RESEARCH REVEALS GOOD NEWS FOR EMPLOYERS:Predicting future health care costs can be effective and affordable

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ST. PAUL, Minn. (June 25, 2010) — When it comes to managing employee health care
costs, the ability to forecast future cost trends comes in handy. Not only does this knowledge
help employers set budgets; it enables them to design their employee wellness or total health
management strategy to mitigate costs down the road. Using historical health care claims to
predict future costs and identify opportunities for targeted outreach has long been the industry
standard for identifying employees for disease management, but this type of analysis can come
with a hefty price tag for employers.

Fortunately, new research from StayWell Health Management shows there are other
alternatives for predicting health care costs that are nearly as effective as claims analysis, but
that can be more affordable and can also enhance program engagement.

In the study, “Comparing Alternative Methods of Targeting Potential High-Cost
Individuals for Chronic Condition Management,” published in the June issue of the Journal of
Occupational and Environmental Medicine, StayWell researchers examined three methods for
predicting health care costs: 1) claims-based prediction using medical and pharmacy claims
data; 2) prediction using health assessment data; and 3) prediction combining both claims and
health assessment data. Overall, the researchers found that data from health
assessments are nearly as effective as claims data at predicting next year’s costs.

“Claims data is not the only way to effectively evaluate the health of a workforce and to
manage future expenses,” said Jessica Grossmeier, director of research for StayWell Health
Management and a co-author of the study. “This will be especially welcome news for small- to
mid-sized employers who can’t afford to conduct a claims analysis on their population. It will
also help large employers with multiple health plans, where the cost and complexity to integrate
all plan data into a common data warehouse is prohibitive.”

Understanding how to use the data that is derived from health assessments and
biometric screenings is essential for employers of all sizes who are beginning to offer annual
assessments and screenings to their employees as part of workplace health management
programs.

“Implementing an annual health assessment and biometric screening gives employers
direct access to valuable and affordable predictive data, which can be used not only to identify
those at highest risk, but also to understand their readiness to change specific behaviors and
their motivation, as well as their self-efficacy,” said Michael Staufacker, director of program
development for StayWell and a study co-author. “This enables employers to tailor their
engagement strategies to get more of their high-cost employees into health management
programs.”

StayWell Health Management works with large employers across the country to design
and implement workplace health management programs addressing lifestyle risks and chronic
disease and to evaluate workplace health status. StayWell pioneered one of the industry’s first
predictive modeling tools using health assessment data, and regularly uses claims data as well
as health assessment and screening data to predict which individuals are most likely to become
high utilizers of the health care system in the next year. This data is used to segment the
population and triage individuals into lifestyle and disease management coaching programs, as
well as other program activities. As a leader in health management research, StayWell
recognized the need for more scientific evidence on alternative predictive modeling approaches
to deliver solutions to its diverse client base.

The study was based on data from 8,056 employees, and included medical and
pharmaceutical claims data, health assessment data, and biometric screening data. Researchers
used data from 2004 and 2005 to compare the effectiveness of predicting future costs using
claims data alone, health assessment and screening data alone, or both types of data
combined.

Highlights from the study
In applying these approaches, researchers found the following:
• Health assessment + claims data is the most accurate. Combining health assessment
and screening data with claims data delivered the most accurate prediction of future health
care and pharmaceutical claims, explaining up to 30 percent of the variation in the next
year’s claims costs.
• Claims data alone is only marginally better than health assessment data. Claims
analysis alone (which explained up to 25 percent of variation) was only marginally better
than health assessment data (which explained up to 20 percent of variation) in predicting
future health care costs.
• Health assessment data alone identified more people for chronic conditions.
Health assessment data identified a significant number of people with chronic conditions
before they were identified from claims data (e.g., 45 percent of 325 employees reported
having hypertension and 14 percent of 140 employees reported having diabetes in the
health assessment before the first claims for these respective conditions occurred)

“Employee engagement is a challenge for all employers, and it’s something that has plagued
traditional disease management programs for years,” said David Anderson, Ph.D., senior vice
president and chief health officer at StayWell Health Management and a study co-author.
“However, because employees voluntarily complete the health assessment and screening, they
are already engaging in their health and expecting follow-up support, which makes it much
easier to enroll them in programs and interventions to address chronic conditions or to improve
lifestyle habits. And that follow-up process is where the lasting behavior change that improves
future health and lowers costs occurs.”

To view the complete manuscript of this study, contact marketing@staywell.com.

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StayWell Health Management is a recognized leader in delivering comprehensive health management programs and services that help organizations maximize business results by improving employee health and productivity. Founded in 1978, StayWell Health Management is a MediMedia USA Company headquartered in St. Paul. The company has 350 employees. StayWell’s programs and publications help improve the lives of more than 50 million people each year. StayWell customers have received the C. Everett Koop National Health Award and more than 40 WELCOA Gold Awards for health management programs StayWell has developed. To learn more about the company, visit
www.staywellhealthmanagement.com.

For more information:
Barbara Tabor, APR
651.450.1342

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