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Do Beneficiary Incentive Programs Cut Costs, Prevent Disease?

Some state Medicaid programs have created beneficiary incentives among consumers who display healthy behaviors and choose a healthier lifestyle.

- Within the health insurance market, the patient is seen as a consumer in need of medical coverage. Payers must also consider the financial implications of managing the health of more and more patients with chronic medical conditions. As the baby boomer population ages and obesity rates skyrocket around the nation, the healthcare industry is left to manage the costs associated with treating many chronic diseases.

Medicaid Beneficiary Incentive Programs

As such, more providers and payers are looking at the implications of health and wellness programs as well as patient engagement initiatives. Through more effective patient engagement, consumers are more likely to adhere to their medications, take part in fitness programs, and stick to healthy and physician-recommended diets.

Through wellness initiatives, payers sought to engage consumers in improving their overall health, preventing disease, and thereby cutting costs associated with chronic medical conditions.

The Henry J. Kaiser Family Foundation issued a brief describing how some state Medicaid programs have created beneficiary incentives among consumers who display healthy behaviors and choose a healthier lifestyle. Some of the incentives offered in these state Medicaid programs include either gift cards, cash, gym membership coverage, meals, childcare, transportation, and more.

With heart disease, stroke, and diabetes seen as some of the biggest chronic diseases found in healthcare contributing to rising costs, beneficiary incentives based on healthy behaviors could help solve these issues. While the beneficiary incentive programs are meant to reduce overall healthcare costs, there is currently insufficient evidence on whether these goals are being met.

“Estimates on the cost-effectiveness of Medicaid beneficiary incentive programs have also varied,” the brief explained. “States aim to reduce Medicaid costs by encouraging the use of preventative care in order to decrease the need for future high-cost treatments and hospital use.  However, government agencies, policy analysts, and patient advocates have questioned the cost-effectiveness of incentive programs given their infrastructure start-up costs, marketing costs, and administrative costs.”

Before the Affordable Care Act came around, some state Medicaid beneficiary incentive programs including Idaho’s Preventative Health Assistance (PHA) Benefits and Indiana’s Healthy Indiana Plan (HIP) focused on preventive care, smoking cessation, obesity rates, and prenatal and postpartum care.

Additionally, the Patient Protection and Affordable Care Act led to the creation of Medicaid Incentives for the Prevention of Chronic Diseases (MIPCD) program. This particular program puts $85 million into the Medicaid budget of 10 states throughout five years to determine whether offering incentives to Medicaid beneficiaries taking part in prevention programs will bring them to adopt healthy behaviors.

Each individual state is required to provide proof of programs related to weight control or weight loss, smoking cessation, lowering cholesterol or blood pressure, and/or preventing diabetes. The Kaiser Family Foundation brief evaluates the outcomes from the Medicaid beneficiary incentive programs.

“Overall (both inside and outside of Medicaid), consumer incentive programs are fairly new and research on their effectiveness in encouraging behavior change has varied,” the brief stated. “In the short run, consumer incentives can be effective for encouraging one-time or simple preventative care, such as receiving immunizations or attending a regular check-up. However, there is insufficient evidence to say if incentives are effective for promoting long-term lifestyle changes, such as smoking cessation or weight management.”

The analysis shows that states are taking more than one approach to improving wellness within their region. Several health conditions and behaviors are being targeted. States are including counseling, telephone lines, educational programs, weight management programs, and even health coaches.

 With state Medicaid expansion being implemented due to the conditions within the Affordable Care Act, beneficiary incentives based on healthy behaviors are also being implemented in many Medicaid programs.

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