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Workplace Wellness Shows No Savings

During the last decade, workplace wellness programs have become commonplace in corporate America. The majority of US employers with 50 or more employees now offer the programs. A 2010 meta-analysis that was favorable to workplace wellness programs, published in Health Affairs, provided support for their uptake. This meta-analysis, plus a well-publicized “success” story from Safeway, coalesced into the so-called Safeway Amendment in the Affordable Care Act (ACA). That provision allows employers to tie a substantial and increasing share of employee insurance premiums to health status/behaviors and subsidizes implementation of such programs by smaller employers. The assumption was that improved employee health would reduce healthcare costs for employers.

Subsequently, however, Safeway’s story has been discredited. And the lead author of the 2010 meta-analysis, Harvard School of Public Health Professor Katherine Baicker, has cautioned on several occasions that more research is needed to draw any definitive conclusions. Now, more than four years into the ACA, we conclude that these programs increase, rather than decrease, employer spending on healthcare, with no net health benefit. The programs also cause overutilization of screening and check-ups in generally healthy working-age adult populations, put undue stress on employees and provide incentives for unhealthy forms of weight-loss.

Through a review of the research literature and primary sources, we have found that wellness programs produce a return-on-investment (ROI) of less than 1-to-1 savings to cost. This blog post will consider the results of two compelling study designs — population-based wellness-sensitive medical event analysis and randomized controlled trials (RCTs). Then it will look at the popular, although weaker, participant vs. non-participant study design. (It is beyond the scope of this posting to question vendors’ non-peer-reviewed claims of savings that do not rely on any recognized study design, though those claims are commonplace.)

Population Based Wellness-Sensitive Medical Event Analysis

A wellness-sensitive medical event analysis tallies the entire range of primary inpatient diagnoses that would likely be affected by a wellness program implemented across an employee population. The idea is that a successful wellness program would reduce the number of wellness-sensitive medical events in a population as compared with previous years. By observing the entire population and not just voluntary, presumably motivated, participants or a “high-risk” cohort (meaning the previous period’s high utilizers), both self-selection bias and regression to the mean are avoided.

The field’s only outcomes validation program requires this specific analysis. One peer-reviewed study using this type of analysis — of the wellness program at BJC HealthCare in St. Louis — examined a population of hospital employees whose overall health status was poor enough that, without a wellness program, they would have averaged more than twice the Healthcare Cost and Utilization Project (HCUP) national inpatient sample (NIS) mean for wellness-sensitive medical events. Yet even this group’s cost savings generated by a dramatic reduction in wellness-sensitive medical events from an abnormally high baseline rate were offset by “similar increases in non-inpatient costs.”

Randomized Controlled Trials and Meta-Analyses

Authors of a 2014 American Journal of Health Promotion (AJHP) meta-analysis stated: “We found a negative ROI in randomized controlled trials.” This was the first AJHP-published study to state that wellness in general loses money when measured validly. This 2014 meta-analysis, by Baxter et al., was also the first meta-analysis attempt to replicate the findings of the aforementioned meta-analysis published in February 2010 in Health Affairs, which had found a $3.27-to-1 savings from wellness programs.

Another wellness expert, Dr. Soeren Mattke, who has co-written multiple RAND reports on wellness that are generally unfavorable, such as a study of PepsiCo’s wellness program published in Health Affairs, dismissed the 2010 paper because of its reliance on outdated studies. Baicker et. al.’s report was also challenged by Lerner and colleagues, whose review of the economic literature on wellness concluded that there is too little credible data to draw any conclusions.

Other Study Designs

More often than not wellness studies simply compare participants to “matched” non-participants or compare a subset of participants (typically high-risk individuals) to themselves over time. These studies usually show savings; however, in the most carefully analyzed case, the savings from wellness activities were exclusively attributable to disease management activities for a small and very ill subset rather than from health promotion for the broader population, which reduced medical spending by only $1 for every $3 spent on the program.

Whether participant vs. non-participant savings are because of the wellness programs themselves or because of fundamentally different and unmatchable attitudes is therefore the key question. For instance, smokers self-selecting into a smoking cessation program may be more predisposed to quit than smokers who decline such a program. Common sense says it is not possible to “match” motivated volunteers with non-motivated non-volunteers, because of the unobservable variable of willingness to engage, even if both groups’ claims history and demographics look the same on paper.

A leading wellness vendor CEO, Henry Albrecht of Limeade, concedes this, saying: “Looking at how participants improve versus non-participants…ignores self-selection bias. Self-improvers are likely to be drawn to self-improvement programs, and self-improvers are more likely to improve.” Further, passive non-participants can be tracked all the way through the study because they cannot “drop out” from not participating, but dropouts from the participant group — whose results would presumably be unfavorable — are not counted and are considered lost to follow-up. So the study design is undermined by two major limitations, both of which would tend to overstate savings.

As an example of overstated savings, consider one study conducted by Health Fitness Corp. (HFC) about the impact of the wellness program it ran for Eastman Chemical’s more than 8,000 eligible employees. In 2011, that program won a C. Everett Koop Award, an annual honor that aims to promote health programs “with demonstrated effectiveness in influencing personal health habits and the cost-effective use of health care services” (and for which both HFC and Eastman Chemical have been listed as sponsors). The study developed for Eastman’s application for the Koop awards tested the participants-vs-non-participants equivalency hypothesis.

From that application, Figure 1 below shows that, despite the fact that no wellness program was offered until 2006, after separation of the population into participants and non-participants in 2004, would-be participants spent 8% less on medical care in 2005 than would-be non-participants, even before the program started in 2006. In subsequent presentations about the program, HFC included the 8% 2005 savings as part of 24% cumulative savings attributed to the program through 2008, even though the program did not yet exist.

Figure 1

Lewis-Figure 1

Source: http://www.thehealthproject.com/documents/2011/EastmanEval.pdf

The other common study design that shows a positive impact for wellness identifies a high-risk cohort, asks for volunteers from that cohort to participate and then tracks their results while ignoring dropouts. The only control is the cohort’s own previous high-risk scores. In studying health promotion program among employees of a Western U.S. school district, Brigham Young University researcher Ray Merrill concluded in 2014: “The worksite wellness program effectively lowered risk measures among those [participants] identified as high-risk at baseline.”

However, using participants as their own control is not a well-accepted study design. Along with the participation bias, it ignores the possibility that some people decline in risk on their own, perhaps because (independent of any workplace program) they at least temporarily lose weight, quit smoking or ameliorate other risk factors absent the intervention. Research by Dr. Dee Edington, previously at the University of Michigan, documents a substantial “natural flow of risk” absent a program.

Key Mathematical and Clinical Factors

Data compiled by the Healthcare Cost and Utilization Project (HCUP) shows that only 8% of hospitalizations are primary-coded for the wellness-sensitive medical event diagnoses used in the BJC study. To determine whether it is possible to save money, an employer would have to tally its spending on wellness-sensitive events just like HCUP and BJC did. That represents the theoretical savings when multiplied by cost per admissions. The analysis would compare that figure to the incentive cost (now averaging $594) and the cost of the wellness program, screenings, doctor visits, follow-ups recommended by the doctor, benefits consultant fees and program management time. For example, if spending per covered person were $6,000 and hospitalizations were half of a company’s cost ($3,000), potential savings per person from eliminating 8% of hospitalizations would be $240, not enough to cover a typical incentive payment even if every relevant hospitalization were eliminated.

There is no clinical evidence to support the conclusion that three pillars of workplace wellness — annual workplace screenings or annual checkups for all employees (and sometimes spouses) and incentives for weight loss — are cost-effective. The U.S. Preventive Services Task Force (USPSTF) recommends that only blood pressure be screened annually on everyone. For other biometric values, the benefits of annual screening (as all wellness programs require) may not exceed the harms of potential false positives or of over-diagnosis and overtreatment, and only a subset of high-risk people should be screened, as with glucose. Likewise, most literature finds that annual checkups confer no net health benefit for the asymptomatic non-diagnosed population. Note that in both cases, harms are compared with benefits, without considering the economics. Even if harms roughly equal benefits, adding screening costs to the equation creates a negative return.

Much of wellness is now about providing incentivizes for weight loss. In addition to the lack of evidence that weight loss saves money (Lewis, A, Khanna V, Montrose S., “It’s time to disband corporate weight loss programs,” Am J Manag Care, In press, February 2015), financial incentives tied to weight loss between two weigh-ins may encourage overeating before the first weigh-in and crash-dieting before the second, both of which are unhealthy. One large health plan offers a weight-loss program that is potentially unhealthier still, encouraging employees to use the specific weight-loss drugs that Dartmouth’s Steven Woloshin and Lisa Schwartz have argued in the Journal of the American Medical Association never should have been approved because of the drugs’ potential harms.

In sum, with tens of millions of employees subjected to these unpopular and expensive programs, it is time to reconfigure workplace wellness. Because today’s conventional programs fail to pay for themselves and confer no proven net health benefit (and may on balance hurt health through over-diagnosis and promotion of unhealthy eating patterns), conventional wellness programs may fail the Americans with Disabilities Act’s “business necessity” standard if the financial forfeiture for non-participants is deemed coercive, as is alleged in employee lawsuits against three companies, including Honeywell.

Especially in light of these lawsuits, a viable course of action — which is also the economically preferable solution for most companies and won’t harm employee health — is simply to pause, demand that vendors and consultants answer open questions about their programs and await more guidance from the administration. A standard that “wellness shall do no harm,” by being in compliance with the USPSTF (as well as the preponderance of the literature where the USPSTF is silent), would be a good starting point.

Five Workers’ Compensation Myths

Travelers Insurance, which recently passed Liberty Mutual to be the largest workers' compensation insurance carrier in the U.S., published a list of five common workers' comp myths, from a small employer's perspective:

  1. “I only have a few employees, so I don’t need comp insurance.”
  2. “My employees won’t sue me.”
  3. “Comp insurance is too expensive, so I’ll just pay out of my pocket if an injury occurs.”
  4. “I provide a safe workplace, so my employees won’t get injured.”
  5. “Medical costs in the workers' comp system are just too high.”

While these myths are prevalent, I often see an additional five beliefs from my perspective as a workers' comp defense attorney that are as mythical as a mermaid:

1. Every injured worker needs an attorney.

While it is true that many injured workers do need to hire an attorney, there is certainly no need for most to obtain counsel. Most states have systems to resolve the claim directly with the injured worker without the time and expense associated with the claimant's hiring an attorney and filing a formal claim.

The complaint against injured workers representing themselves is what gave rise to that old joke: “A person who acts as his own attorney has a fool for a client.” I agree that most claimants don’t know as much comp law as does the average claimant’s attorney. That shouldn’t come as a shock to anyone.  But that doesn’t mean every injured worker needs an attorney. 

Most comp claims are compensable, so the only issue is the nature and extent of impairment. 

Is the final settlement for an unrepresented claimant always the same as for those who retained counsel? Obviously not, but that doesn’t mean the claimant gets less money. Remember that, in most jurisdictions, the claimant’s attorneys take between 20% and 33% of the final settlement as a fee. Add in a few thousand dollars for an IME report and discovery costs, and you can see how the fees and expenses go up faster than the winnings on Wheel of Fortune. If the claimant resolves the permanent partial disability portion of the claim on his own, he can still take home roughly the same amount as if he had retained counsel and paid fees and expenses out of a larger final settlement.

There is also the time value of money to consider.Claims where the injured worker is represented often take years to resolve, not weeks or months. Which is better to receive: $10,000 today or $12,000 three years from now? Most people would chose the former, and injured workers who don't hire an attorney are virtually guaranteed to get their money faster than if they retain counsel.

2. Injured workers are entitled to compensation for any painful condition that arises during working hours.

While this may be somewhat true in a few states (New York, California, Illinois), in most states this is simply false.

There are various philosophical theories that underlie the workers compensation statutes of a particular state, such as the “positional risk doctrine,” the “mutual benefit doctrine” and the “scope and course of employment” doctrine. Nevertheless, in most states there must be some connection between the injury and the employment for a claim to be compensable. Merely feeling pain at work is not enough.

It doesn’t surprise me that many claimants believe otherwise. What is surprising is how many small business owners believe this same myth.

I often talk to business owners who tell me stories that generally follow this path: “My employee says his arm hurts, and he wants me to take care of it. That’s all I know.” One doesn’t have to be that sunglasses-wearing guy from CSI: Miami to ask a few questions of the claimant, such as, “How did you hurt your arm?”; “Did the pain start while you were doing something in particular?”; or “When exactly did the pain start?”

3. The jurisdiction for a comp claim is where the carrier wants it to be.

This is a myth that is pervasive among adjusters and safety directors.

If employee works in State A but is in State B for a work-related purpose and is injured in State B, which state has jurisdiction over the claim? In most instances, the employee can choose to file his claim in either State A or State B, or even both! Yet, I have a conversation almost weekly with claims professionals who tell me: “Brad, I want this claim to be in State A, so please have the claim dismissed from State B.”

If a state says it has jurisdiction over a claim, the basis for asking for a dismissal cannot be: “Judge, my adjuster simply doesn’t want the claim to be here.” I would obviously have a more reasoned position upon which to base my request, but the result is often the same: The judge denies the request.

4.  Employers have workers' comp insurance so they can let the carrier worry about their claims.

This is basically the same as believing that if I stick my head in the sand bad things can’t happen to me. Employers should manage and monitor comp claims as if the money being paid to the claimant is their own money. Wanna know why? BECAUSE IT IS THEIR MONEY!

Comp insurance works just like automobile insurance — more claims always equates to increased premiums. Sure, an employer may have one or two claims that won’t affect premiums. However, with the cavalier attitude toward claims that underlies this myth, it’s only a matter of time before the premiums get higher than a surfer locked in a medical marijuana facility. 

5.  Most workers comp claims are fraudulent.

For claims professionals who handle comp claims on a daily basis, it often seems as if most comp claims are fraudulent. However, statistics simply don’t support this conclusion. A recent study from the University of Michigan concluded that only 2% of claims are fraudulent. I would think that the actual number is a bit higher than 2%, but certainly a far cry from 100%.

The danger in believing that most claims are fraudulent is that employers and carriers can face steep penalties for failing to provide legally required comp benefits in the absence of a valid reason to deny the claim. Additionally, employers and carriers that develop a reputation for denying claims without a valid reason often face higher awards from judges and arbitrators.

I like the approach used during the missile reduction talks with the Soviet Union during the 1980s: “Trust, but verify.” If we treat most claims as compensable while always being on the lookout for evidence of fraud, it creates opportunities to prevail at trial rather than opportunities to reinforce an employer stereotype as one that denies all claims.