Return on Investment with Performance-Based Health Management

1. Return on Investment with Performance-Based Health Management

2. Objectives • Explain why traditional wellness has failed • Identify the 6 best practices of a successful health • Identify the 6 best practices of a successful health management program • How to design an effective incentive strategy • Demonstrate real Return-On-Investment

3. Why 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 • <50% of those who are eligible actually participate • Participation in disease management remains low…less than 15% eligible actually participate • Opt-in health coaching participation in the single digits

4. The Reality • Despite the popularity and prevalence of employee wellness programs, we are not getting healthier.

5. Obesity Trends * Among U.S. Adults BRFSS (*BMI 30, or about 30 lbs. overweight for 5’4” person) 1999 1990 2009 No Data <10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%

6. Diabetes Trends Diagnosed Diabetes among Adults aged ≥ 20 years 2004 2007 Percent 2009

7. Life is Getting Easier

8. Doing Nothing is a Losing Strategy • Migration study of 43,312 Individuals Over 3 Years Year 0 Year 3 • Key Findings • Risk profile of a population gets worse over time • Number of High Risk individuals increased 11.4% • Number of Medium Risk individuals increased 7.7% • Number of Low Risk individuals decreased 4.9% • Results are a function of American lifestyle habits and the realities of age Low Risk (0-2 Health Risks) 27,951 Low Risk (0-2 Health Risks) 26,591 Medium Risk (3-4 Health Risks) 10,670 Medium Risk (3-4 Health Risks) 11,495 High Risk (5+ Health Risks) 4,691 High Risk (5+ Health Risks) 5,226 High Risk (5+ Health Risks) 5,226

9. You Don‘t Know What You Don’t Know Claims information HRA Findings • 111 with glucose in diabetic range • 580 with glucose in pre-diabetic range • 50 have claims with a diagnosis suggesting diabetes or pre-diabetes Diabetes Hypertension • 78 have claims with a diagnosis suggesting hypertension • 549 individuals with elevated systolic and diastolic blood pressure readings • 815with elevated cholesterol • 883 with BMI readings > 30, of which 396 (44.8%) are also pre-diabetic • 98 individuals have claims with a diagnosis suggesting being at risk of a heart attack Heart Attack Risk

10. 6 Best Practices

11. Best Practice #1 Objective and Outcome-Based • Objective measurement is key to success • Set baseline • Track trends • Real information, not a guess • Importance of on-site venipuncture biometric screening • Objective data points to measure over time • Participants don’t “know their numbers” • Uncover hidden risks

12. Employee Perception of Health • - 88% of participants self-reported a good or great health status • - 70% of participants scored a 71 or higher (ideal or low level of risk) • 1% of participants self-reported a below average or poor health status • 12% of participants scored a 60 or below (high or very high risk)

13. Best Practice #2 Clear-Cut Scoring • Easy to understand scoring drives engagement and participation • Scored model translates risks into compliant measurement model • Long term measurement tool

14. Personal Report • Overall Wellness • Dear “Participant”, • By completing this assessment, “Participant”, you have taken the first step toward a healthier lifestyle! This guide will give you valuable information to help you achieve a healthier way of life. Better health increased productivity, in both your professional and personal life. • This guide is not meant to take the place of a physician visit nor can it diagnose illness or medical problems. It is designed to give you information relating to your health risks and overall wellness. This information is provided to help you develop a plan of action to make healthy lifestyle changes. This program uses scientifically validated research to help you identify risks or behaviors that may cause or lead to chronic illness. Our program concentrates on risk factors that can be modified and that you should be able to effectively control, maintain and/or improve. • To get the most out of this guide, you may want to read it more than once. • Your Health Score is 58 • Your score qualifies as High Risk. The ranges of scores are as follows: • An overall score of 71 or above indicates your lifestyle is on the right track. A score below 71 means that you might be at risk for developing certain diseases or health conditions.

15. Best Practice #3 Carrie Independent • Don’t share proactive risk data with risk bearer • Keep program consistent over time • You OWN the data • More flexibility in program design

16. Best Practice #4 Meaningful Incentives Direct Correlation Between Value & Participation • Results for completion of Health Assessments show a direct correlation between incentive value and participation • Incentives reward those who make healthy lifestyle choices

17. Best Practice #5 Support Behavior Change Personal Intervention Group Programming

18. Best Practice #6 Measure Results Participation • Track participation by employee/dependent, location, and job codes • Goal: 70% participation (minimum) Program Engagement • Track activity in health coaching, online utilization of sites, goal tracking, classes and challenges to determine outcomes and impact Health Risk Analysis and Migration • Break out specific risk factors and risk category to track annually Claims Analysis and Impact

19. Designing an Effective Incentive Program

20. Effective Incentive Design • Various studies show that 85% of people are wired to not change unless there are consequences • Myth: People won’t change • Reality: • Seat belt use 30 years ago compared to today • Drunk driving 30 years ago compared to today • Worksite/Job safety 30 years ago compared to today

21. HIPAA Compliance • Wellness Program conditions and rewards MUST comply with HIPAA Wellness Program Regulations: • Limit on Reward • Reasonably Designed To Promote Good Health or Prevent Disease • Annual Opportunity to Qualify For Reward • Reasonable Alternative Standard • Disclosure Required

22. Example of Implementation • Year 1 - Actions • Increase contribution rates by $25 per month for non-participants • Offer employees $25 per month discount for participating in assessment program • Year 2 - Performance • Offer $10 per month discount for repeat participants (participation incentive) • Offer $15 per month discount for repeat participants who maintain a high level of health, improve by at least 5 points on the scored algorithm, or provide a letter from MD that states compliance with care (outcome incentive) • Year 3 and beyond • Increase premium rates as necessary • Include spouses

23. Cost Difference by Participation

24. Claims Experience Related to Health Score

25. Repeat Participation Demonstrates Reduction in Claims Expense • *Non-Participants are costing $2,000 more than Year 1 Participants and more than $3,000 more than those continuously participating in the biometric screenings

26. Medical Claims Correlation to Glucose

27. Workers Comp Claims by Participation

28. Workers Comp Claims Correlation to BMI

29. Excess Risk Equals Excess Cost High Risk employees cost $4,403 more per year! Source: University of Michigan Health Management Research Center Inflation adjusted to 2009: http://www.halfhill.com/inflation.html

30. Return on Investment

31. Questions? Sarah Kuretzky Health Solutions Coordinator sarah.kuretzky@kapnick.com 888.263.4656 x1157