Effect of an Employer-Sponsored Health and Wellness Program on Medical Cost and Utilization

Published In: Population Health Management, v. 16, no. 1, Feb. 2013, p. 1-6

Posted on RAND.org on January 01, 2012

by Harry H. Liu, Katherine M. Harris, Steven Weinberger, Seth Serxner, Soeren Mattke, Ellen Exum

The objective of this study was to examine the impact of PepsiCo's health and wellness program on medical cost and utilization. The authors analyzed health plan and program data of employees and dependents 19-64 years of age, who had 2 years of baseline data (2002 and 2003) and at least 1 year of data from the intervention period (2004 to 2007), resulting in a sample of 55,030 members. Program effects were measured using a difference-in-difference approach based on a multivariate regression model with an individual-level random effect. In its first year, the program was associated with a relative increase in per member per month (PMPM) cost ($66, P<0.01); a relative reduction in PMPM costs of $76 (P<0.01) and $61 (P<0.01) was seen in the second and third year, respectively. Over all 3 years, the program was associated with reduced PMPM costs of $38 (P<0.01), a decrease of 50 emergency room visits per 1000 member years (P<0.01), and a decrease of 16 hospital admissions per 1000 member years (P<0.01). The disease management component reduced PMPM costs by $154 (P<0.01), case management increased PMPM costs by $2795 (P<0.01), but no significant effects were observed for lifestyle management over the 3 intervention years. The implementation of a comprehensive health and wellness program was associated with a cost increase in the first year, followed by a decrease in the following years. These results highlight the importance of taking a long-term perspective when implementing such programs and evaluating their effectiveness.

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