1. Employer Trends and Best Practices in Health Benefits and Wellness Initiatives Cheryl Larson Vice PresidentMichigan Purchasers Health Alliance Midwest Business Group on HealthSeptember 18, 2008

2. Why Are Employers Changing Benefit Strategies? Their costs continue to increase Their population is not getting healthier The marketplace is not meeting their expectations Employees don’t recognize the real cost of health services Few patients take responsibility for own health Serious and systemic quality problems exist Employers have the unique opportunity to impact workers’ health since they see employees over 1000 hours a year, while the average person sees their doctor only several hours each year!

3. How Have Employers Contributed to the Problem? Been reluctant to direct employees to better performing plans, giving them the same contributions for any plan they selected Continued the ongoing perception of “entitlement,” instead of encouraging and communicating to them that “we’re in this together” Carved out services to obtain customized programs, better information and services – resulting in fragmentation and confusion, the loss of integrated data and poor coordination of vendor services Treated wellness as a fringe benefit, not an integral part of human capital management Expected employees would participate in health management programs just because they were offered Treated health benefits as an expense, not an investment

4. The New Employer Foundation Is built on the maintenance of health and the integration of data Includes key support beams: ◦ Integrating benefit designs and financial strategies that drive behavior change and increase compliance through the use of strategic incentives and disincentives ◦ Implementing proven, best-practice programs for prevention, wellness, lifestyle and disease management ◦ Including key consumerism/engagement strategies, along with targeted communications

5. MBGH Annual Member Survey - 2007 95% of member employers believe all Americans should have access to health care 59% support a “play or pay” requirement that would require employers who do not offer health benefits to pay into a government fund that would provide such coverage Of those that support “pay or play” 24% believe the amount of “pay” should be a fixed amount based on the size of the employer 49% support requiring all employers to offer benefits to full time employees, while 44% do not support an employer mandate 64% support the government providing tax credits to encourage employers to offer health benefits to part-time workers Only 26% support requiring employers to provide coverage to part-time workers

6. Annual Survey 2007 64% support the government providing a premium subsidy to low income individuals to pay for coverage from their employer or the marketplace 66% do not believe there is sufficient quality information on doctors to enable patients to make knowledgeable choices 100% believe physicians and hospitals should make prices and the quality and safety of their services publicly available 94% believe patients need to know their out-of-pocket costs to make informed decisions on obtaining and selecting health care services 76% think all physician offices should be required to use interoperable electronic medical records, with 49% supporting the govt. providing funds

7. Annual Survey 2007 79% think physicians should be paid more for reaching certain quality targets 77% think evidence-based preventive care services should be covered in benefit plans with no cost to patients 79% think a physician should be paid the same for a procedure regardless of whether the patient is uninsured, underinsured or fully insured 92% believe every person should have access to portable medical records 46% would rather pay patients for selecting higher performing doctors and hospitals than paying more to physicians and hospitals 89% believe there should be caps on non-economic damages in med-malpractice suits

8. MBGH Key Employer Trends Survey - 2008

9. Employer Trends 2008 Key Clinical Areas of Interest Arthritis Asthma Birth Cancer CVD Depres- Diabetes Fatigue Fitness GI Hyper- Infer- Muscu- Obesity Smoking Control sion tension tility loskeletal #1#2#3

10. Employer Trends 2008 Importance of key employer challenges Creating Using Relying Collect- Helping Offering Staying Working Working Sharing a culture VBD & on vendors ing and workers convenient current with other with others info on of health incentives to change using become care that’s on policy employers to improve best practices to improve behaviors data for better personal- changes to improve the health with other health /improve activities consu- ized health of the purchasers health mers system community Creating Using Relying Collect- Helping Offering Staying Working Working Sharing a culture VBD & on vendors ing and workers convenient current with other with others info on of health incentives to change using become care that’s on policy employers to improve best practices to improve behaviors data for better personal- changes to improve the health with other health /improve activities consu- ized health of the purchasers health mers system community #1#3#2

11. Employer Trends 2008 Importance of key employer challenges 82% Creating a culture of health 77% Helping workers become better consumers 72% Using value-based benefit designs and incentives to improve population health 69% Staying current on policy changes 64% Relying on vendors to change behaviors to improve population health 52% Collecting and using data for activities 46% Sharing information on best practices with other purchasers 43% Working with other employers to improve the health care system 36% Offering convenient care that’s personalized 34% Working with others to improve the health of the community

12. Where MBGH should be involved in changing the health care system Bringing Promote Make Promote Promote Develop Ensure Evaluate Measure Use Improve Produce Promote Help Explore together use of personal use of medical P4P accuracy health impact phrmcst hospital reports use of empl value of employer electronic health electronic home of hospital plan of health to impr safety on prev. e-visits create medical claims data medical records prescribing and MD perf on prod outcomes diseases to MDs and use tourism records available report cards onsite/ retail clinics #1#2#3

13. Employer Trends 2008 Where MBGH should be involved in changing the health care system 71%Improve hospital safety 66%Ensure accuracy of hospital and MD report cards 60%Measuring impact of health on productivity 56%Promote use of electronic medical records 52%Evaluate health plan performance 51%Produce reports on prevalence of diseases 49%Develop P4P 48%Make personal health records available 47%Use pharmacists to improve outcomes 44%Promote use of electronic prescribing 33%Bring together employers’ claims data 21%Promote use of e-visits to doctors 20%Help employers create and use onsite and retail clinics 18%Promote medical home 3%Explore the value of medical tourism

14. Keys to Creating a “Culture of Health” Secure senior management endorsement and participation through: ◦ Educating management ◦ Tying the health of the worksite to management’s performance bonuses ◦ Identifying and using local health champions ◦ Ensuring a supportive environment ◦ Making sure health policies support the culture Work with all vendors - health plan, PBM, EAP, DM, TPA, to gather data and coordinate efforts Engage local providers – hospitals, medical groups, disease- specific organizations – for resources, screenings, programs, etc.

15. Keys to Creating a “Culture of Health” Include in program offerings: ◦ Health coaching for lifestyle and acute/chronic conditions ◦ Self-directed program options ◦ Access to on-line resources, nurseline and EAP – as appropriate Evaluate and address stress and anxiety levels of workplace Offer incentives for participation Offer healthy foods, at lower cost than others Offer health fairs and screenings Include spouses and dependents over 18 in offerings Communication – ongoing, comprehensive, transparent

16. Culture & Your Employees EntitlementTrustEngagementEmpowermentAccountability Success !

17. Copyright MBGH 200717 MBGH Readiness to Adopt Value- Based Benefits Survey - 2007-08 Characteristics of Self-Identified “Leading Edge” Firms The organization is highly supportive of improving employee health Senior leadership is highly influential in designing health benefits They see a link between an employee's health and his/her productivity In addition to company data, they look to experiences of other “leading edge” firms and academic research to determine their benefit directions Health benefits are seen a necessary cost of doing business and an investment in human capital, with a measurable outcome

18. Copyright MBGH 200718 Readiness Survey Employers Views on the Value of Health There is a link between an employee’s health and their productivity ◦ 95% of employers agree Health benefits are a necessary cost of doing business ◦ 84% of employers agree Health benefits are an investment in human capital with a measurable outcome ◦ 85% of employers agree Our company is highly supportive of improving employee health ◦ 75% of employers agree We should provide cash or other incentives to motivate employees’ use of preventive services ◦ 62% of employers who view themselves as “Leading Edge” agree, versus 40% of other employers

19. Copyright MBGH 200719 Readiness Survey Key Findings on Cost Sharing Drug co-pays are not considered barriers to optimal care by most employers ◦ However, employers viewing themselves as “leading edge” currently have or plan to adopt strategies to waive co-pays to encourage participation in DM programs, use of generics and to improve adherence in chronic disease treatments Employers see cost-sharing as reducing physician visits Employees need to know their out-of-pocket costs to make informed decisions to obtain health services Mandating use of generics is a major employer strategy

20. Copyright MBGH 200720 Readiness Survey Key Findings on Incentives Employers prefer incentives rather than disincentives An increasing number of employers will provide strong incentives for completing health risk assessments Employers would rather pay employees to select better physicians and hospitals, than to pay providers for higher quality care Employers want to incentivize employees to select quality providers – but they don’t believe there is sufficient information on doctors and hospitals to enable people to make informed decisions Employer believe workers would be willing change providers if they understood how quality varies and impacts outcomes “Leading Edge” employers are twice as likely as others to provide incentives for encouraging preventive care, use of quality providers and designated Centers of Excellence

21. Keys to Effective Value-Based Benefit Design Getting individuals engaged in producing good health outcomes Using economic incentives to influence consumer behavior and aligning them with outcomes the employer wants to achieve Aligning consumer incentives with economic incentives for providers and other suppliers of health and health care services Tiering medical services/coverage by evidence of effectiveness - and providers by evidence of performance Using co-pay levels to steer individuals toward effective services and high performing providers Linking timely information, coaching and support with economic incentives to create educated, skilled consumers to make knowledgeable choices and self manage their health and utilization

22. A Few Words about Incentives Rewards or Penalties… Incentives or Disincentives… Carrots or Sticks … “ We use both - we just paint the stick “orange”

23. Copyright MBGH 200723 Keys to Using Incentives Incentives must be viewed as meaningful to individuals – based on culture, company loyalty, reduction of expenses, increase in benefits Offer a variety to motivate employee engagement in wellness programs and encourage lifestyle-related behavior changes Both financial and non-financial incentives seek to reward and penalize a variety of personal activities and/or achievements Employers expect their financial investment will be offset by economic and other benefits of wellness Employers want to emphasize a strong connection between healthy living and their ultimate objective of reducing the cost of health care Align the reward with the cost of the underlying health benefit – e.g. premium differentials or contributions to HSA/HRA

24. Types of Incentives being offered by Employers Today Rewarding activity by reimbursing costs Providing discounts on health coverage – i.e. premium differentials (increase or decrease) Indicating eligibility for coverage or benefit contingent is on completing an activity – e.g. program participation, completing HRA Making contribution to FSA or HRA Making contribution to HSA through cafeteria plan Offering cash, prizes, points or paid time off Providing recognition on individual or team reaching goal

25. Copyright MBGH 200725 MBGH Smoking Cessation Program Survey - 2008 Survey sent to MBGH members and employers of sister coalitions 51 respondents total Mid to large, self-insured employers – primarily in the Midwest

26. Smoking Cessation Survey

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41. MBGH Obesity Management Benefits Survey - 2006 Employer respondents offering obesity/weight management programs ◦ 61% - Weight watchers ◦ 52% - Onsite fitness facility ◦ 47% - Bariatric surgery ◦ 28% - Weight loss medications ◦ 23% - Health club membership/medical weight management programs 41 Copyright MBGH 2007

42. Obesity Management Survey Employer respondents offering obesity/weight management programs 19% of employers track employee BMI Indicate the main entities that drive education/compliance with these programs is: ◦ Employee self motivation ◦ Physician direction ◦ Peers ◦ Incentives ◦ Spouse 42 Copyright MBGH 2007

43. Finally….A Word on Measurement ROI is More Than the Dollars Saved Periodically review programs to determine efficiency and effectiveness Best program measurements looks at: ◦ Process Measures - How well the program is working ◦ Outcome Measures - Whether or not it is achieving expected results Don’t forget Self-Report – Getting feedback from employees is still valuable data! Other ways to measure programs: Aggregate clinical and cost changes in the population Program enrollment & participant engagement Program utilization & web site visits Number of participants reaching goals Reduction in overall trend Reduction in emergency room use and inpatient stays Percent completing health risk assessment Absenteeism rate Compliance and adherence with medications Satisfaction with programs

44. Resources U.S. Dept of Health & Human Services - www.hhs.gov www.nih.govwww.hhs.govwww.nih.gov Partnership for Prevention - www.prevent.org/www.prevent.org/ Leading by Example: CEOs on the Business Case for Worksite Health Promotion - www.prevent.org/content/view/31/60www.prevent.org/content/view/31/60 Centers for Disease Control and Health Promotion - www.cdc.gov/node.do/id/0900f3ec80059b1a – View CDC’s “Healthiest Nation” initiative www.cdc.gov/node.do/id/0900f3ec80059b1a American Cancer Society Workplace Solutions- www.acsworkplacesolutions.com www.acsworkplacesolutions.com AHRQ “Questions Are the Answer” – website to help consumers get involved in their health care - www.ahrq.gov/questionsaretheanswer/www.ahrq.gov/questionsaretheanswer/ AHRQ’s Consumer Engagement - www.ahrq.gov/consumer/www.ahrq.gov/consumer/ Article on Engaging Employees in Wellness http://hshackleford.wordpress.com/2008/02/01/byline-overcoming- challenges-in-engaging-employees-in-health-wellness/ http://hshackleford.wordpress.com/2008/02/01/byline-overcoming- challenges-in-engaging-employees-in-health-wellness/

45. Resources Welcoa – The Wellness Councils of America - http://welcoa.orghttp://welcoa.org Wellsteps - ROI Calculator and wellness toolkit - http://wellsteps.comhttp://wellsteps.com HERO – Health Enhancement Research Organization -Wellness Audit/Scorecard - http://www.the-hero.org/scorecard.htmhttp://www.the-hero.org/scorecard.htm Midwest Business Group Health – General Health, Benefits Info/Health Calculators http://www.mbgh.orghttp://www.mbgh.org Integrated Benefits Institute – Information on Health and Productivity - http://ibiweb.org/ http://ibiweb.org/ Publications and resources on nutrition, physical activity, and weight control listed by subject - http://win.niddk.nih.gov/publications/index.htmhttp://win.niddk.nih.gov/publications/index.htm

46. Thank You! Cheryl Larson, Vice President Midwest Business Group on Health Phone: 312-372-9090 x3 Email: clarson@mbgh.org www.mbgh.org