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Medicaid To Offer Rewards For Healthy Behavior

Apr 11, 2011

A federal grant program authorized in the health overhaul law is offering states $100 million to reward Medicaid recipients who make an effort to quit smoking or keep their weight, blood pressure or cholesterol levels in check.

The grant program is meant to encourage states, many of which are under pressure to cut Medicaid costs, to experiment with an uncertain approach to wellness: offering incentives for healthy behavior.

"Medicaid is almost the sweet spot for financial rewards," said George Loewenstein, a behavioral economist at Carnegie Mellon University who has studied the effect of financial incentives on behavior. Medicaid recipients, he explains, are economically disadvantaged and have more to gain from incentives.

Loewenstein, however, is dubious about whether incentives, especially those tied to weight loss, could really work. He's not alone.

Behavioral incentive programs have shown some promise in specific settings, but they are largely untested in the Medicaid population.

The federal dollars for Medicaid incentives reflect a sharpening emphasis on the role of preventive health in targeting the underlying causes of chronic disease, a central pillar of the Obama administration's health care agenda. States have until May 2 to submit their final proposals to the Centers for Medicare & Medicaid Services for funding, and a number have indicated an interest.

And while states have some flexibility about how they design their incentives, federal guidelines provide a basic profile. Medicaid enrollees who demonstrate a commitment to improving their health will be eligible to receive financial rewards such as coupons or gift certificates. For those who are overweight or trying to quit smoking, that commitment might take the form of weight management classes or tobacco cessation counseling. States are encouraged to provide rewards "on a tiered basis" for attempts at participation, "actual behavior change," and "achievement of health goals."

Chronic conditions such as diabetes, bad cholesterol and high blood pressure account for more than 75 percent of the $2.5 trillion the U.S. spends annually on health care, according to data from the Department of Health and Human Services. Cigarette smoking, 10 percent more prevalent among Medicaid enrollees than the population at large, cost Medicaid programs an average of $607 million in 2004, according to the National Center for Health Statistics, and is also the leading preventable cause of death in the U.S.

States Have Mixed Results

To date, a few states have tried transplanting the corporate wellness model to Medicaid, with mixed results. State health officials seem to agree that participation from health care providers and other community organizations, often a challenge, was critical in making their programs work.

West Virginia's approach, which provides an enhanced coverage plan with added benefits to Medicaid enrollees who agree to adhere to healthy behaviors, has been widely criticized by health advocates.

Idaho, which launched an incentive program in 2007, offers $200 in vouchers to Medicaid enrollees who consult with a doctor about losing weight or quitting smoking. Recipients can use the vouchers for gym memberships, weight management programs, nutrition counseling and tobacco cessation products. Tobacco counseling courses are offered free of charge through public health districts in the state. Idaho is now enrolling about 1,500 new Medicaid participants each year.

According to Tom Kearns, who manages Idaho's Preventive Health Assistance initiative, participants have written in with positive feedback — but the state doesn't have data to show whether the incentives are cost-effective or have a large-scale impact on participants' behavior.

"There's a lot of challenges in tracking the outcomes of this long-term," Kearns said. "Ultimately we'd like to have a large enough population to track."

The state has worked hard to find partners who are willing to accept its vouchers and so far has more luck with community groups, such as the YMCA, than private companies.

Florida has also tried using incentives in its Medicaid managed care pilot program.

The program allows Medicaid enrollees living in five counties to earn up to $125 worth of credits each fiscal year in exchange for their compliance with certain "healthy behaviors," like getting a flu shot or adhering to a prescribed drug regimen. Participants can redeem the credits at participating pharmacies for over-the-counter products such as bandages and diapers.

But logistical setbacks have dampened the impact of the incentives. At first, few were aware that the program even existed, and some pharmacies refused to accept the Medicaid credits. Several hundred people have received credits for participating in a diabetes or hypertension disease management program since 2006, but as of February, only two individuals were on the record for having attended a smoking cessation course, and six individuals have been credited for entering a weight management or exercise program.

"There's a question about whether this is really incentivizing anything ... that link is very dubious," said Greg Mellowe, policy director at the consumer advocacy group Florida CHAIN. Most of the credits distributed through Florida's rewards program in the past five years, Mellowe contends, were awarded for routine visits and immunizations that Medicaid recipients would have sought anyway — and not for significant behavioral changes.

Research On Incentives Is Inconclusive

Research is scant on the effects of incentive programs on mitigating chronic diseases. A smattering of studies have shown that complex behavioral programs with built-in incentives can sometimes produce short-term results—if the incentives are large enough. A 2009 study published in the New England Journal of Medicine found that a program offering people $750 to quit smoking: 15 percent of participants eligible for a reward managed to quit, compared with 5 percent of participants who enrolled in a traditional tobacco cessation program.

A similar study about incentive-based weight loss programs, published by some of the same researchers in the Journal of the American Medical Association, was less optimistic. That study found that financial rewards did help participants lose more weight temporarily, but the losses weren't fully sustained in the end.

Few behavioral studies have attempted to determine whether people who receive the incentives are able to maintain their short-term success long term — the ultimate goal of incentive-based prevention program. Fewer attempts have been made to address how the design of an incentive program should be adjusted according to the demographics of the target population, such as insuring that low-income participants have transportation to get to appointments and classes.

"In and of itself, without health education and other forms of engagement, it seems to fall short," said Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities. "The incentives are never going to be enormous because it's never going to be affordable."

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