Definition Incentives Programs

Energizing Workplace Wellness Programs: The Role of Incentives and Recognition | Research About this Research. This paper is based on a review of hundreds of research papers, book excerpts, essays, articles and case studies on workplace wellness, population health management, and preventative medicine from approximately 1. The material has been synthesized to present the most relevant material and findings on workplace wellness programs —including the use of  incentives and rewards and government initiatives and legislation aimed at workplace and general wellness— in as succinct and logical manner as possible. This paper is intended mainly to serve as a synthesis of the current state of workplace wellness programs, and specifically, the use of incentives and rewards therein. This is not original research.

1. The IRF examines whether workplace wellness programs can play a significant role in reducing the largely preventable conditions brought on by the poor health choices.
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Where recommendations and conclusions are offered, they are the opinion of the author and do not necessarily represent the views or opinions of the Incentive Research Foundation or its members. The main objective of this paper is to present in one place the emerging landscape from which the reader may appreciate the complexity of the topic, the richness of positions and practices in place, and the variety of issues involved, all of which make workplace wellness a fascinating arena with real potential to create a better future for Americans and the nation. Starbuck’s chairman recently noted that his company spends $2.

Green Building Standards. Learn about six major model codes and rating systems that communities can use to develop green building programs and revise building ordinances. Employee incentive programs are programs used to increase overall employee performance. While employees tend to approve of incentive programs, only 27% of companies. Noun 1. a plan of action to accomplish a specified end: a school lunch program. 2. a plan or schedule of activities, procedures, etc., to be followed. 3. a radio or. Are you asking 'What is Meaningful Use?' Find out more about the meaningful use definition and objectives for users in their transition to health IT.

WELCOA, 2. 00. 9) Executive Summary. Healthcare costs are escalating rapidly and globally, accounting for greater shares of the GDP of developed world nations—their threat to national economies exceeds any other single cost item.

It is no wonder that individuals, families, employers, communities and governments are urgently seeking solutions. Most agree that the greatest potential lies in reducing the largely preventable conditions and diseases brought on by poor individual health choices. Between 7. 0% and 7. U. S. on healthcare is invested in the treatment of preventable conditions, but less than 5 percent goes toward chronic disease prevention (Department of Health and Human Services, 2. The question is how to drive healthier communities and organizations. How can employers and governments help individuals change their behaviors to stop smoking, stop overeating, exercise more, wear seatbelts, consume less alcohol, get regular health checkups, take their medications and change their diets?

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Among the most promising approaches is the use of incentives, rewards and recognition in the encouragement of healthy lifestyles and choices. A growing and compelling set of evidence exists which correlates well- designed wellness programs—which almost invariably include incentives and rewards—with better health and wellness outcomes. A growing community of practitioners, experts and policy- makers favor the use of incentives to encourage not only participation in wellness programs but outcomes.  “Attainment” incentives (rewards based on achieving wellness objectives) operate similarly to auto insurance policies. If I am a reckless driver, if I drink and drive, if I disobey speed limits, etc. I get caught) I expect to pay higher premiums and probably will. Likewise, if I smoke, drink excessively, don’t exercise and am obese, it might be fair that I pay more of my health insurance costs than a person who maintains their health. Currently, under the 1.

Health Insurance Portability and Accountability Act (HIPAA), a group health plan may not discriminate among individuals on the basis of health factors by varying their premiums. Moreover, the law states that even where attainment incentives meet these standards, they must not exceed 2. The new healthcare legislation—the Patient Protection and Affordable Care Act (PPACA)—underscores the government’s belief that reasonable and HIPAA compliant attainment incentives are both ethical and effective. In 2. 01. 4, the PPACA raises the cap on attainment incentives to at least 3. The research is convincing where incentives impact short- term participation in wellness programs. There is also compelling evidence that incentives are effective in smoking cessation, weight loss and in the amelioration of other preventable health conditions.

Where the research remains inconclusive, is in the effects of incentive programs on promoting long- term, sustained wellness.“Motivating, engaging and empowering individuals to become better stewards of their own health has never been easy work.”- Care Continuum Alliance, 2. Because few controlled, long- term behavioral studies have attempted to determine whether people who receive incentives are able to maintain their short- term success long term — the ultimate goal of incentive- based prevention program — this remains the largest gap in incentives driven wellness research. Additionally, few attempts have been made to address how the design of an incentive program should be adjusted according to the demographics of the target population, such as insuring that low- income participants have equal opportunity to participate. Research initiatives into these areas would add value to the body of existing research. Introduction“Given the vast number of preventable deaths associated with smoking (4. U. S.] population’s health.” - New England Journal of Medicine, January 6, 2. The term “wellness” is not defined or used consistently around the world.

Generally, “workplace wellness” refers to programs designed to improve the health and well- being of employees (and their families) in order to enhance organizational performance and reduce costs (see also Appendices A and B). Wellness programs typically address specific behaviors and health risk factors, such as poor nutrition, physical inactivity, stress, obesity, and smoking. Wellness programs can also help reduce the incidence and severity of chronic illnesses such as asthma, diabetes, insomnia and heart disease. Employers often integrate their wellness initiatives with chronic disease management programs to provide a continuum of healthy lifestyle support. Wellness programs raise awareness, provide information and education, and usually offer incentives that encourage employees and their families to adopt healthier lifestyles. These initiatives are most successful in a workplace environment that, at its core, promotes and supports health and well- being.

The health issues that wellness programs generally target commonly lead to serious and expensive health problems and have a negative impact on workforce productivity. They are also, largely preventable. The Scope of the Problem. For almost 5. 0 years, healthcare spending has grown by 2 percentage points in excess of GDP growth across all Organization for Economic Co- operation and Development (OECD) countries. As a result, health care has become a much bigger part of most of these economies.  If current trends persist to 2. OECD countries will spend more than a fifth of GDP on health care. Even if the excess growth of health care spending over GDP is somehow cut in half, according to a 2.

Mc. Kinsey report,  “health care will, by 2. U. S. healthcare costs are growing at an even faster rate than the OECD average and much faster than inflation, the economy, or wages. Costs have increased 2. In 2. 00. 9, combined healthcare spending in the U.

S. amounted to $2. GDP. The Congressional Budget Office predicts that if trends continue, healthcare will consume 2. GDP by 2. 02. 5 and one- third by 2. For all this, the US ranks, at best, 3. WELCOA, 2. 00. 9)Solutions to spiraling healthcare costs may be an economic survival imperative for the U.

S. and many other nations. Certainly, accelerating healthcare insurance costs have become a critical, board- level issue for many U. S. organizations. Thus, the rise of workplace wellness programs and initiatives over the past two decades is no surprise. Yet the problem is far from solved.

Despite the clear benefits to better health choices and individual wellness, America is an overweight, obese, inactive and sick nation. The State of Workplace Wellness Programs. Costs: The Key Driver of Workplace Wellness Programs. The silver lining in the otherwise depressing American health scenario is that the vast majority of healthcare spending is avoidable. Americans and the populations of most “western” countries are largely responsible for their own poor health in the choices they make.

This represents an enormous opportunity for improvement. Figure One illustrates the primary health risks of American workers. Figure One: Health Risks per 1. Employees in the U.

S. According to Mercer HR research, health insurance reached an average of $5,6. From 1. 99. 8 to 2. Kaiser Family Foundation and Health Research and Educational Trust 2. Appendix C summarizes the most common preventable health conditions and their costs. As referenced above, the U.

S. currently spends about $2. If 7. 5% of that is spent on preventable conditions, as many experts suggest, then the overall savings potential through preventative healthcare, including workplace wellness programs is almost $1. Current and Future Trends in Workplace Wellness Program Adoption. A 2. 00. 8 survey by Hewitt Associates found that 9. The primary reasons cited for company sponsorship were: to promote health (4. In its 2. 01. 0 analysis, Population Health Improvement: A Market Research Survey, the Care Continuum Alliance reported that "8. Further, 6. 1 percent of current purchasers [of vendor- supported wellness programs or services] view wellness programs as a ‘must have’ within their organizations, and 8.

While the studies may differ in their assessment of workplace wellness program adoption (likely due to varying definitions) they all point to a trend toward greater implementation of the programs over the past decade or so. The reasons for broader adoption of wellness programs are varied but include the compelling evidence of a strong ROI in wellness programs. The ROI in Workplace Wellness Programs.

The short- term return- on- investment (ROI) for corporate wellness programs has been well- documented over the past two decades. Year- round comprehensive corporate wellness programs have shown savings- to- cost ratios of more than $3 saved for each $1 invested (see Figure Two).

Documented savings based on meta- analysis of numerous research studies are observed in medical costs, absenteeism, worker’s compensation costs, short- term disability, and increased productivity. Figure Two. Source:  American Institute for Preventive Medicine Examples of positive ROI are plentiful even though most organizations do a poor job of tracking it.

Below are some examples of typical ROI: Johnson & Johnson, which started its first wellness program in 1. Healthy People program.

J& J reports that “Our focus on health and wellness among our U. S. workforce has helped reduce per- capita health- plan costs by $4.

Citibank's comprehensive health management program demonstrates that for every dollar invested in programming activities, $4. Union Pacific Railroad's medical self- care program achieved cost savings of $2. In a meta- analysis of the literature on costs and savings associated with workplace disease prevention and wellness programs, Harvard researchers led by Katherine Baicker recently reported that medical costs fall by about $3. New England Journal of Medicine, 2.

In perhaps the most rigorous research conducted on workplace wellness program ROI to date, researchers for the MEDSTAT group followed over 8,0. Johnson & Johnson’s Health & Wellness program for about nine years (five before the program and four after). Using regression techniques to isolate the impact of the wellness program, the researchers concluded that: “a well- conceived health and wellness program that focuses on prevention, self- care, risk factor reduction, and disease management can produce substantial benefits for employers and their employees. Utilization and expenditures may be reduced by better coordination of existing health and productivity management programs, with many of these benefits occurring in later years.”[7]The most relevant question for organizations today appears not to be whether they should offer wellness programs, but according to Baicker and her colleagues, ”rather how these programs should be designed, implemented and evaluated in order to achieve the best outcomes.” [8]The Role of Incentives, Rewards and Recognition in Workplace Wellness program design and in Driving & Sustaining participation and Interest. As above, preventable medical conditions represent an unsustainable drain on the nation’s finances.

Workplace wellness programs address this challenge and normally achieve 3. ROI. Thus, the more employees who participate in a wellness program, the more potential savings and the better their quality of life. Hence companies have tried a variety of methods to increase employee participation, some of which have proven more effective than others. Mandatory employee participation, for example, may backfire.

When a railroad company tried to require its track maintenance employees to do warm- up exercises, the workers threatened to strike unless the program was halted immediately.[9]While the stick is sometimes appropriate, positive incentives, rewards & recognition have become a part of most wellness programs in the United States today – the rewards offered are both financial and non- cash (i. The results of an Aon Hewitt survey released in June 2.

The report cited 5. According to Health.

Resources 2. 00. 8 survey of the membership of the National Association of Manufacturers (NAM) and the ERISA Industry Council (ERIC) between 2. Types of Incentives Used. By far the most common incentives are used to encourage participation in a wellness program including the upfront Health Risk Analysis (HRA) and for actions such as attending fitness classes, receiving immunizations and reducing or stopping smoking. Generally, rewards for participation range from cash to gift cards to merchandise. According to a 2.

Kaiser Family Foundation, about 6 percent of firms vary premium contributions based on employees’ participation in wellness programs, up from 3 percent in 2. Differential premiums can be controversial, especially when they reward not only for participating in a wellness program but for outcomes or “attainment”.[1. Some employers have begun varying the premiums paid by their employees for health insurance based on health outcomes or attainment of goals. This approach has been endorsed to some degree by Congress and the White House in the Patient Protection and Affordable Care Act of 2. PPACA) which permits employers to offer cash incentives to employees for participating in wellness programs and for reaching certain targets. Current law limits the value of wellness incentives to 2. When the new rules of the PPACA go into effect in 2.

Safeway is perhaps the organization best known for the use of differential premiums as incentives for wellness and is reputably the model for the incentives component of the PPACA described above. Safeway has instituted a program with substantial differences in premiums, depending on employees’ healthiness. The company’s health care plan also uses differing premiums, based on various factors such as smoking, weight, blood pressure, and cholesterol levels.

Employees are screened for those four items, and they receive a discount off the base level premium for each test they pass or standard they meet. The attractiveness of Safeway’s approach (and the emphasis on differential premiums in the PPACA) is obvious. In theory, if one requires workers to pay higher premiums if they fail tests for measures such as smoking, weight, blood pressure and cholesterol, they will want to become healthier to reduce their costs. When they do, the employer gets a fitter and healthier workforce and reduces medical expenses and absenteeism.

Employees benefit in the form of lower deductibles and premiums.“Red. Brick Health appeals to everyone’s sense of fairness. We can now directly link the cost of employees’ health care benefits to an individual’s decision to engage in healthy behaviors within their control. We’re not forcing anyone to change his or her behavior.

Instead, we’re simply saying the cost of coverage should be responsibly aligned with personal health choices. We look forward to helping our employees reap the personal and financial benefits of healthy behaviors through Red. Brick’s health resources and tools.”- Jim Conseco: Grace Brothers, Vice President of Benefits In practice, Safeway’s results are impressive in most areas but marginal in others. According to Safeway’s statistics, the proportion of employees classified as obese declined by five percentage points between 2. Meanwhile, 4. 0 percent of workers and spouses who failed the blood pressure test in 2. The financial ramifications remain unclear. In the short term, Safeway admits its program probably boosts medical expenses at first because the screenings prompt people to seek treatment for newly detected problems.

International Truck and Engine Corporation uses participation and attainment incentives to encourage high Health Risk Assessment (HRA) participation and to triage employees into primary, secondary and tertiary health promotion/disease prevention programs. International’s smoking policy was a by- product of this initiative. Over half of the employees that identified themselves as smokers actively participated in the smoking cessation course or quit smoking entirely. Longitudinal study results at International, consisting of three separate retrospective surveys initiated in 2. The investment costs include staffing, handbooks (plus the shipping and handling fees) training, communication materials, incentives (including participation and attainment rewards) and early detection screenings in 2.

Since International funded the cost of the initiative, the return- on- investment (ROI) for each year was calculated from the plan paid perspective. As such, the estimated plan paid ROI for the five- year period was $9. ROI is not the only consideration, however. Writing in a recent issue of the New England Journal of Medicine, Harald Schmidt and colleagues argue that “[Attainment incentives] might be fundamentally unfair because they might be only technically voluntary, out of reach for the socio- economically disadvantaged, a burden on the doctor- patient relationship and, ultimately, a source of higher out- of- pocket insurance premium costs for the very people who can least afford them”.[1. Nonetheless, 5. 6 percent of employers plan to hold employees accountable for a larger share of health plan costs according to a 2. Towers Watson study. With costs escalating, it is likely that employers will pursue attainment related incentives and disincentives aggressively within the bounds of the law.

In addition to being convinced that such incentives work, some employers see a way to pay for their wellness programs entirely through this strategy.[1. The ROI in Incentives- Driven Wellness Programs.

The debate over the use of incentives in promoting workplace wellness will no doubt continue for years to come. For most organizations, communities and nations, however, evidence of the ROI in incentives- driven wellness programs will be the determining factor in their use, and the evidence is mounting in favor of the use of incentives – for those using both cash and/or non- cash rewards.“If we learn that incentive programs are less cost- effective than alternative means of promoting cardiovascular health, or that they carry unintended consequences such as encouraging certain people to adopt unhealthy behaviors so as to become eligible for incentives, then broadly implementing these interventions may be unwise.

But given the promise of incentives to favorably modify behavior, we should not let inchoate views that the incentives themselves are unethical prevent us from studying them in earnest.” - American Heart Association, 2. A 1. 99. 1- 9. 5 study of 7.

Salt Lake City, who participated in a Healthy Lifestyle Incentive Program (HLIP) offers additional evidence in support of the use of incentives. The program allowed participants to earn points for engaging in a healthy lifestyle — behaviors such as exercising, wearing seat belts, not smoking, reducing or maintaining desirable blood pressure, cholesterol and body fat levels, having routine preventive exams and engaging in various educational  activities on healthy lifestyle topics. Annual rebates ranged from $7. Even though the rewards were modest, modifiable health risks were significantly reduced over time, both among higher and lower risk participants. Obesity prevalence decreased significantly among men and women.

High cholesterol and high blood pressure, seat belt use, smoking cessation and physical activity all saw significant improvements over the 4 year period, despite setbacks, in some cases, from year to year. The size and type of incentive or reward can matter also.

At Johnson & Johnson, for example, voluntary participation in its wellness program increased from 2. For some people, cash rewards, unless significant, can be less meaningful than the “trophy value” of a merchandise type reward.[1. More recently, in May, 2. The American Journal of Health Promotion published the results of a longitudinal study conducted by Discovery Vitality in which 3. About 6. 5 percent of the subjects participated in the Vitality Wellness program over the five year study, while about 3. The differences between the two groups were significant. Wellness program participants were more likely to join fitness activities and remain engaged in those activities over time.

Those that were active in fitness activities experienced significantly lower hospital costs than those that were inactive.[1. Whether cash or non- cash, setting the incentive level is a design science in itself. The right reward type and amount will vary based on the behavior change, participation objective or outcome desired and possibly by type of organization, employee cohort, or a range of other factors.

Research Gaps and Recommendations for Further Research. There is strong evidence that employees prefer to work for firms that offer effective and attractive benefit programs. However, though a minority, many employers are still reluctant to implement incentive- driven wellness programs - especially with meaningful incentive dollar values - because they believe a compelling “business case” for such investment has not been made or they fear developing a “culture of entitlement” where wellness and health outcomes aren’t driven by intrinsic motivations because participants learn to expect rewards for everything they do and achieve. To address this need: Further research is needed to determine which incentive structures and amounts are optimal, assess the ability of incentives (both contingent and intrinsic) to produce sustained behavior changes, and evaluate the cost- effectiveness of implementing incentive programs.“Given a wellness program’s cost, scope, duration and number of participants, and given the availability (or non- availability) of claims data and of an appropriate control group, what program evaluation design is indicated, such that the additional cost associated with the additional rigor is warranted and can be justified by higher quality of data that results?” CCA, 2. Further research is required to determine the degree to which incentive rewards within workplace wellness programs promote robust, long- term behavior change and whether  (and to what degree) incentives that are linked to behavior outcomes result in greater ROI than incentives for participation.

More research is needed to better determine the interaction between the intensity of interventions and incentives offered and the duration of a program as it relates to the level of ROI that can be expected. A constraint also seems to be with the low cash incentives used in programs. A study using higher rewards could be feasible if conducted in a low cost country.

Future research needs to more systemically examine the contextual factors in the workplace, such as the culture, senior management commitment, marketing of the program and incentives to discover how they may be linked to participation in health promotion activities. The study might also address how the design of an incentive program should be adjusted according to the demographics of the target population, such as insuring that low- income employees have transportation to attend classes and fitness facilities. More research is needed on the optimal mix and level of cash (financial) and non- cash rewards. Does merchandise leave a longer lasting impression on recipients than cash?

Do non- cash incentives drive the desired behavior and outcomes as well or better than cash? How can cash and non- cash incentives support the need to develop intrinsic motivations for wellness?

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