Reform Update: Incentives, penalties may not be enough to encourage a healthy workforce

Financial incentives may not be enough to get employees to adopt healthy behaviors and stick with them long enough to prevent costly, common diseases that contribute heavily to health spending, according to a trio of researchers in the Journal of the American Medical Association.

In fact, more potent financial penalties for workers who do not lose excess weight or quit smoking could leave those employees no better off healthwise and worse off financially, they wrote.

That makes new rules for workplace wellness incentives under the Patient Protection and Affordable Care Act a potentially pricey gamble for workers, who could face penalties such as greater insurance premium contributions for weight gain and smoking. This approach is also risky for policymakers, who have looked to health promotion as one way to address healthcare's strain on the economy and public budgets. Improved public health could be a significant source of savings—though not immediately—as the nation seeks to slow health spending, a recent analysis of Medicare data found (see below).

“Even though some employers might be satisfied with simply having higher-risk employees pay more for insurance in accordance with their risk, from the standpoint of enhancing the health of the U.S. population this would be a lost opportunity,” wrote Kristin Madison, Harald Schmidt and Dr. Kevin Volpp in JAMA.

The health reform law allows employers to increase the financial incentives for workers to actively address their health risk factors such as obesity or smoking. The law increased to 30% from 20% the amount of employees' total health benefit costs that can be levied as penalties or awarded as bonuses for workers who lose weight or achieve other healthy benchmarks. For smokers, the amount is even higher—50%.

Hospitals and medical groups are taking growing interest in which healthy behavior incentives work, and why, because under value-based payment models they stand to profit or lose money based on the total cost of patients' medical care during a year. It's thought that more wellness and prevention efforts may help prevent costly emergency department and hospital visits.

But research on the subject has little to say on sustained use of financial incentives to modify ongoing behavior.

“It really is an emerging field,” said Schmidt, a lecturer in the department of medical ethics and health policy at the University of Pennsylvania and one of the JAMA article's three authors. More is known about the effective use of incentives to motivate people to do a task once, such as get an immunization.

And changing behavior that contributes to health risk factors can be difficult, due to addiction or social or environmental challenges that leave people with little time to exercise or limited access to healthy foods, Schmidt said. HHS did give employers some flexibility in the recently published final rules for workplace wellness penalties and bonuses. “They recognize that behavior change can be very hard,” Schmidt said.

Preventing avoidable hospital and emergency room visits may not be the U.S. health cost panacea so many have hoped for. Harvard University researchers, in an analysis of Medicare spending, found 70% of costs were attributable to 10% of patients. But hospital and emergency room visits that could have been avoided made up just 10% of those expenses, wrote Dr. Karen Joynt, Dr. Atul Gawande, E. John Orav and Dr. Ashish Jha in the Journal of the American Medical Association.

The two most costly acute-care conditions—orthopedic conditions and heart attacks—were included among a list of unavoidable conditions that drove spending among these high-cost patients. But that could change, albeit with time. “Indeed, while a proportion of these very expensive inpatient episodes may be potentially preventable (such as acute myocardial infarction or degenerative joint disease leading to orthopedic procedures), their prevention would likely require a long time horizon and substantial investments in population wellness,” they wrote.

New payment models encouraged by the Affordable Care Act and some commercial insurers have prompted some hospital operators to acquire or expand into insurance markets. And health plans figured into two major health system deals recently in the news. Tenet Healthcare Corp. would gain Vanguard Health Systems' insurance assets in a $1.8 billion deal announced this week, Modern Healthcare's Beth Kutcher reported. Meanwhile, Baylor Healthcare System president and CEO Joel Allison said the system found Scott & White's insurance arm one reason to pursue their potential merger.

Follow Melanie Evans on Twitter: @MHmevans