Interactive Health Worksite Wellness Program Lowers Medical Costs and Increases Productivity

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1 Interactive Health Worksite Wellness Program Lowers Medical Costs and Increases Productivity Interactive Health offers a number of programs including biometric health evaluations, intervention and health coaching to improve employee health and help companies that wish to control the escalating costs of their healthcare plans. Interactive Health engaged Zoe Consulting, Inc. to conduct an independent analysis of the effectiveness of the Interactive Health program for controlling medical claims. This white paper includes the results of two separate independent studies. Study I: Large Population Study The study analyzed four years (from 2008 to 2011) of healthcare spending data for the client population of a Third Party Administrator that offered the Interactive Health program to its clients. Zoe conducted a control study using four years of medical spend data on over 15,500 employee and spouse members. The results showed a 6% average annual cost trend reduction with 85% of the population maintaining or improving their health risk level over the study period. Study 2: Three Company Study The study analyzed healthcare spending data for the client population of three disparate companies involved in distribution, finance and manufacturing. The study focused on employees and spouses (Interactive Health provides intervention and coaching services to adults only). The total combined study population for the three companies was over 19,900 in All three companies had experienced doubledigit annual health plan cost increase trends which Interactive Health was able to significantly reduce. The analysis found that the Interactive Health program had significant positive impact in controlling the medical expense of the three companies, through effective identification and coaching of members of the health plan needing intervention. Data also showed that participants in the Interactive Health Program had on average fewer days away from work under Workers Compensation and short-term disability. About Interactive Health To learn more about how Interactive Health can create a culture of health and help control health plan costs for your organization, please contact: Tricia Johnson Director of Marketing t.johnson@interactivehs.com About Zoe Consulting, Inc. To learn more about the study results, or to find out how Zoe can help analyze health data for your organization, please contact: Robin Foust President help@mycatalyst.com

2 Large Population Study Conducted By Zoe Consulting, Inc. Interactive Health Worksite Wellness Program Lowers Medical Costs and Increases Productivity Executive Summary Many U.S. companies are aggressively searching for ways to control the escalating costs of their healthcare plans. Company health plan costs have been regularly outstripping inflation, increasing over the past 10 years at an average annual rate of more than 13% 1. As an expense item, health plans have grown to over 25% of total labor expense 2. A combination of increased use of medical services and 3-4% annual cost inflation for such services is behind this expense growth trend. Interactive Health offers a number of programs including biometric health evaluations, intervention and employee coaching to improve employee health and reduce healthcare plan expenses. Interactive Health engaged Zoe Consulting, Inc. (Zoe) to conduct an independent analysis of the effectiveness of the Interactive Health program for controlling medical claims. Zoe conducted a control study using four years of medical spend data on a gross population of 22,500 lives from 56 employer groups. Participation in the Interactive Health program was limited to employees and spouses for a study population of 15,500. The study population was matched into a Study Group of Interactive Health participants and a Control Group of non-user groups. The Study Group showed a 6% average annual cost trend reduction compared to the Control Group, with 85% of the population maintaining or improving their health risk level over the study period. Over the four-year study period the reduction in cost trend amounted to as much as 15% of health plan expense for a typical company. The Problem A small percentage (as little as 20% in some cases) of an insured population can generate a disproportionate share (as much as 80% in some cases) of the medical claims cost for a health plan. This high cost population segment typically has certain medical conditions, referred to as core conditions, such as Asthma, Coronary Heart Disease, Chronic Obstructive Lung Disease, Diabetes and Hypertension. The effects of such core conditions can often be controlled and mitigated through early detection and compliance with prescribed therapies. The Interactive Health service focuses on identifying the core condition population and through health coaching, improves their health behavior. Zoe was tasked with measuring the effectiveness of the Interactive Health program in controlling healthcare plan costs. Interactive Health Interactive Health engages employees in the management of their health through early detection and identification of risk factors. The Company has a 20-year track record of helping U.S. companies become healthier and better manage healthcare costs. 1 The Kaiser Family Foundation and Health Research and Educational Trust 2011 annual national survey of non-federal private and public employers with three or more workers. 2 Source: Consumer Price Index -- US Health Care Inflation Rate Historical Data; Bureau of Labor Statistics. 2

3 The Interactive Health program focuses primarily on managing the sector of the population that spends (or is at risk of spending) disproportionately. Through goal setting, outreach and coaching, Interactive Health helps these members become more responsible for their own health. Interactive Health collects and merges data from information that includes a health risk questionnaire and blood analysis to create a composite view of the individual s health. Following the evaluation, Interactive Health gives individuals a health risk score that identifies those who are likely to benefit from Interactive Health intervention and coaching. The health risk score and clinical health evaluation also benefits the generally healthy population, in addition to the group with serious core conditions, by providing them with recommendations for maintaining or improving their health. Interactive Health also works with physicians to create personalized pathways to better health, based on the member s health status and by establishing achievable health goals (for example, lowering the individual s weight by adopting a healthier diet). Interactive Health Index Interactive Health has developed the Interactive Health Index (IHI) to provide a measure that holds participants accountable for their health management and meeting achievable health goals. The IHI is a score based on lifestyle-related measurable health risk factors that are indicators of an individual s cardiovascular health. When an individual completes a health evaluation, they receive an IHI score and goals to remain healthy (or get healthy). The IHI helps the individual understand their future risk for coronary heart disease and diabetes. The IHI is composed of five modifiable lifestyle risk factors that include glucose, LDL cholesterol, triglycerides, blood pressure, and smoking. IHI Health Scores Defined by Medical Conditions and Various Lifestyle Factors Risk Level IHI Score Status High Risk > 50 Serious chronic conditions relating to diabetes and cardiovascular disease Elevated Risk 26 to 50 Individuals with increased risk for diabetes and cardiovascular disease Moderate Risk 1 to 25 Individuals with obesity, metabolic syndrome, pre-hypertension, pre-diabetes, tobacco users Low Risk -20 to 0 Clinical risk factors are within normal range or slightly abnormal 3

4 The Zoe Study Methodology The Zoe Study focused on the general results of Interactive Health programs, and specifically to the core condition member population that uses more medical services and submits more claims. The study analyzed four years (from 2008 to 2011) of healthcare spending data for the client population of a Third Party Administrator 2 (TPA) that offers the Interactive Health program to its clients. Study and Control Group Propensity Score Matching To measure the effectiveness of the Interactive Health program, two similar client population groups were compared: a study group which used the Interactive Health program and a control group which did not. Propensity Score Matching (PSM) as described in appendix A, was used to enhance comparability between the study group and control group and isolate the claims cost effect of the Interactive Health program. Risk Levels The study also tracked the migration of the study group population between IHI risk levels, using a first to last methodology (the risk level when the member first joined the Interactive Health program was compared with their risk level assessment at the end of study). Pharmacy Spend The study excluded prescription drugs because employers in the study used many different pharmacy benefit managers (PBMs) and consistent data for pharmacy prescriptions was not available. However, in a separate study of individual companies, the inclusion of pharmacy spends did not materially change the cost trends. Prescription spends may increase as a result of Interactive Health outreach and coaching, but the cost benefit of the controlled conditions and the reduction in related expenses later (for example, relatively inexpensive hypertension medication avoids much more serious and expensive potential heart attacks) are likely to outweigh the preventive treatment costs. Medical Costs All medical costs, including the cost of the Interactive Health program and catastrophic cases, were included in the study methodology. The study considered total allowed medical spend, which included the employee and employer portion of medical spend to eliminate plan design bias due to share shifting between company and employees. As medical costs have increased and employers have focused on maintaining their bottom line, some have shifted a larger percentage of the increases to their employees. The impact of Interactive Health services is to control medical spend for both employers and members. PEPY Compared to PMPM The common Per Employee Per Year (PEPY) metric for comparing the cost of various health plans is not an effective metric for this study because PEPY is dependent on spousal and dependent ratios which may vary between plan populations. The study used the Per Member Per Month (PMPM) metric to accurately measure costs and trends for the employees and their spouses (adults served by Interactive Health). For the TPA population, the PEPY of approximately $9,500 translated to a PMPM for employee and spouse of $450-$550 depending on spousal and dependent ratios (see Appendix B for conversion analysis from PEPY to PMPM for study and control groups). 2 A third Party Administrator (TPA) is an organization that handles the administrative services of an employee benefit plan for selfinsured employers. Third Party Administrators process insurance claims, review utilization, and provide other administrative services related to the benefit plan. The self-insured employer is responsible for funding all claims costs, so medical claim savings as a result of the Interactive Health program are realized by the employer and the employees. 4

5 Peer to Peer Review The study methodology also included a peer-review process incorporating biostatisticians and other subject matter experts. Study Results Analysis of the study data showed that the Interactive Health program had the following positive impact on the population: Medical Spend: Core Conditions Group The Interactive Health program had a measurable impact on the medical spend of members with core conditions (a group consisting of 22% of the population but accounting for 44% of the spend 3 ). The cost trend for core condition employee and spouse medical PMPM significantly improved for the Study Group as compared to the Control Group with a $257 PMPM reduction in differential and a 13.5% reduction in average annual growth (see Figure 1: Employee and Spouse Core Condition PMPM Comparison). Medical Spend: Non-Core Conditions Group The Interactive Health program also had a positive impact on the population beyond the core group because of the awareness derived from receiving the Interactive Health evaluation reports that recommended positive lifestyle changes. The cost trend for non-core condition employee and spouse medical PMPM improved for the Study Group as compared to the Control Group with a $21 PMPM reduction in differential and a 1.7% reduction in average annual growth, as well as a 10.2% PMPM reduction in the final year. (see Figure 2: Employee and Spouse Non-Core Condition PMPM Comparison) Overall Cost Trend The resulting cost trend for the total employee and spouse population medical PMPM significantly improved for the Study Group as compared to the Control Group with an $81 PMPM reduction in differential and a 6.1% reduction in average annual growth. There was a reduction of 7.7% in PMPM in the final year a particularly impressive outcome given the underlying 3-4% annual inflation in medical services (see Figure 3: Total Employee and Spouse Population PMPM Comparison). Health Risk Score 85% of members on the Interactive Health program maintained or reduced their IHI health risk score (see Figure 4: Aggregate Change in Risk). 3 Four-year average based on employees and spouses only 5

6 Figure 1: Employee and Spouse Core Condition PMPM Comparison This chart compares the employee and spouse healthcare spends for individuals with core conditions. This group represents a minority of the healthcare population, but they account for the majority of the healthcare expenses. The Control Group continued to trend upward over the term of the analysis. The Study Group showed a lower growth trend with a downward trend in the final year. $2,000 Employee & Spouse Only Core Conditions Control Study $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Avg. annual PMPM increase: 25.4% Avg. annual PMPM increase: 11.9% Control Med PMPM $ $ $1, $1, Annual Percentage Change 27.9% 19.8% 15.0% Study Med PMPM $ $ $ $ Annual Percentage Change 20.4% 12.8% -0.1% PMPM Differential $ $8.24 $69.98 $ Comparison Notes 1. The control group PMPM started at $ in 2008 and ended at $1, in 2011, an average annual increase of 25.4%. 2. The study group PMPM started at $697.47, $34.22 more than the control group, in By 2011 the study group PMPM is $945.68, $ less than the control group, and trended downward (an improvement of $257 PMPM). 3. The cost trend for the study group showed an average annual increase of 11.9%, a 13.5% improvement over the control group. 6

7 Figure 2: Employee and Spouse Non-Core Condition PMPM Comparison This chart compares the employee and spouse healthcare spends for individuals without core conditions. This group represented the majority of the healthcare population, but they accounted for a minority of the healthcare expenses. The Study Group showed a lower growth trend than the Control Group with a downward trend in the final year. $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Employee and Spouse Only Non Core Condition Control Study Avg. annual PMPM increase: 4.5% Avg. annual PMPM increase: 2.8% Control Med PMPM $ $ $ $ Annual Percentage Change 5.8% 8.5% -1.2% Study Med PMPM $ $ $ $ Annual Percentage Change 18.7% 1.6% -10.2% PMPM Differential $47.55 $12.59 $37.67 $68.97 Comparison Notes The control group PMPM started at $ in 2008 and ended at $ in 2011, an average annual increase of 4.5%. The study group PMPM started at $292.54, $47.55 less than the control group, in By 2011 the study group PMPM was $316.96, $68.97 less than the control group, and trended downward (an improvement of $21 PMPM). The cost trend for the study group showed an average annual increase of 2.8%, a 1.7% improvement over the control group. 7

8 Figure 3: Total Employee and Spouse Population PMPM Comparison This chart compares the employee and spouse healthcare spends for the entire member population. The Control Group continued to trend upward over the term of the analysis. The Study Group showed a lower growth trend with a downward trend in the final year showing the positive effect of the Interactive Health program over the total population. $600 Employee & Spouse Total Control Study $550 $500 $450 $400 Avg. annual PMPM increase: 12.0% Avg. annual PMPM increase: 5.9% $350 $300 $250 $ Control Med PMPM $ $ $ $ Annual Percentage Change 15% 13.9% 3.8% Study Medical PMPM $ $ $ $ Annual Percentage Change 19.7% 6.4% -7.7% PMPM Differential $26.73 $12.19 $48.80 $ Comparison Notes 1. The control group PMPM started at $ in 2008 and ended at $ in 2011, an average annual increase of 12.0%. 2. The study group PMPM started at $387.71, $26.73 less than the control group, in By 2011 the study group PMPM was $455.79, $ less than the control group, and trended downward an $81 PMPM improvement. 3. The cost trend for the study group showed an average annual increase of 5.9%, a 6.1% improvement over the control group ,500 individuals studied filtered from the gross population of 22,500 lives. As indicated the 15,500 includes employees and spouses only and not dependents. 8

9 Figure 4: Aggregate Change in Risk This chart compares the first and last health evaluations for each employee and spouse in the Study Group. The data indicates that Interactive Health programs positively impacted the Study Group with 85% of the members maintaining or reducing their health risk. Aggregate Change in Risk Risk Escalated % Risk Maintained % 85.0% reduced or maintained risk Risk Reduced % Risk Level Risk Persons % First Risk High Elevated Moderate Low IHI Score > 50 High % 5.1% 2.1% 1.5% 1.3% IHI Score = 26 to 50 Elevated % 1.8% 4.1% 4.1% 3.3% IHI Score = 1 to 25 Moderate 1, % 1.0% 3.4% 7.4% 8.0% IHI Score = -20 to 0 Low 3, %.7% 1.9% 6.2% 48.2% 5, % 11.5% 19.2% 60.7% Yellow = Risk Maintained % Last Risk Red = Risk Escalated Green = Risk Reduced Blue = shading represents change over the time period studied from first to last risk Comparison Notes There are four risk levels from high risk (worse) to low risk (better). In the 10.0% High Risk Group, 5.1% remained the same and 4.9% improved. In the 13.2% Elevated Risk Group 4.1% remained the same, 1.8% got worse, and 7.4% improved. In the 19.8% Moderate Risk Group 7.4% remained the same, 4.4% got worse, and 8.0% improved. In the 57.0% Low Risk Group, 48.2% stayed the same, and the remaining 8.8% got worse. In the aggregate, the Low Risk Group grew from 57.0% to 60.7%, and the High Risk Group declined from 10.0% to 8.6%. Results indicate that 85% reduced or maintained risk. 9

10 Study Conclusion The Interactive Health program had a significant positive impact on controlling the medical spend of core condition members as well as the total population. In this study, the Study Group average annual spend growth trend improved by 6.1% (13.5% for core condition members) over the Control Group, with a 7.7% downward trend in the final year of the study. In terms of PMPM, the improvement was reflected in an $81 PMPM ($257 for core condition members) reduction over the four-year study period. With a typical spousal ratio of 1.5, this would translate to a $1,458 PEPY (per employee per year) reduction over four years, or as much as 15% of a typical company PEPY of $9,500. Based on IHI health risk score levels, members under the Interactive Health coaching program also exhibited a predominant (85%) tendency to maintain or improve their health risk. 10

11 Appendix A Propensity Score Matching (PSM) The purpose of the control study was to evaluate the impact of healthcare cost and risk for a population that used Interactive Health services compared with a similar population that did not receive the Interactive Health services. The study used the data from the client population of a TPA that manages approximately 275 company groups and 127,000 individual members. Initially, all employer groups for the TPA were evaluated for inclusion as candidates for the study based on consistent medical eligibility during the course of the study period. Only employer groups that were covered for 75% or more of the four-year study period ( ) were included into one of two categories: 1. Employer groups that received Interactive Health services (the study population) 2. Employer groups that did not receive Interactive Health services (the control population) To be included in the study population, employer groups also had to have an employee participation rate greater than 50% for three years out of the four-year study. The study and control groups were further aligned using PSM based on covariates for age, gender, and utilization of medical services, thereby eliminating employer groups that did not have a comparable profile in the corresponding group. With PSM the key variables that drive medical services utilization are consistent between the two groups. Although the size of the groups may vary, the results of the study retain their integrity because the variables are independent of the size of the groups. After subjecting the TPA population to these screens, the study was conducted with 56 groups and approximately 15,500 members consisting of 23 groups and approximately 5,000 employees and spouses in the Control Group and 33 groups and approximately 10,500 in the Study Group. Using PSM and the comparison of medical costs on a Per Member, Per Month (PMPM) basis, the relative size of the two groups does not impact the results of the study. 11

12 Appendix B Study Group PEPY to PMPM Bridge PEPY to PMPM Bridge Methodology The conversion from PEPY to PMPM involves dividing the PEPY by the Dependent Spend Ratio (All Insured/Employee and Spouse) to exclude spending by other dependents, then dividing by the Spousal Ratio (Employee and Spouse/Employees) to convert to per member, then dividing by 12 months. Study Group 2011 PEPY to PMPM conversion example: Total medical spend PEPY was $9,345, divided by Dependent Spend Ratio of 1.18 equals $7,888 PEPY for employee and spouse only, divided by Spousal Ratio of 1.4 equals $5,469 PMPY (per member per year), divided by 12 months equals $456 PMPM. Study PEPY All Insured $7,868 $9,233 $9,962 $9,345 Trend 17.3% 7.9% -6.2% PEPY Employee & Spouse $6,768 $8,046 $8,555 $7,888 Trend 18.9% 6.3% -7.8% Weighted Avg Count Employee 4,566 4,571 4,470 4,466 Spouse 2,076 2,030 1,980 1,975 Other Dependent 3,110 3,127 3,038 3,034 Employee & Spouse 6,642 6,601 6,450 6,440 All Insured 9,753 9,728 9,488 9,474 Member Count Ratios All Insured (members)/employees Spousal Ratio: (Employee & Spouse) /Ees All Insured (members)/(employee & Spouse) Medical Spend All Medical Claims $35,927,004 $42,198,710 $44,530,281 $41,730,635 Employee & Spouse $30,903,684 $36,773,889 $38,239,515 $35,224,168 Dependent Spend Ratio: (All Insured/Employee & Spouse) Medical PMPM PMPM All Insured $307 $361 $391 $367 PMPM Employee/Spouse $388 $464 $494 $456 Trend 19.7% 6.4% -7.7% 12

13 Control Group PEPY to PMPM Bridge Study PEPY All Insured $7,868 $9,233 $10,014 $10,155 Trend 9.6% 16.3% 1.4% PEPY Employee & Spouse $6,728 $7,595 $8,636 $8,996 Trend 12.9% 13.7% 4.2% Weighted Avg Count Employee 3,033 2, ,757 Spouse 1, Other Dependent 1,648 1,536 1,439 1,423 Employee & Spouse 4,103 3,907 3,812 3,667 All Insured 5,751 5,442 5,251 5,090 Member Count Ratios All Insured (members)/employees Spousal Ratio: (Employee & Spouse) /Ees All Insured (members)/(employee & Spouse) Medical Spend All Medical Claims $23,818,872 $25,313,346 $28,790,809 $27,997,038 Employee & Spouse $20,406,943 $22,334,322 $24,829,345 $24,801,535 Dependent Spend Ratio: (All Insured/Employee & Spouse) Medical PMPM PMPM All Insured $345 $388 $457 $458 PMPM Employee/Spouse $414 $476 $543 $564 Trend 15.0% 13.9% 3.8% 13

14 Three Company Study Conducted By Zoe Consulting, Inc. Interactive Health Worksite Wellness Program Lowers Medical Costs and Increases Productivity Executive Summary Many U.S. companies are aggressively searching for ways to control the escalating costs of their healthcare plans. Company health plan costs have been regularly outstripping inflation, increasing over the past 10 years at an average annual rate of more than 13% 1. As an expense item, health plans have grown to over 25% of total labor expense 2. A combination of increased use of medical services and 3-4% annual cost inflation for such services is behind this expense growth trend. Interactive Health offers a number of programs including biometric health evaluations, intervention and employee coaching to improve employee health and reduce healthcare plan expenses. Interactive Health engaged Zoe Consulting, Inc. (Zoe) to conduct an independent analysis of the effectiveness of the Interactive Health programs for three diverse Interactive Health clients in distribution, finance and manufacturing. The key objectives of the study were to analyze the following: Medical expense trends for the three Interactive Health clients versus forecast to determine the effectiveness of the Interactive Health program for controlling health plan expenses. The effectiveness of Interactive Health coaching in maintaining or improving the health risk level of participants. The prevalence of core conditions (as defined on next page) within each company as compared to national norms to demonstrate the effectiveness of the Interactive Health program for identifying the core condition population a segment that disproportionately spends more on medical expenses as compared to the larger population. The effect of the Interactive Health program on worker s compensation and short-term disability return-to-work statistics. The study found that the Interactive Health program had significant positive impact in controlling the medical expense of the three companies, through effective identification and coaching of members of the health plan needing intervention. Data also showed that participants in the Interactive Health Program had on average fewer days away from work under Workers Compensation (WC) and Short-Term Disability (STD). 1 The Kaiser Family Foundation and Health Research and Educational Trust 2011 annual national survey of non-federal private and public employers with three or more workers. 2 Consumer Price Index U.S. Health Care Inflation Rate Historical Data; Bureau of Labor and Statistics. 14

15 The Problem A small percentage (as little as 20% in some cases) of an insured population can generate a disproportionate share (as much as 80% in some cases) of the medical claims cost for a health plan. This high cost population segment typically has certain medical conditions, referred to as core conditions, such as Asthma, Coronary Heart Disease, Chronic Obstructive Lung Disease, Diabetes and Hypertension. The effects of such core conditions can often be controlled and mitigated through early detection and compliance with prescribed therapies. The Interactive Health service focuses on identifying the core condition population and through health coaching, improves their health behavior. Zoe was tasked with measuring the effectiveness of the Interactive Health program for controlling healthcare plan costs. Interactive Health Interactive Health engages employees in the management of their health through early detection and identification of risk factors. The Company has a 20-year track record of helping U.S. companies become healthier and better manage healthcare costs. The Interactive Health program focuses primarily on managing the sector of the health plan population that spends (or is at risk of spending) disproportionately. Through goal setting, outreach and coaching, Interactive Health helps these members become more responsible for their own health. Interactive Health collects and merges data from information that includes a health risk questionnaire and blood analysis to create a composite view of the individual s health. Following the evaluation, Interactive Health gives individuals a health risk score that identifies those who are likely to benefit from intervention and coaching. The health risk score and clinical health evaluation also benefit the generally healthy population, in addition to the group with serious core conditions, by providing them with recommendations for maintaining or improving their health. Interactive Health also works with physicians to create personalized pathways to better health, based on the member s health status and by establishing achievable health goals (for example, lowering the individual s weight by adopting a healthier diet). Interactive Health Index Interactive Health has developed the Interactive Health Index (IHI) to provide a measure that holds participants accountable for their health management and meeting achievable health goals. The IHI is a score based on lifestyle-related measurable health risk factors that are indicators of an individual s cardiovascular health. When an individual completes a health evaluation, they receive an IHI score and goals to remain healthy (or get healthy). The IHI helps the individual understand their future risk for coronary heart disease and diabetes. The IHI is composed of five modifiable lifestyle risk factors that include glucose, LDL cholesterol, triglycerides, blood pressure, and smoking. 15

16 IHI Health Scores Defined by Medical Conditions and Various Lifestyle Factors Risk Level IHI Score Status High Risk > 50 Serious chronic conditions relating to diabetes and cardiovascular disease Elevated Risk 26 to 50 Individuals with increased risk for diabetes and cardiovascular disease Moderate Risk 1 to 25 Individuals with obesity, metabolic syndrome, pre-hypertension, pre-diabetes, or tobacco users Low Risk - 20 to 0 Clinical risk factors are within normal range or slightly abnormal The Zoe Study Methodology The Zoe study analyzed healthcare spending data for the client population of three disparate companies involved in distribution, finance and manufacturing. The study focused on employees and spouses (Interactive Health provides intervention and coaching services to adults only). However, one employer offered the program to employees only resulting in a combined study population of 30,600 individuals through the life of the study, or over 19,900 members in All three companies had experienced double-digit annual health plan cost increase trends. Distribution Company Profile The Distribution Company had been an Interactive Health client since They were a growing company with a total health plan Per Employee Per Year (PEPY) cost of approximately $8,000. The company had ratios of 2.4 to 2.6 members per employee, and 0.6 to 0.7 spouses per employee. Financial Company Profile The Financial Services Company had been an Interactive Health client since The company had a total health plan PEPY cost of approximately $9,500. The company has a ratio of 2.0 members per employee and offers the Interactive Health program to employees only (not spouses). Manufacturing Company Profile The Manufacturing Company had been an Interactive Health client since The health plan was growing with a total health plan PEPY cost of between $9,000 and $10,000. The company had ratios of 2.5 members per employee and 0.5 spouses per employee. 16

17 PEPY Compared to PMPM The common Per Employee Per Year (PEPY) metric for comparing the cost of various health plans is not an effective metric for this study because PEPY is dependent on spousal and dependent ratios which vary between plan populations. The Zoe Study used the Per Member Per Month (PMPM) metric to accurately estimate costs and trends for the employees and their spouses. In the case of the Financial Company, PMPM relates to employees only because spouses were not offered participation in the Interactive Health program. In this study, the PEPY of approximately $9,000 translated to a PMPM for employee and spouse of $450 to $550 depending on spousal and dependent ratios (see appendix A for conversion analysis from PEPY to PMPM for each of three companies involved in the Zoe Study). Forecasting Method An industry accepted medical cost forecasting method was applied to study actual spending compared to forecasted spend. A simple exponential regression of prior year PMPM values drove the forecast. While the forecasting methodology was based on a single regression factor without taking into account other potential factors such as changes in plan design (e.g. employee deductibles and co-pay levels, annual and lifetime maximums) or shift in population mix or risk level, as a simple benchmark to evaluate the impact of Interactive Health services, this forecast was deemed to be appropriate. Medical Costs All medical costs, including the cost of the Interactive Health program and catastrophic cases, were included in the study methodology. The study considered total allowed medical spend, which included the employee and employer portion of medical spend to eliminate plan design bias due to share shifting between company and employees. As medical costs have increased and employers have focused on maintaining their bottom line, some have shifted a larger percentage of the increases to their employees. The impact of Interactive Health services controls medical spend for both employers and members. Risk Levels The study tracked the migration of the study group population between IHI risk levels, using a first to last methodology (the risk level when the member first joined the Interactive Health program was compared with their risk level assessment at the end of the study). Prevalence The study compared prevalence of core conditions to national norms (see appendix C: BRFSS). Core Condition Medical Spend Pareto Distribution The study examined the percentage of the population represented by adult members with core conditions and the corresponding percentage of the health plan medical spend that was generated by this group. Interactive Health Program Participation Levels The study examined the participation levels in the Interactive Health program. To promote the effectiveness of the program, Interactive Health targets participation levels of at least 50%. All three Interactive Health clients in the study offered incentives for members to participate. 17

18 Pharmacy Spend The study excluded prescription drugs because pharmacy spend data from pharmacy benefit managers (PBMs) was not available on a consistent basis, in the earlier years of the studies. However, when the information was available, the inclusion of pharmacy spends did not materially change the cost trends (see appendix B). Prescription spends may increase as a result of Interactive Health outreach and coaching, but the cost benefit of the controlled conditions and the reduction in related expenses later (for example, relatively inexpensive hypertension medication avoids much more serious and expensive potential heart attacks) largely outweigh the preventive treatment costs. Provider Network Impact None of the three companies examined had a major shift in their provider network that would have significantly impacted pricing. Productivity Impact on Worker s Compensation and Short-Term Disability The study examined worker s compensation (WC) and short-term disability (STD) data (excluding maternity leave) for differences in average return to work durations between employees participating in the Interactive Health program and non-participants. This data was available for two of the three companies in the study. Peer to Peer Review The study methodology included a peer-review process incorporating biostatisticians and other subject matter experts. 18

19 Study Results PMPM Cost Trends The Distribution Company After experiencing annual double-digit health plan cost increases from 2006 through 2008, with Interactive Health involvement the company experienced significant flattening in the cost trend in their plan in 2009 and In particular, the core condition group PMPM improved by $95 over the last two years of the study compared to the forecast, leading to a $67 PMPM improvement for the total adult population. The spousal ratio (employee and spouse count/employee count) of 1.5, translated to a $1,205 PEPY reduction, or as much as 15% of the 2008 PEPY of $8,149 (See appendix A for PEPY data). Distribution Group PMPM Trend Forecast to Actual Employee and Spouse $700 $600 $500 $400 $300 $200 $100 $0 Actual Core Med PMPM Core Med Forecast Actual All Med PMPM All Med Forecast Core Medical PMPM $ $ $ $ Annual % Rate of Change 13.5% 11.4% 4.7% 0.7% Core Medical Forecast $ $ $ $ Annual % Rate of Change 13.5% 11.4% 12.8% 11.9% All Medical PMPM $ $ $ $ $ Annual % Rate of Change 18.3% 7.7% -1.2% 3.0% All Medical Forecast $ $ $ $ $ Annual % Rate of Change 18.3% 7.7% 14.7% 10.0% 19

20 The Financial Company After a double-digit health plan cost increase trend in 2009, with Interactive Health involvement the company has seen a significant flattening in the cost trend curve for their plan in In particular, the core condition group PMPM (employees only) improved by $117 in 2010 compared to the forecast, leading to a $99 PMPM improvement for the total employee population. This would translate to a $1,188 PEPY (per employee per year) reduction, or over 12.5% of the 2009 PEPY of $9,501 (See Appendix A for PEPY data). Financial Group PMPM Trend Forecast to Actual: Employee Only $800 $700 $600 $500 $400 $300 $200 $100 $0 Actual Core Med PMPM Core Med Forecast Actual All Med PMPM All Med Forecast Core Medical PMPM $ $ $ Annual % Rate of Change 35.6% 12.9% Core Medical Forecast $ $ $ Annual % Rate Change 35.6% 35.6% All Medical PMPM $ $ $ Annual % Rate of Change 36.2% 7.6% All Medical Forecast $ $ $ Annual % Rate of Change 36.2% 36.2% 20

21 The Manufacturing Company After many years of double-digit health plan cost increases, with Interactive Health involvement the company experienced a cost reduction in their plan in The core condition group PMPM improved by $117 in 2010 compared to the forecast, leading to a $34 PMPM improvement for the total adult population. The spousal ratio of 1.5, translated to a $609 PEPY reduction, or 8% of the 2008 PEPY of $8,083 (Refer to Appendix A for PEPY data). It should be noted that the benefits of the program took longer to take hold for this company. In certain groups, the impact may be a short-term increased spend as members begin to respond to conditions that may not have been known prior to the health evaluation (and as preventative treatment was adopted by the generally healthy larger population). Manufacturing Group PMPM Trend Forecast to Actual Employee and Spouse $800 $700 $600 $500 $400 $300 $200 $100 $0 Actual Core Med PMPM Core Med Forecast Actual All Med PMPM All Med Forecast Core Medical PMPM $ $ $ $ $ Annual % Rate of Change 21.2% 19.5% 32.5% -8.7% Core Medical Forecast $ $ $ $ $ Annual % Rate of Change 21.2% 19.5% 20.6% 19.9% All Medical PMPM $ $ $ $ $ Annual % Rate of Change 28.8% 8.7% 33.8% -5.4% All Medical Forecast $ $ $ $ $ Annual % Rate of Change 28.8% 8.7% 21.7% 12.9% 21

22 Risk Level Modification The following charts compare the first and last health evaluations for each employee and spouse in the Interactive Health program. The data indicates that Interactive Health programs positively influenced the participating members. Between 83.5% and 88.2% of the members maintained or reduced their health risk level. Notes on interpreting the Risk Modification Matrix (with reference to the Distribution Group). There are four risk levels from high risk (worse) to low risk (better). In the 9.2% High Risk Group, 4.2% remained the same and 5.0% improved. In the 11.6% Elevated Risk Group 3.5% remained the same, 1.7% got worse, and 6.4% improved. In the 20.0% Moderate Risk Group 8.0% remained the same, 3.2% got worse, and 7.8% improved. In the 59.2% Low Risk Group, 51.7% stayed the same; and the remaining 7.5% got worse. In the aggregate, the Low Risk Group grew from 59.2% to 63.8%, and the High Risk Group declined from 9.2% to 7.5%. Results indicate that 86.7% reduced or maintained risk. Distribution Group Risk Modification Matrix Aggregate Change in Risk Risk Escalated % Risk Maintained 3, % 86.7% Reduced or Held Risk Risk Reduced 1, % Risk Level Risk Persons % First Risk High Elevated Moderate Low IHI Score > 50 High % 4.2% 2.0% 1.5% 1.5% IHI Score = Elevated % 1.7% 3.5% 3.6% 2.8% IHI Score = 1 to 25 Moderate 1, % 1.0% 3.2% 8.0% 7.8% IHI Score -20 to 0 Low 3, % 0.6% 1.5% 5.4% 51.7% 5, % 10.2% 18.6% 63.8% Yellow = Risk Maintained % Last Risk Red = Risk Escalated Green = Risk Reduced Blue = shading represents change over the time period studied from first to last risk 22

23 Financial Group Risk Modification Matrix Aggregate Change in Risk Risk Escalated % Risk Maintained 2, % 88.2% Reduced or Maintained Risk Risk Reduced % Risk Level Risk Persons % First Risk High Elevated Moderate Low IHI Score > 50 High % 1.9% 1.0% 0.8% 1.1% IHI Score = Elevated % 1.1% 1.8% 1.6% 1.8% IHI Score = 1 to 25 Moderate % 1.3% 1.6% 5.6% 6.7% IHI Score -20 to 0 Low 2, % 0.4% 1.2% 6.3% 66.1% 3, % 5.6% 14.3% 75.6% Yellow = Risk Maintained % Last Risk Red = Risk Escalated Green = Risk Reduced Blue = shading represents change over the time period studied from first to last risk Manufacturing Group Risk Modification Matrix Aggregate Change in Risk Risk Escalated % Risk Maintained 1, % 83.5% Reduced or Held Risk Risk Reduced % Risk Level Risk Persons % First Risk High Elevated Moderate Low IHI Score > 50 High % 6.6% 3.7% 1.7% 0.8% IHI Score = Elevated % 3.0% 7.0% 5.5% 2.9% IHI Score = 1 to 25 Moderate % 1.8% 4.3% 12.2% 7.4% IHI Score -20 to 0 Low % 0.7% 1.7% 5.1% 35.6% 2, % 16.7% 24.5% 46.7% Yellow = Risk Maintained % Last Risk Red = Risk Escalated Green = Risk Reduced Blue = shading represents change over the time period studied from first to last risk 23

24 Core Condition Prevalence Through its health assessments, the Interactive Health program proactively seeks out adult members with core conditions. In two of three groups, there was a higher prevalence of core conditions identified than national norms (as determined by BRFSS, see appendix C). Employee and Spouse Core Condition Prevalence % of Eligible Population With Select Core Condition Compared To National Norms Distribution Group Conditions National Norms 1 Coronary Artery Disease 5.1% 5.0% 4.6% 4.5% 4.2% 4.1% Diabetes Mellitus 8.2% 8.3% 7.9% 7.4% 7.4% 8.7% Hypertension 24.9% 25.7% 25.3% 25.1% 23.4% 28.7% Financial Group Conditions National Norms 1 Coronary Artery Disease 8.6% 8.4% 8.1% 4.1% Diabetes Mellitus 11.0% 11.1% 10.9% 8.7% Hypertension 35.9% 36.0% 35.9% 28.7% Manufacturing Group Conditions National Norms 1 Coronary Artery Disease 6.2% 6.6% 6.5% 6.5% 6.2% 4.1% Diabetes Mellitus 11.6% 11.7% 11.0% 11.3% 10.4% 8.7% Hypertension 31.5% 33.3% 33.0% 34.5% 32.5% 28.7% 24

25 Medical Spend in Core Condition Group The Pareto distribution of medical spend by members with core conditions in the three companies was approximately 30-40% of the total adult population, and accounted for 60-70% of the medical spend Medical Spend: Distribution Group Employee and Spouse With Core Conditions Spend Band % of Employee and Spouse % of Medical Spend >0 to >5K 25.7% 9.3% >5K to <15K 3.8% 11.8% >15K to <25K 1.0% 6.7% >25K to 60K> 0.8% 11.0% >60K 0.5% 22.2% Total 31.8% 60.9% Total Employee/Spouses 11,748 Total Medical Spend $33,358,957 25

26 2010 Medical Spend: Financial Group Employee and Spouse With Core Conditions Spend Band % of Employee and Spouse % of Medical Spend >0 to >5K 33.2% 9.8% >5K to <15K 7.3% 14.4% >15K to <25K 1.9% 8.3% >25K to 60K> 1.7% 13.8% >60K 0.8% 26.2% Total 43.8% 71.3% Total Employee/Spouses 7,180 Total Medical Spend $31,657, Medical Spend: Manufacturing Group Employee and Spouse With Core Conditions Spend Band % of Employee and Spouse % of Medical Spend >0 to >5K 33.2% 8.6% >5K to <15K 5.7% 12.9% >15K to <25K 1.5% 6.9% >25K to 60K> 1.5% 13.7% >60K 0.8% 26.6% Total 42.6% 68.7% Total Employee/Spouses 3,100 Total Medical Spend $12,181,684 26

27 Workers Compensation (WC) and Short Term Disability (STD) The return-to-work data for the Distribution and Manufacturing Companies in the study (WC and STD data was not available for the Finance Company) indicated that Interactive Health participants generally had a lower average number of days away on WC or STD than non-participants. For the Distribution Company, the average days away for WC on Interactive Health was 9.2 (21% less than non-participants) and 16.9 days (23% less than non-participants) for STD. For the Manufacturing Company the corresponding STD data was 10.5 days (16% less than non-participants); however, for WC the difference was insignificant. Interactive Health believes that fewer days were lost to occupational or non-occupational disability because Interactive Health participants managed their health better than non-participants and typically recovered more quickly. Distribution Group: Workers Compensation Period Studied: 2008 through 2010 Population Description WC Claimants Total Incurred Total Inc $/ Claimant Total Days Lost Days/ Claimants Incurred Indemnity Wages Incurred Medical Incurred Expense Total Workers Compensation 2,893 $34,504,629 $11, , $15,446,008 $15,384,896 $3,673,725 IH Members w/wc Claims 986 $10, 700,029 $10,852 34, $4,641,186 $5,050,181 $1,008,662 WC Claimants: Non IH 1,907 $23,804,600 $12,483 83, $10,804,822 $10,334,715 $2,665,063 Variance (1,631) -9.2 Manufacturing Group: Workers Compensation Period Studied: 2006 April 2011 Population Description WC Claimants Total Incurred Total Inc $/ Claimant Total Days Lost Days/ Claimants Incurred Indemnity Wages Incurred Medical Incurred Expense Total Workers Compensation 893 $6,497,748 $7,276 11, $2,905,401 $2,855,264 $737,083 IH Members w/wc Claims 495 $3, 036,340 $6,134 6, $1,052,755 $1,615,950 $367,635 WC Claimants: Non IH 398 $3,461,408 $8,697 5, $852,646 $1,239,314 $369,448 27

28 Distribution Group: Short Term Disability Period Studied: Population Description STD Claimants Total STDS STDS/ Claimant Days Lost Days/ Claimant Total Illness Total Injury Total STD 877 $4,537,375 $5,174 57, $1,174,140 $877,977 With IH 462 $2, 365,994 $5,121 26, $460,000 $311,744 Non IH 415 $2,271,381 $5,232 30, $714,139 $566,233 Variance ($111) Manufacturing Group: Short Term Disability Period Studied: Population Description STD Claimants Total STDS STDS/ Claimant Days Lost Days/ Claimant Total Illness Total Injury Total STD 178 $536,304 $3,013 10, $262,898 $261,080 With IH 137 $398, $2,905 7, $204,317 $181,403 Non IH 41 $138, $3,372 2, $58, $79, Variance ($467) Short Term Disability did not include pregnancy 28

29 Interactive Health Program Participation Levels Between the three companies, the 2010 adult participation levels in the Interactive Health program ranged from 57% to 63%. The Financial Company only offered the Interactive Health program to their employees so participation levels did not include Spouses. The Manufacturing Company reached a participation level of 73% in To promote the effectiveness of its program, Interactive Health targets a participation level of at least 50%, and some Interactive Health clients offer incentives for members to participate which results in higher participation. Each of the companies implemented participation incentives that successfully achieved participation levels in excess of target level. Employees and Spouses at the Distribution Company were required to meet 4 out of 6 healthy metrics to receive a premium differential. The Financial Company provided employees with entries in a raffle for various healthy activities including the Interactive Health program (prizes included a car, paying a mortgage and a trip of a lifetime). The Manufacturing Company implemented four tiers of premium levels determined by IHI score. Distribution Group: % Participation in Interactive Health Program % 59% 58% 54% 61% 57% 21% 13% 19% Employee Spouse Total Interactive Health Participation: Distribution Group No. Health Evaluation Participants by Year % Participants by Year No. Insured Individuals Year Employee 1,624 4,744 4, % 62.3% 58.5% 7,604 7,612 7,977 Spouse 478 2,125 2, % 57.8% 53.8% 3,750 3,677 3,787 Total 2,102 6,869 6, % 60.8% 57.0% 11,354 11,289 11,764 29