Firms Offer Payouts to Those Who Work Out

By Christopher J. Gearon
Special to The Washington Post
Tuesday, October 14, 2008; Page HE01

Debbie and Larry Ward of Jefferson, Md., each get $75 from Debbie's company when they go for their annual physicals. Arlington County police officer Darrin Cassedy received a two-night hotel stay in Florida and an MP3 player from his employer for losing weight and exercising. Sandy Colaccino of Silver Spring has access to free primary and urgent care at her job, a resource that she believes saved her from serious illness.

"A lot of people are shocked," says Debbie Ward, 51, that her employer, Herndon-based construction materials company Lafarge North America, hands out gift cards when employees or family members get physicals and cancer screenings or fill in detailed questionnaires about their health. The Wards have earned more than $400 in health-related rewards and will receive enough financial incentives in the coming year to make up for the $14-a-month premium hike they'll face from their Aetna PPO. "I'm very happy with my benefits," Ward says.

It's not only the employees who are happy. A recent Kaiser Family Foundation survey found that nearly 80 percent of large firms offering wellness programs believe they improve health, and 68 percent say they reduce costs.

Even though some experts contend these estimates are overly upbeat, many large companies -- including several local employers -- are adding financial incentives to their wellness and disease management efforts. While the Kaiser survey showed only a handful of employers currently pay people to take part in their programs, "in 2009, somewhere around 35 percent of [large] employers will offer such incentives," says Tracy Watts, a principal with the benefits consulting firm Mercer.

Cash incentives combined with lifestyle and disease management programs and health risk assessments can bring substantial payoffs for employers -- up to $3 in savings for every dollar spent over three years, says Mercer principal Missy Jaeger. By investing $6.5 million in financial perks that keep employees at work and out of the emergency room, Lafarge expects that it will save $12 million. And the $1 million that Discovery Communications calculates that it has saved by providing on-site primary and urgent care at its Silver Spring headquarters means that it won't have to increase premiums or cut back on benefits in any of its three plans next year. "It's one-stop health care and immediate health care," says Colaccino, who negotiates production agreements for the Discovery Channel.

Benefits will also remain stable for employees at Towson-based Black & Decker, with premiums rising a modest 3 percent next year. That stability, the company says, is in part a result of its investment in employee incentives, wellness and disease management. The firm currently reduces premiums by $30 a month for nonsmoking workers and family members. Next year, people who say they don't smoke will pay $55 less each month.

The company's 7,500 workers "are in the driver's seat to impact their health, their health-care costs and the company's health-care costs," says Raymond Brusca, vice president of benefits at Black & Decker. "I still believe one of the biggest methods in the end is cold, hard cash," he says.

'I Feel a Lot Better'

"Targeted behavior modification has such huge potential," says Watts. "Eighty percent of health-care costs are incurred by 20 percent of the population," she says. Most of those costs -- often related to diabetes, heart conditions, cancer and asthma -- can be managed or prevented. More than half of employers that offer health benefits provide at least one wellness program, according to the Kaiser survey.

A few years ago, the Arlington County government added Local Motion, a team-based approach to wellness and exercise, to its wellness efforts. "I feel a lot better," says Cassedy, a lieutenant in the county's police department, who dropped nearly 30 pounds over two years participating in Local Motion and Weight Watchers, for which county workers pay a reduced membership fee.

Local Motion participants receive a pedometer, water bottle, weekly incentive gifts, e-mail newsletters, and advice from a registered nurse and fitness experts. Participants are tracked through biometric measurements before and after joining the program. The county hopes to expand Local Motion to family members next year.

Over two years, 559 employers have completed the entire program, with more than 3,300 total pounds lost, nearly 403,000 miles logged on pedometers, reduced blood pressures, lots of thinner waists and improved hydration overall.

Stark Trends

For most workers, the trends in employer-based health insurance are downright depressing, with average premiums for family coverage jumping 119 percent since 1999, to $12,680 this year, according to Kaiser.

Most employers have tried to curtail their expenses by reducing benefits or shifting more of the costs onto workers through higher deductibles and co-payments in PPO and HMO plans. And hefty out-of-pocket costs are increasingly common in high-deductible plans, which often require people to pay thousands of dollars in medical costs before insurance kicks in. Such plans typically have lower premiums, often with tax-preferred savings accounts to which employers frequently contribute. That financial incentive has led employees to sign on. In the past two years, the number of employees enrolled in these plans has doubled to an estimated 5.5 million, according to Kaiser.

But shifting costs onto workers isn't always the best medicine, notes Jon Gabel, senior fellow at the National Opinion Research Center at the University of Chicago. "It cuts health spending both for effective and ineffective care."

Increasingly, large employers understand this. Continuous cost shifting and downgrading benefits not only pinches employees' pockets but depresses their morale.

"A company that controls its costs by shifting those costs . . . will have disgruntled employees," says Brusca.

In 2008, 39 percent of large firms planned not to shift more costs onto workers, according to a Mercer survey.

Assessing the Risks

A $75 incentive was enough to get Ward to complete a detailed survey about her health and send it along to Aetna, which administers Lafarge North America's health plan. Health risk assessments allow insurers to identify brewing or existing health problems, letting clinicians reach out to enrollees and help them manage conditions proactively.

"The health risk assessment is entree into all of the wellness programs," says Philia Swam, Lafarge North America's health benefits director. The company is investing $6.5 million over four years in financial incentives to increase employee participation in these assessments and annual physicals and to cover the cost of dropping prescription drug co-payments from $50 to $12.50 for a 90-day supply of medicines that workers and family members regularly take for diabetes, asthma and hypertension. The Wards collected $150 in gift cards by taking the assessments. In the past two years, the Wards have received an additional $300 for getting their annual physicals, which are free under the company health plan.

More important, when a Lafarge nurse visited the company's Frederick site last summer, Ward got a mini checkup, which revealed that her blood pressure had spiked since her last doctor's visit. Ward ended up on cholesterol medication. "That was a benefit for me," says Ward, who wonders what could have happened, as her next physical was not due for nine months.

Such efforts by her employer "have made both me and my husband more aware about our health," Ward says, adding that the couple is grilling more and eating more salads. "I've been exercising more, started yoga, and I'm drinking more water," she says.

"We try hard to manage the plan in terms of changing people's behavior, and we're really seeing that pay off right now," Swam says. Last year, 163 of 23,000 covered Lafarge employees or dependents had medical claims of $50,000 or more, for a total of $18.8 million. In the first half of 2008, 50 people have had claims of more than $50,000. Next year, the firm will add incentives for those enrolling in nurse-monitored disease management programs.

At Discovery Communications, the draw of free on-site medical care and wellness activities is helping workers and the company's bottom line.

"It has basically replaced my general practitioner," says Colaccino, 41, who has used the center for regular checkups, nutritional counseling, even for emergency care. Before getting ready to travel overseas two years ago, she had abdominal pains and went to have them checked at the health center.

"They told me, 'We think you have appendicitis,' " Colaccino says. Wellness center clinicians got her an immediate appointment with a radiology center covered by her UnitedHealthcare plan. Tests revealed she was indeed suffering from appendicitis. The wellness center called ahead to Suburban Hospital; doctors were waiting for her that evening. Colaccino credits the center for saving her from a more serious condition.

The wellness center costs Discovery $700,000 a year to operate, but Adria Alpert-Romm, senior executive vice president for human resources, says Discovery saves $1 million a year with it.

Legal Protections

Disease management and wellness programs make some employees nervous.

"It raised the flags for me," Ward notes about the risk assessments. Possible breaches of privacy include employers' obtaining personal health information, either on purpose or by accident.

Her suspicions were eased, she says, when Lafarge officials outlined her legal protections. Federal law protects personal health information from being shared without individuals' permission. To keep information at arm's length, employers typically hire outside firms or health plans to oversee health risk assessments and disease management and wellness activities.

And next year, Black & Decker will be adding a big stick to the financial carrots when it comes to health risk assessments.

Even with a $50 incentive, not many workers completed the assessment. "We are going to be mandating health risk assessment," Brusca says. In that way Cigna, which administers company benefits, will "know what to focus on and reach out."

Christopher J. Gearon, a Maryland-based health and financial writer, is a regular contributor to the Health section.

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