For wellness programs, more employers using rewards and penalties

Here’s a trend to watch: More employers are using both financial incentives (the carrot) and penalties (the stick) in wellness programs. A number of publications have covered the issue of employers using penalties, perhaps because the penalties are a relatively new development.

For many years, employers have used incentive payments and other inducements to encourage workers to participate in wellness programs. But a rising number of employers are using financial penalties to encourage participation.

In July, Pennsylvania State University told its employees and their spouses that they would face a $100 monthly surcharge unless they completed a biometric screening and an online wellness profile and certified that they have had or will have a physical exam. Penn State added that it would not have access to the health screening results.

Dena Bunis, managing editor at CQ HealthBeat, covered this story and reports (via the Commonwealth Fund) that as part of the biometric testing, employees and spouses have to get blood pressure and fasting blood tests and height and weight measurements. In emails, faculty and staff have raised questions about why the university decided to encourage participation with a penalty rather than a financial incentive, Bunis wrote.

Erinn Connor at Everyday Health also covered the Penn State story, quoting Roy Buchinsky, M.D., director of wellness for University Hospitals in Cleveland, saying, “Right now more organizations are rewarding rather than punishing, but with time they may start using the ‘stick method’ for people who aren’t achieving goals.”

Penn State employees are protesting the new penalties and yet, as The Wall Street Journal pointed out, the protests are an “unusually public backlash against an increasingly common employer practice.”

Earlier this year, CVS Caremark Corp. introduced a similar program, saying employees who get a health screening and complete an online wellness review each year by May 1 would avoid paying an additional $600 in the current plan year. Just as Penn State did, CVS said it would not have access to the health screening results.

One of the best articles on the CVS program was in The Washington Post. In this article, Jena McGregor pointed out that employers are using both incentives and penalties and that 50 percent of employers in one survey said they would strongly consider switching to penalties in the next three to five years.

One report on this trend is the 18th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care. Released in March, this report said, “More recently companies have been expanding biometric outcomes to include achievement of specific body mass index levels and target cholesterol levels. Today, 16% of companies align their rewards/penalties to specific biometric targets (other than tobacco use), and another 31% are considering this strategy for 2014.”

The report also showed a rising number of employers are using financial rewards for participating in wellness programs. In 2011, 54 percent of responding employers said they would use financial rewards, while 81 percent are planning to do so next year. The number of employers using penalties such as increased premiums or deductibles for individuals not completing certain health requirements also is rising from 19 percent of responding employers in 2011 to 36 percent that plan to do so next year. And, more employers are requiring employees to complete health risk appraisals or biometric screenings to be eligible for financial incentives (35 percent in 2011 and 75 percent will do so next year), the survey said.

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