S.2684/A.791 – Incentive Program

The New York Health Plan Association (HPA) supports S.2684/A.791, which seeks to allow insurers to apply to the Department of Financial Services (DFS) to offer voluntary incentives or rewards programs by providing DFS with greater flexibility in reviewing incentive programs.  Currently, insurers are prohibited from offering such programs in statute.  Allowing insurers the flexibility to offer incentive programs would greatly benefit covered individuals by lowering out of pocket costs and improving health outcomes.

Managed care plans are founded on principles that emphasize primary and preventive care. As part of their comprehensive approach to health care, HPA member plans have long sought to educate their members about the importance of adopting healthy lifestyles, avoiding behaviors that increase the risk of developing chronic problems, and adopting tools to help manage various types of illnesses and encourage better quality outcomes. In concert with this philosophy, plans provide access to a wide array of health education and wellness tools aimed at helping members take an active role in improving their overall health and well-being.

Examples of the myriad programs available to members include health risk assessment tools; nutrition education; weight management and smoking cessation programs; diabetes prevention and management; and hypertension management, to name but a few. In addition to promoting healthier lifestyles and helping members improve their overall health status, these programs often have an added benefit of reducing costs by helping people eliminate the need for a prescription used to manage a chronic condition or avoiding hospitalization.  Allowing insurers to incentivize participation in these programs through a reward structure paired with transparency tools would help to increase participation in these programs and use of these tools.

The potential of price transparency tools to engage consumers in choosing high-quality, lower-priced providers and reduce their health care costs remains largely untapped.  Despite health plans and the state making these tools available for individuals who wish to shop and compare prices, their use remains relatively modest.  Individuals who use these tools deserve a financial benefit for being engaged consumers.  Further, encouraging members to utilize price transparency tools through incentive programs can help to save money for members and employers.

One example is how the State of New Hampshire paired its transparency tools with financial incentives to offer a market-based approach to address the cost of health care for employers and consumers.  As the largest single employer in the state, in 2014 the State of New Hampshire sought to reduce overall spending on health care.  Over 28,000 people were eligible for the SmartShopper program – employees, under age 65 retirees and their dependents.  As the employer, the State wanted to encourage its employees and their families to shop for similar-quality, lower-priced care.  The program provided financial benefits for individuals who chose lower-cost options for certain shoppable services (imaging services, labs, specialty drugs, preventative exams and outpatient surgeries).

In 2016, State participants reduced medical costs by an average of $554 when taking advantage of the program and by Q1 2018 42 percent of shopped medical claims were redirected to a lower-cost provider, meaning the State of New Hampshire saved money while the employee earned cash for choosing a better-value provider.  To date, New Hampshire’s SmartShopper has saved over $25 million dollars in claims by redirecting participants to cost-effective providers, with the State sharing nearly $3 million in cash incentives with participants.

However, New York prohibits these types of financial rewards programs for members by limiting health plans from offering these options to employers and consumers, so even if an individual shops and selects care from a high-value, lower-cost provider they do not receive any of the financial benefit for comparison shopping.  By updating the current statute to provide DFS with more flexibility in the types of incentive programs health plans can offer, this legislation will help to promote the use  of wellness programs and transparency tools that can provide meaningful financial benefits for individuals to be engaged consumers in their health care. For these reasons, HPA supports S.2684/A.791.