considered substantial (Centers for Disease Control and Prevention, 2007) (Table 4-2). Workplace Programs’ Financial Outcomes What, then, is the evidence of cost savings? Here too several literature reviews that weigh the evidence from experimental and quasi-experimental study designs suggest that workplace programs using tailored communica- tions and individualized counseling for high-risk individuals are likely to produce a positive ROI; that is, for every dollar invested over a three-year period, the ROI ranges from about $1.40 to $4.70 (Chapman, 2005; Goetzel et al., 1999). Studies often cited for the strongest research designs and the largest numbers of subjects include those performed at Johnson and Johnson, Citibank, Dupont, Bank of America, Tenneco, Duke University, the California Public Retirees System, Procter & Gamble, Highmark, and Chevron Corporation (Figure 4-11). Even when taking into consideration the inconsistencies in design and results across these studies, most of these workplace studies have shown positive financial outcomes. TABLE 4-2 Evaluation of Worksite Health Promotion Programs— February 2007 Analysis Summary Results Body of Consistent Magnitude of Outcome Evidence Results Effect Finding Estimated risk 15 Yes Moderate Sufficient Healthcare use 6 Yes Moderate Sufficient Worker productivity 10 Yes Moderate Strong SOURCE: Soler et al., 2007.

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 CONSUMER INCENTIVES $1,800 1731 Par ticipants $1,700 Non-Par ticipants $1,600 $1,500 1386 $1,400 1339 $1,300 1196 $1,200 1080 1098 $1,100 $1,000 $900 $800 Year 1 Year 2 Year 3 FIGURE 4-11 Total annual medical costs for participants and nonparticipants in health check: Proctor & Gamble (1990-1992). SOURCE: Goetzel et al., 1998b. Figure 4-11.eps vector editable Suggestions With the above discussion as background, following are personal sug- gestions for employer-directed initiatives as part of healthcare reform. The overall aim of these recommendations is to increase employer engagement in providing state-of-the-art and science-based health promotion programs to their employees. Improve employer communication and education about the benefits of effective health promotion programs We need to do a better job com- municating the human and economic costs associated with poor health, the effects of not achieving health improvements, and the options available to reduce health risks. Federal, state, and local health agencies, in partner- ship with businesses, should leverage their extensive marketing and com- munication networks to share information about exemplary programs to employers. This means a broader dissemination of results from scientific studies and translation of findings into understandable business language;

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 VALUE IN HEALTH CARE convening business group meetings on workplace topics; and speaking before legislators and policy makers with testimonial evidence regarding program successes. Increase funding for applied research in “real-world” settings There are not enough federally funded, applied research studies that examine real- world applications of health promotion programs in the workplace. Until recently, much of the workplace research came from the private sector and was paid for by private sources. This research is improving but is still relatively primitive and limited. To enhance knowledge of best practices, more government support is needed for studying the science underlying workplace-based programs and the relative effectiveness of various com- ponent parts in improving health, lowering costs, and increasing worker productivity. Develop tools and resources to support employer efforts in health promotion Several tools and resources have already been developed and disseminated with the support of government funding. However, additional ones are needed to help employers design, implement, and evaluate their workplace programs. Pilot innovative health promotion programs at federal, state, and local health departments and agencies It is ironic that most government agen- cies do not have state-of-the-art programs for their own employees and dependents. Some noteworthy exceptions can be found in King County, Washington, and the State of Delaware, where experimental health promo- tion programs are now being implemented and evaluated. Public agencies should serve as laboratories for testing innovative approaches to improving workers’ health as well as role models that other employers can emulate. Honor and reward America’s healthiest organizations We need to recog- nize and reward employers who are the champions of health improvement. Innovative organizations that have successfully implemented extraordinary programs deserve recognition. There are good award programs already in place, including those at the National Business Group on Health, the Health and Human Services Secretary’s Innovation in Prevention Award, and the Health Project’s C. Everett Koop National Health Award. These efforts should be further supported and expanded. Create an employers’ health promotion resource center A government- supported resource center would collect, develop, and disseminate objec- tive, easy-to-use, and accessible information and act as a clearinghouse for resources, tools, and expertise to support employer efforts.

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 CONSUMER INCENTIVES Establish a public-private technical advisory council The council would be set up just like other government advisory panels, such as the U.S. Preven- tive Services Task Force and the Community Guide Task Force. Establish collective purchasing consortia for small employers These con- sortia would define common health and business objectives for employers in a given community, achieve consensus on health promotion program designs, issue requests for proposals to vendors and health plans, and estab- lish performance guarantees related to the success of these programs. Support establishment of health promotion program certification and accreditation programs Several established review and accreditation orga- nizations, such as the National Committee for Quality Assurance (NCQA), the Utilization Review Accreditation Committee (URAC), and the Health Enhancement Research Organization (HERO), have recently introduced review processes focused on workplace vendors and health plans. These organizations should be encouraged because they will improve the quality of health promotion programs and introduce a level playing field of com- petition across programs and vendors. Provide financial incentives for employers to adopt evidence-based programs An immediate and effective way to capture the attention of businesses is to provide them tax credits for implementing bona fide health promotion programs. These tax credits would partially offset the costs of providing a qualified program. (See Senator Tom Harkin’s Healthy Work- force Act—S. 1753; Library of Congress, 2009.) Conclusion In sum, we need to make sure that there is a clear focus on workplaces as a venue for health system reform. The current U.S. healthcare system has major flaws. We are spending more than $2 trillion per year on health care, with three-fourths of this amount being directed toward the treatment of chronic diseases. Almost two-thirds of the growth in spending is attrib- utable to Americans’ worsening health habits, particularly the epidemic rise in obesity. Our healthcare delivery system favors paying for treatment rather than prevention. For the United States to continue to be an economic leader worldwide, supported by a healthy and productive workforce, we need to direct our national attention and energy toward concerted health promotion and disease prevention. We can start by focusing on improving the health and well-being of employees who work within our organizations. Prevention and health promotion are essential to comprehensive health

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