Recommendation #4: Provide Positive and Negative Incentives
Positive and negative incentives are effective in improving health and wellness program participation
levels. Hospitals can use incentives to increase participation and to improve outcomes.
The survey results show that employee participation levels in wellness programs can be
improved at most hospitals. Overall, most hospitals currently use more participation incentives
than incentives based on program completion or outcomes. The survey results also show that a
large minority (37%) of hospitals do not currently use incentives, and very few hospitals use
negative incentives. Three out of four hospitals that offer incentives do not offer more than
$300 in yearly incentives.
How Do Hospitals Meet this Goal?
Hospitals can expand the use of incentives in order to improve participation levels.
The literature shows that financial incentives are linked strongly to increased program
participation.
18 For example, Ford Motor Company increased HRA participation from
4% to 85% by offering a $600 deductible differential.
19 Most recently-surveyed benefits
consultants and wellness vendors believe that at least $100 is needed to motivate a
single behavior.
20
Hospitals can experiment with various types of incentives and accurately measure their
effect on participation and outcomes. Under ACA, the maximum reward or penalty
allowed will increase from 20% to 30% of total cost of coverage by 2014, with an option
for the federal government to raise this level to 50%.
21 If hospitals have no previous
experience with offering incentives, they can start with positive incentives and, if
necessary, move to negative incentives to increase participation.
According to a recent survey, across industries, more firms are moving toward
program completion and outcomes-based incentives.
22 As participation levels increase,
hospitals can begin to shift toward more outcomes-based incentives.
18 Katherine Baicker, David Cutler, and Zuri Song, “Workplace Wellness Programs Can Generate Savings,” Health
Affairs, Vol. 29, No. 2: 304-311 (January 2010).
19 Ha T. Tu and Ralph C. Mayrell, “Employer Wellness Initiatives Grow, But Effectiveness Varies Widely,” National
Institute for Health Care Reform Research Brief No. 1, July 2010: 1-13, http://www.nihcr.org/Employer-Wellness-Programs.pdf
20 Ha T. Tu and Ralph C. Mayrell, “Employer Wellness Initiatives Grow, But Effectiveness Varies Widely,” National
Institute for Health Care Reform Research Brief No. 1, July 2010: 1-13, http://www.nihcr.org/Employer-Wellness-Programs.pdf
21 Patient Protection and Affordable Care Act, Section 2705, United States Public Law 111–148, 23 Mar. 2010, 124 Stat.
119, http://www.gpo.gov/fdsys/pkg/PLAW-111publ148/pdf/PLAW- 111publ148.pdf
22 Francesca Lunzer Kritz, “Healthcare perks may be harder to come by,” Los Angeles Times, 19 April 2010,
http://articles.latimes.com/2010/apr/19/health/la-he-your-money-20100419-25
A Call to Action: Creating a Culture of Health
