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Outcomes-based wellness incentives

April 1, 2012

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According to a report from the Washington-based National Institute for Health Care Reform, a new trend in incentives – and one expected to grow in the next few years – is outcomes-based incentives, in which employees are rewarded based on achieving a certain health factor.

Sharif Amin, senior director of compensation benefits for CNH America LLC – a Racine, WI-based manufacturer of agriculture and construction equipment – said his company’s incentives-based wellness program has been in place since 2008. Employees are rewarded yearly with $100 for participating in the program, which includes three steps: a confidential online health assessment, a free onsite health screening that measures key health metrics, and a conversation with a health advisor about the results of the test and screening. The program is paired with communication and education campaigns intended to empower employees to improve their health, Amin said.

Alan Balch, vice president of the Preventive Health Partnership, a collective effort bringing together the American Cancer Society, American Diabetes Association and the American Heart Association, said there are some serious concerns regarding outcomes-based incentives since such efforts are likely to involve substantial penalties as well as rewards. He said he believes participation-based incentives should remain the norm until at least more guidance is available surrounding the effectiveness of outcomes-based efforts. A practical reason, he said, is that participation-based incentives do not carry the same legal liability for an employer since they are not governed by Health Insurance Portability and Accountability Act restrictions. Under HIPPA, incentives given for meeting health outcomes must not discriminate against employees with health conditions that would “make it unreasonably difficult to meet the goal” and must be provided an alternative.

These rules only protect workers who are unable to meet health outcomes based on a medical condition or disability. Balch said he also believes some outcomes-based standards could be unreachable for workers from certain socioeconomic groups who are more likely to have the health issues being targeted by the penalties. Unfortunately, many of those same individuals also are more likely to lack the resources such as access to healthy foods and access to physical activities needed to meet a health status standard, in addition to being least able to afford the penalties assessed for failure to meet the standard.

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