HealthCheck360 Incentive Strategies to Improve Health and Reduce Health Care Costs. Presented to Mississippi Association of Self Insured, May 2012.

1. Presented By:
Jim Wachtel
National Sales Director
Jim.wachtel@healthcheck360.com
1

2. Agenda
 Introduction
 Define Incentives
 Types of Incentives and Strategies
 HIPAA Compliance
 Case Studies
 Conclusion
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3. Wellness Defined
well·ness
1. the quality or state of being healthy in body and
mind, especially as the result of deliberate effort.
2. an approach to healthcare that emphasizes
preventing illness and prolonging life, as opposed to
emphasizing treating diseases.

4. Incentive Defined
in·cen·tive [in-sen-tiv]
noun
1. something that incites or tends to incite to action or
greater effort, as a reward offered for increased
productivity.
adjective
2. inciting, as to action; stimulating; provocative.

5. Traditional Wellness Has Failed
 Price Waterhouse Coopers Study
 71 % of employers offering wellness program…few said
they are effective at lowering costs
 Participation remains low
 <40% average participation rate in wellness
 <15% of those eligible participate in disease mgmt
 Opt-in health coaching participation in the single digits

7. The Old Solution…
“Well… let’s raise
“Our health deductibles and
care costs increase employee
are up 10% contributions again.”
again!”

8. Wellness and Incentive Reality
 Many degrees of Wellness
 Many degrees of Incentives
 All should lead to a defined Population Health
Management Strategy that Drives Positive
Outcomes

9. Purpose of Incentives
1. Drive Participation
2. Spur Awareness and Motivation
3. Drives Positive Health Outcomes (Positive
Behavior Change)
4. Improve Productivity and Morale
5. Ultimately, reduce and control costs
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10. Well Designed Incentive Program
Incentives
Participation Engagement Health Outcomes
Target: As necessary to Rewards go to those
80% to 100% build momentum, who have less risks OR
participation support change are making progress in
reducing risks
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11. Types of Incentives
1. Participation Based
2. Outcome Based
1. Progress Based Component
3. Combined
1. Case Study
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12. Participation Based - Pros and Cons
 Participation Based
 Everybody wins
 Little impact
 Outcome Based
 Measured Results
 Earn the result
 Accountable
 High Impact

13. Participation Based Wellness - Examples
 Participation Based
 Self reported HRA
questionnaire
 Walking/Pedometer
programs
 Points for activities
(online videos, lunch
and learns, weight
loss challenge, etc.)

14. Participation Based Incentives- Examples
 Gift Cards
 Merchandise
 Time Off
 Premium Differential

15. Outcome Based Wellness

16. Outcome Based Wellness - Examples
 Outcome Based – Must measure health
objectively
 Score model
 0-100 based on biometric results
 Individual Biometric model
 Tiered structure based on specific biometric
indicators

17. Scored Model
 Easy to understand
scoring drives
engagement and
participation
 Scored model translates
risks into compliant
measurement model
 Long term measurement
tool
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18. Easy to Understand Reporting
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19. Tiered Contribution Wellness Structure
Gold Level
• Repeat participants with 85 or greater
• Repeat participants with <71 AND 10+ pt improvement
Silver Level
• Repeat participants with >=71 and <85
• Repeat participants with <71 AND 5+ pt improvement
• ALL new participants
Bronze Level
• Participation only incentive

20. Individual Biometric Model
Wellness Test NIH Goal Employer’s Goal Points
BMI <= 24.9 <= 29.9 1
Blood Pressure <= 120/80 <= 130/85 1
LDL Cholesterol <= 100 <= 130 1
Blood Glucose <= 100 <= 110 1
Nicotine Negative Negative 1
Spouse Nicotine Negative Negative 1
 Goals can be adjusted
 Points can have a dollar value
 More data points for participant to remember
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21. Outcome Based Wellness - Examples
 Incentive Types
 Premium differential
 Lower premium for participating or meeting standard
 HSA Contribution
 Contribution for participating or meeting standard
 Plan design
 Earn enrollment in preferred plan options
 Whatever the Incentive, Program Cost Should
be Neutral with Proper Design

22. Outcome Based Model Pays for Itself
Cost Neutral Implementation
• Year 1: Increase contribution rates by $40 company wide
for singles and $80 for a family, then offer $40/$80
discount for participating or meeting the health outcome
• Year 2: Upon retesting, offer discount for:
– maintaining high level of health
– improving health (5 points)
– Compliance with physician’s care
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23. Incentive Value and Participation
100% • Results for completion of
Health Risk Assessments
80%
Enrollment Percentage
show a direct correlation
60% between incentive value
40% and participation
20% • Incentives reward those
0%
who make healthy
$0 $100 $200 $400 $600 $800 $1000
Incentive (Annual Cash Value)
lifestyle choices
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24. HIPAA Compliance
Wellness Program conditions and rewards MUST comply with
HIPAA Wellness Program Regulations:
1. Limit on Reward
2. Reasonably Designed To Promote Good Health or
Prevent Disease
3. Annual Opportunity to Qualify For Reward
4. Reasonable Alternative Standard
5. Disclosure Required
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25. Significant Shift towards Outcome Based Incentives
Use a default plan option for employees NOT ful lling requirements in 5% 9%
health/disease management activities
Incent only members who complete multiple health engagement activities 29% 24%
Incent only members who complete requirements of health engagement 37% 23%
activities
Incent participation in health engagement activities 53% 23%
Reward/penalize based on health status factors other than 6% 19%
smoker, tobacco-use status
Reward/penalize based on smoker, tobacco-use status 24% 18%
0% 10% 20% 30% 40% 50% 60% 70% 80%
2010 Employer Survey on Purchasing Value 2010 2011*
in Health Care Report, Towers Watson &
National Business Group on Health
Note: *Planned for 2011

26. Motivating Behavior Change
1. Extrinsic Motivators
1. Comes from “Outside”
2. Based on “External Factors”
3. Money, Tangible rewards
2. Intrinsic Motivators
1. Comes from “Within”
2. Intangible, Enjoyable, Meaningful
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27. What Influenced You To Improve Your Health?
Receiving Biometric data 91%
Biometrics and
Want to pay lower insurance
premiums
73% premium incentives
Taking online HRA 63%
are much more
influential than
Spouse was improving health 56% online HRA or
Illness of friend/family 48%
personal events in
influencing decision
Co-worker inspired change 21% to improve health.
0% 20% 40% 60% 80% 100%
Somewhat agree, Agree and Strongly Agree
N = 6,000
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28. Attitudes towards Program
Program made it more likely for me to 92%
improve health There was very
strong agreement
Provided valuable insight into my 92%
health
that the program not
only provided good
Report helped me understand where 89%
to change
insight into
health, but also help
Premium Incentive motivated me to 80% foster the desire to
improve my health
improve health.
Articles I received motivated me to 67% One-third of
improve health
participants found
Alerted me to medical condition I 34% out about a health
wasn't aware of*
issue that they were
0% 20% 40% 60% 80% 100% unaware of before
Somewhat Agree, Agree and Strongly Agree
the program.
* Using Agree/Disagree scale only
N = 6,000
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29. You Don’t Know What You Don’t Know
Claims Information Biometric Screening Findings
• 50 have claims with a diagnosis • 111 with glucose in diabetic range
suggesting diabetes or pre- • 580 with glucose in pre-diabetic
diabetes range
• 78 have claims with a diagnosis • 549 individuals with elevated
suggesting hypertension systolic and diastolic blood
pressure readings
• 98 individuals have claims with a • 815with elevated cholesterol
diagnosis suggesting being at risk • 883 with BMI readings > 30, of
of a heart attack which 396 (44.8%) are also pre-
diabetic
N = 1,750 Mfg Firm
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30. Employee Perception of Health
Self reported Status of Health
88% of participants self-reported a
10% 1% 0%
good or great health status 29%
Great
Good
Average
70% of participants scored a 71 or
Below Average
higher (ideal or low level of
Poor
risk)
59%
Biometric Results
4%
8%
1% of participants self reported a 33%
Ideal (85+)
below average or poor health 18%
Low (71-84)
status
Moderate (61-70)
High (51-60)
12% of participants scored a 60 or Very High (<=50)
below (high or very high risk) 37%
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31. Case Study – Partial Union Environment
Plan Costs/Premiums per Covered
Plan Year
Employee
2007-2008 $8,852
2008-2009 $9,054
2009-2010 $8,365
2010-2011 $8,967
2011-2012 $8,823
• Medical and drug costs have actually decreased on a per employee and per
member basis over the last five years.
• If medical plan costs had increased at rate of 8% per year since 2007-08, ABC
Company premiums would be $7.24 million dollars higher than today. Total
Wellness investment less than $1m in same period.
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32. Comprehensive Programming Flattened Costs
Plan Cost/Premiums Per Covered Employee
15,000
13,006
13,000 12,043
11,151
11,000 10,325
8,852 9,560
8,852 9,054 8,967 8,823
9,000 8,365 8,247
7,000
5,000
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Actual 2007-08 Trended
Plan Cost
Savings Actual $1.0 $3.5 $3.8 $5.7 $8.4
vs. Trended
(millions)
$22.4 Million of Plan Cost Savings Over 5 Years
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33. Repeat Participation Equals Better Health
Typical Profile of New v. Repeat Participant
Avg. Avg. Avg. Avg. Avg. Total Avg. Nicotine
Biometric Profile 2011 Score
BMI Weight Systolic Diastolic Cholesterol Glucose POS
Repeat Participants 76.6 29.0 192.8 120.4 76.3 192.6 97.8 26%
First Time Participants 67.9 29.9 203.2 124.4 78.3 195.7 101.7 22%
 Of the 612 repeat participants between 2010 and 2011, the overall average health score
increased from 72.6 to 76.6. There was an improvement in health score in almost every
risk category (with the exception of those scoring over 96).
 Overall blood pressure for these same participants decreased, as did the overall cholesterol
levels.
 Of the 40 people who were at extremely high risk for blood pressure in 2010, 30 moved to
be at moderate, low, or ideal categories.
 Of the 173 people with high or very high cholesterol risk, nearly 45% moved to
moderate, low, or ideal categories.
 The number of people with very high glucose levels fell 35%.
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34. 5 Part Intervention Model
% of
20% of Members 70% of Members 10% of Members
members
% of costs 5% of costs 45% of costs 50% of costs
Chronic/
STAGE Healthy At-Risk
Catastrophic
1. Healthcheck360 Biometric Screening & HRA
2. Review of Findings Call
3. Physical Activity Program
5. Condition
4. Health Coaching
Management
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35. Using Choice Architecture to Drive Behavior Change
1. Defaults: Obstacles to the Path of Least Resistance
– Defaults are powerful and unavoidable. Within a choice structure, there must be an
associated rule to determine what happens to the decision maker if he/she does nothing.
– In this case, the decision maker that does nothing, forfeits freedom of medical plan choice.
– Forcing Function: To get what you WANT, you must do something else first. (ATM)
2. Potential Gain (Incentives) versus Fear of Loss (Disincentives)
– Greater Influence?
3. Give Feedback: The best way to help humans improve performance.
– Important to provide feedback before things go wrong. (Laptop low battery)
4. Structure Complex Choices
– Structuring choice sometimes means helping people to learn so they can later make better
choices on their own.
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36. Participation Required to Maintain Plan Options
Restructuring the cost of doing nothing
• Employee must participate in Health Risk Assessment (HRA) program to be able to
choose from all medical plan options
• Condition Management candidates must be compliant with “best-practice”
treatment and compliant with medications to be eligible to choose from all medical
plan options
– Adults over the age of 21 and primary on the medical plan
– CM Compliance does not apply to dependents under the age of 21
• If employee does not meet participation requirements for HRA or CM Compliance
then they are only eligible to enroll in Plan 4 - High Deductible Health Plan (HDHP)
with no Health Reimbursement Account (HRA) from the company – (Sin Bin)
• Incentives (lower premiums/credits) tied to engagement and achieving health
outcomes
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37. Multiple Plans and Premiums Based on Outcomes
All Employees
Level 1 – Participation in Participate in HC360 Don’t Participate in
HC360 & ROF Calls Screening HC360 Screening
Score 71+ or improve Score <70 and don’t Level 2 – Overall health
5 points improve 5 points management, improvement
Have a Have a
No chronic No chronic
chronic chronic
Condition Condition
Condition Condition
Non- Non-
Compliant Compliant Level 3 – Care
compliant compliant
with Care with Care compliance
with Care with Care
All Plans Plan 4 – Sin Bin All Plans All Plans All Plans Plan 4 – Sin Bin Plan 4 – Sin Bin
Lowest Premiums Highest Premiums Lowest Premiums Middle Premiums Middle Premiums Highest Premiums Highest Premiums
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38. Physical Activity Program – Combined Incentive
Employees can enroll in one of three physical activity program options in first half of
year. Employee contribution incentive of $150 paid after program completion.
Physical Activity Credit Earned Evaluation Incentive Payout
April 1 – September 30 October Nov 1 – Mar 31
• Walking Challenge • Exchange info • $150 Incentive
• Fitness Challenge • $30 per month
• Health Coaching Calls
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39. Tight Integration With Health Coaching and Medical Management
HRA
participants
Condition Already in Biometrics qualify Condition
Disease for Disease
Management Management Management Management
Team Team
Not eligible
for Disease Management
Health Coaching
Team

40. Repeat Participation = Reduced Claims Expense
Risk Marker Triggers
Every HRA participant
• BMI > 30.00 classified by number of risks
BMI
• BMI < 18.50 they have
• Total > 200 mg/dl • Extreme: 5+ Risks
Cholesterol • HDL < 50 mg/dl • High: 3-4 Risks
• LDL > 130 mg/dl • Moderate: 2 risks
• Trig > 175 mg/ dl • Low: 0-1 risks
Blood • Systolic > 130
Pressure • Diastolic > 85 Number of Outbound
Health Coaching calls driven
• Glucose > 100 by number of risks
Glucose
• 5 risks = 5 calls
• Nicotine = POS • 4 risks = 4 calls
Nicotine
• 3 risks = 3 calls
• 2 risks = 2 calls
• GGT > 65 • 1 risk = 1 call
GGT
• Unlimited call-in coaching
calls
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41. 2011-12 Results – Changing Behavior and Results
12%
Level 1 – Participation in Yes
HC360 & ROF Calls
88% No
Biometric 2010 2011 Avg. Avg. Avg. Avg. Avg. Total Avg.
Profile Score Score BMI Weight Systolic Diastolic Cholesterol Glucose
Level 2 – Overall health
Repeat
management, improvement 72.6 76.6 29.0 192.8 120.4 76.3 192.6 97.8
Participants
First Time
67.9 29.9 203.2 124.4 78.3 195.7 101.7
Participants
100% 85% 87% 76%
50% 40%
Level 3 – Care compliance
0%
Asthma Hypertension Diabetes Nat'l Average
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42. Repeat Participation = Reduced Claims Expense
$5,493.29
3 HRA w/ biometrics
$5,838.68
2 HRA w/ biometrics
$6,202.27
1 HRA w/ biometrics
$8,132.47
Non-participant/ HRA Only
$5,000.00 $5,500.00 $6,000.00 $6,500.00 $7,000.00 $7,500.00 $8,000.00 $8,500.00
Large Financial Services Firm
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43. Medical Trend Claims Analysis
 2007: Client’s trends
$11,500.00
increase exponentially
$11,000.00
$10,500.00
Wellness
implemented in
 2008: Wellness
2008.
Implemented
$10,000.00
$9,500.00
 2010 actual claims
demonstrated:
$9,000.00
$8,500.00
– Trend reduced to low single
digits for two straight years
$8,000.00
– $959,051 saving from
$7,500.00
expected trend
$7,000.00
2006 2007 2008 2009 2010
– $1,470,386 savings from
industry average trend
Cost per employee on plan Average for Industry
Expected Claims
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44. Correlation to Health Score in Population
Score Correlation
$12,000.00
Average claims per HRA
participant: $10,000.00
$8,000.00
 Year 1 – $7,057.57
$6,000.00
 Year 2 – $6,023.68 $4,000.00
$2,000.00
$-
85+ 71-84 61-70 51-60 50 or less
Linear (2009) Linear (2010)
N = 1589
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45. Biometrics and Medical Expense
Glucose Level Correlation to Avg. BMI Level Correlation to Avg.
Claims (medical claims only) Claims (medical claims only)
$4,500 $7,000
$4,253
$6,000
$4,000
Incurred Medical Claims
$5,000
$3,500
$4,000
$2,973
$3,000 $3,000
$2,000
$2,500 $2,316
$1,000
$2,000
$0
Ideal < 100 Moderate 100-125 High 126+ < 18 18-25 25-29 30-34 35-39 40+
Avg. Claims Linear (Avg. Claims) BMI
Actual Results from HC360° Client Pool
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46. Impact of Nicotine Use on Claims
Nicotine Use Correlation to Avg. Claims
(medical claims only)
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
18-29 30-39 40-49 50-59 60+
NEG POS
N = 18,000
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47. Impact of Health on WC Costs
Total
Total Score Counts Avg WC
<50 150 $875.76
50-59 206 $1,007.89
60-75 561 $771.36
76-85 342 $703.24
86+ 330 $366.25
Total 1,589 $713.09
N = 1,589
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48. Doing Nothing is a Losing Strategy
Migration study of 43,312 Individuals Over 3 Years
Year 0 Year 3
Key Findings
Low Risk (0-2 Low Risk (0-2  Risk profile of a population
Health Risks) Health Risks) gets worse over time
27,951 26,591
 Number of high risk
individuals increased
11.4%
Medium Risk (3- Medium Risk (3-
4 Health Risks) 4 Health Risks)  Number of medium risk
10,670 11,495 individuals increased 7.7%
 Number of low risk
individuals decreased 4.9%
High Risk (5+  Results are a function of
High Risk (5+
Health Risks) Health Risks) American lifestyle habits
4,691 5,226 and the realities of age
Source: University of Michigan Health Management Research Center
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49. Excess Risk Equals Excess Cost
Cost Area Low Risk Medium High Risk
(N=671) Risk (N=396)
(N=504)
Short-Term $160 $288 $444 High Risk
Disability Employees
Worker’s $304 $325 $662 cost three
Compensation times as
Absence $327 $455 $703 much as low
risk
Medical & $1,544 $1,983 $4,929 employees!
Pharmacy
Total $2,335 $3,052 $6,738
Source: University of Michigan Health Management Research Center
Inflation adjusted to 2009: http://www.halfhill.com/inflation.html
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50. Best Practices
Engage
• Meaningful Incentives
• Effective Communication
Measure Identify
• Measure and Evaluate Results • Biometric Screening - Full
Blood Panel
• Executive/ Aggregate Reports
• Health Risk Assessment
Support Educate
• Coaching for all Participants • Individual Reporting
• Program Integration • Monthly Newsletter
• MyHealthCheck360.com • Targeted Communications
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51. Key Components of Outcome Based Wellness
1. Objective, comprehensive biometrics to detect risk
2. Clear-cut scoring and measurement model
3. Portable and Carrier Independent
4. Meaningful Incentives (Substantial, Understandable)
5. Full spectrum support for positive behavior change
(Health Coaching, Engagement Tools, Educational
Resources)
6. Measured Results and Analysis
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52. Presented By:
Jim Wachtel
National Sales Director
Jim.wachtel@healthcheck360.com
(563) 289-7360