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Best Practice for Employee Health Strategies New Jersey Business Group on Health* June 8, 2010

Best Practice for Employee Health Strategies New Jersey Business Group on Health* June 8, 2010. *A Division of the New York Business Group on Health.

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Best Practice for Employee Health Strategies New Jersey Business Group on Health* June 8, 2010

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  1. Best Practice for Employee Health StrategiesNew Jersey Business Group on Health* June 8, 2010 *A Division of the New York Business Group on Health

  2. Public Service Enterprise Group (PSEG) is a publicly traded (NYSE:PEG) diversified energy company headquartered in New Jersey, and one of the ten largest electric companies in the U.S. Total assets: $29 billion Total annual revenues: $13.3 billion Employees:  Approximately 10,500 65% Unionized Average Age – 44 Average Years of Service - 16 Reliability:  In 2009 PSE&G was named for the fourth time as America's most reliable electric utility, by receiving the prestigious National Reliability Excellence Award from the industry benchmarking group, PA Consulting. In 2003, PSEG celebrated its 100th anniversary. PSEG has paid a dividend annually since 1907. PSEG received NJBiz Magazine's 2007 New Jersey Corporation of the Year award for financial results, leadership on environmental issues and commitment to New Jersey. PSEG is ranked 101 on the 2008 Forbes 400 Best Big Companies list. PSEG is ranked 190 on the 2009 Fortune 500 list. In 2009, PSEG was named for a second year to the Dow Jones Sustainability North America Index (DJSI North America). PSEG was ranked 11 on New Jersey Business magazine's 2009 100 Top Employers list. PSEG was recognized by New Jersey Monthly magazine as one of their 2009 Great Places to Work. PSEG Company Overview • PSEG's principal subsidiaries are: • Public Service Electric and Gas Company (PSE&G) • PSEG Power • PSEG Energy Holdings • PSEG Service Corporation

  3. A Brief History of Culture Change After 32 fatalities in 27 years, PSEG had to make major changes in the health and safety culture. • What was needed? • A total commitment to transform the culture and a plan for action. • It wasn’t enough to say that health and safety is the #1 priority. • Hundreds of people got involved. • Everyone - from meter readers, generating station workers, linemen, customer services representatives, office workers, supervisors, managers and senior management – had to believe it and get involved! • Results could not be expected overnight • Patience was necessary. • Most best-in-class companies achieve significant culture change in 3-5 years through constant reinforcement of the health and safety message, hard work, significant employee involvement, and consistent support from management. PSEG was on its way: • We benchmarked best-in-class companies, • We took a long hard look at ourselves internally, and • We got lots of people involved to develop a plan for action that is now being implemented and continues to evolve. • A systematic approach would be required as the foundation for an accident-free work environment and a healthy workforce. • Under strong leadership, PSEG has undergone a dramatic shift in its health & safety culture. • The results have been overwhelmingly positive. • OSHA Recordable 1994 = 5.26 • Target 2010 – 1.10

  4. Health and Wellness At PSEG

  5. Wellness is Not Just a Program…It’s a Health Improvement Strategy • Medifit • On Site Fitness Facility Operations • Health Promotion, Education/Communication • Unstaffed Fitness Center Audits • Exercise Reimbursement Program • Weight Management and Nutrition • Coaching Hewitt Your Benefits Desktop • StayWell • Health Risk Assessment • Lifestyle Management • On Line Education/Resources • Optimal Health • Disease Management • Strategic Planning • Vendor Operations Management • Partner Integration • Program Development & Implementation • Communications • ROI Measurement • Work/Life Life Solutions • Employee Assistance Program (EAP) • CareBridge Program Integration PSEG Employee Health • Community Outreach • Non Profits – AHA, ACS • Pharmas • Weight Watchers, NutriSystem • Prevention Works-Pro-Activity • On the Ground Physical Therapists • Injury Prevention • Education, Physical Activity and Nutrition Counseling • First Response Soft Tissue Injuries • Grass Roots • Health & Safety and Wellness Council • Communication • Support • Engagement • On Site Health Services • Cardiovascular Disease Screenings • Flu Shots • Absence Management • Workers Comp – Work Hardening/Conditioning • Wellness Program Integration/Awareness • Health Plans Resources • Aetna • Horizon BCBS • Medco • Aramark • Healthy Food Selections • Cafeteria, Catering, Vending

  6. PSEG Workforce Health Profile Demographics • Predominately Male • 84% Male/16% Female • Highly Unionized – 65% • Average Age: 44 • Years of Service: 15.8 • Top 3 Diagnosis Related to Disability Absence • Musculoskeletal • Mental Health • Cardiovascular/All Other • Top 3 Diagnosis Related to Medical Claim Payments • Orthopedics/Rheumatology (Musculoskeletal) • Cardiology • Gastroenterology • Top 3 Therapeutic Classes Related to Rx Drug Payments • Cardiovascular • Anti infectives • Psychotherapeutics Source: 2009 Health Risk Assessment and 2008 Biometrics from CVD Health Screenings

  7. Number of Health Risks per Employee 7

  8. Health and Safety – A Cultural Change Partner Link ‘Health’ to Safety I • PSEG Health & Safety System • Commitment Statement • Councils • Enterprise (highest level) • Medical Director • Wellness Leader • Lines of Business • Local • 12 Components • Personal Health & Wellness • Wellness Council • Each work location has a Wellness Representative • Local office health advocate • Disseminate informational materials • Update bulletin boards • Tailgate messages • All Hands Wellness presentations

  9. Personal Health & Wellness is Essential to Achieving Safety’s Target Zero • Individual health status is directly linked to: • The risk of being injured (both on and off the job) • The severity of an injury • The duration of recovery/ recuperation of an injury • Most significant predictor of injury is health status, tobacco use, stress level and weight. • Employees <35 and overweight have 72% greater risk of injury. • Employees who perceive health status as other than excellent have 65% greater risk of injury • Smokers, if injured, are 72% more likely to have an incident resulting in lost time. Source: 2003 Union Pacific Railroad, Health & Safety Impact Study

  10. Health & Wellness Continuum Take Control of Your Health with PSEG Health & Wellness Resources Determine Your Health Risks Build Health in Your Routine Get the Right Care At the Right time Manage Chronic Health Conditions • NextSteps Lifestyle • Management • CHAMP Fitness Centers • Exercise Reimbursement • Staywell Online Tools & • Helpline • Weight Watchers/ NutriSystem • Influenza Vaccines • Health Risk • Assessment (HRA) • Health Screenings • Optimal Health • Disease • Management • EAP • Prevention Works • CareBridge • Health Plan Resources Supported by Health Education and Information Visit Your Benefits Desktop often for the latest information about your benefits, health and wellness...there is always something new. http://www.pseg.com/benefits

  11. Driving Results through Participation/Engagement…2008 Wellness Scorecard TARGET 60% in 3 or more programs Engaging the Right People (93% are Moderate to High Risk) Participation in more Programs produces Higher Results • Participation in 1 program vs. 5 programs • Medical/Rx Drug Costs – 5% lower • WC & Disability Lost Time – 19% lower • Disability Recurrence Rates – 7.1% lower

  12. The Impact of PSEG’s Health Management Strategy • A comprehensive evaluation plan to assess PSEG’s health management strategy outcomes was recently completed. • The study focused on: • Health wellness program participation rates, • characteristics of participants and non-participants in PSEG’s health/wellness programs, • health outcomes, and • medical and productivity cost impact over time. • Findings - PSEG’s health wellness programs are showing signs of success: • Employees who are engaged in their health by participating in PSEG’s health wellness programs are showing lower health care and absenteeism/disability costs and trends. • Program participation shows a dose-effect with more medical and productivity cost moderation associated with higher levels of participation (2+ program vs. 1 program vs. never participants) • Cost-benefit analysis demonstrates an overall program ROI of 1.1 (medical costs only) and 1.46 (medical and productivity) after the second year of the program. • PSEG’s ROI reflects results since redesign and launch of it’s health and wellness program since 2008. An ROI of 1:1 (i.e. breakeven) is considered reasonable for earlier years of program implementation. • According to the National Business Group on Health* • A mature, comprehensive health management program with a highly engaged population can expect to see a minimum $3 return for ever $1 invested (3:1) after 3 to 5 years. * Source: National Business Group on Health, (2008) Improving Employee Health – Planning, Implementing and Achieving Targeted Outcomes, p.5.

  13. Health Wellness Program Participation Impact on Employees – Medical & Drug Cost and Trends • Employees who were enrolled in a medical plan from 2006 – 2008 were classified into one of three categories (N=8,451) to determine the impact of participation in PSEG’s health/wellness programs on health care and absenteeism/disability costs and trends. • Never Participant: Employees who did not participate in a program 2007 and 2008 • 1 Program Participant: Employees who participated in one program in 2007 or 2008 • 2+ Program Participant: Employees who participated in two or more programs in 2007 and/or 2008 • Medical cost trends show a dose-effect* as program participation increases. • Those individuals who participate in multiply health/wellness programs have lower health care costs. • From 2006 to 2008, the ‘2+ program’ participant group experienced a 26% increase in health care costs while the ‘never participant’ group increased 68%. • Individuals engaged in their health tend to have lower health care costs. *Increasing impact on cost outcomes is evident with increasing program intensity **Employees enrolled in medical coverage during all reporting years 13

  14. Health Wellness Program Participation Impact on Employees – Lost Productivity Cost and Trends • Lost productivity cost trends for absenteeism/ disability also shows a dose-effect* as program participation increases. • Those individuals who participate in multiply health/wellness programs have lower absenteeism/disability costs. • From 2007 to 2008, the ‘never participated’ group showed the highest increase (8%) while the ‘2+ program’ participant group showed a slight decrease (-1%). • Individuals who are engaged in their health tend to have less absences. *Increasing impact on cost outcomes is evident with increasing program intensity **Employees enrolled in medical coverage during all reporting years 14

  15. Health Wellness Program Participation…Always a Challenge PSEG utilizes 9 Best Practice Elements to Maximize Participation and Engagement: • Comprehensive program design • Integrated incentives • Integrated, comprehensive communication plan • Strong senior management support • Dedicated onsite staff • Multiple program modalities (phone, mail, online) • Population-based awareness building activities • Biometric health screenings • Vendor integration

  16. Culture Communications Incentives What’s Next?A Continuous Improvement Process The “Three Pillars” of Engagement Leadership

  17. The Evolution of Health Management • Worksite Wellness – the 1980s • Worksite-based – HRA/screening & group education and activities • Unmanaged, reactive individual support • Strength may have been cultural focus • Targeted High-Risk Intervention – the 1990s • HRA/screening & targeted individual follow-up intervention • Stimulated by risk-cost research • Focus on high-risk segment • Total Health Management – the 2000s • Enabled by technology – delivered at and away from work • Shaped by integration of wellness & disease management • Manages total population across entire health continuum • Addresses all health needs with integrated services, data, outcomes • Renewed recognition of importance of culture and work environment

  18. Timing of Key Health Care Reform Provisions for Active Employees Health Plans • Employer distribution of uniform summary of benefits to participants • Employer Quality of Care Report • Extension of Adult Child to Age 26* • Preventive services and immunizations at no cost to employees* ** • Lifetime Limits and restrictive annual limits Prohibited* • Preexisting conditions exclusion prohibited for children under 19* • CLASS enrollment (voluntary long term care) • Flexible Spending Accounts – OTC drugs not covered • HSAs: Non qualified withdrawal penalty to 20% • Employer reporting of health coverage on 2011 Form W-2 • Individual Mandate to Purchase Insurance or Pay Penalty • States establish Health Insurance Exchanges where individuals can purchase health insurance • Employer Responsibility to Provide Minimum Health Coverage • Free Choice Vouchers • Preexisting conditions exclusions prohibited for everyone • Cap on rewards for participating in wellness programs increased from 20% to 30% of cost of employees coverage. • Excise tax on high-cost health plans effective • Notice to inform employees of coverage options in exchange • Limit on Flexible Savings Account Contribution reduced to $2,500 • Tax increase on high-income individuals 2018 2012 2011 2013 2014 *For Collectively Bargained Agreements – effective after date of new contract. **Clarification on regulations is needed for what may be considered ‘grandfathered’.

  19. Use of Incentives in Wellness – US Employers Source: Buck Consultants, Working Well: A Global Survey of Health Promotion and Workplace Wellness Strategies, November 2009.

  20. Types of Incentives Offered – US Employers Source: Buck Consultants, Working Well: A Global Survey of Health Promotion and Workplace Wellness Strategies, October 2008.

  21. Advantages of Health Plan Integration • Potential to integrate into “organizational fabric” • Communicates and reinforces the link between behavior, health and cost of sick care • Maximizes incentive value at less or no cost • $200 reward costs employer $200 plus administrative costs, and employee only gets $120-150 after taxes; BUT • $200 premium reduction can cost employer nothing • Assume 60% compliance with required behavior • 60% get $200 reduction, which costs employer $120 per employee (i.e., $200 times 60%) • With next premium increase, raise premiums an extra $120 to cover cost of incentive payouts 21

  22. 2011 - 2013 PSEG Program Framework StrategicPlanning LeadershipEngagement ProgramLevelManagement Best PracticeProgramComponents Measurement& Evaluation • Population-based approach to total health management • Strategic planning • Annual plan • Long-term plan • Align vendor partner strategic plans with overall plans • Senior leadership • Budget allocation • Supportive policies • Active engagement in program promotion • Operational accountability • Healthy Leaders, Healthy Leadership • Health Assessment • Lifestyle Management • Disease Management • Fitness Centers • Exercise Reimbursement • Injury Prevention • EAP • Work/Life Resources • Biometric screenings and flu shots • Population-based campaign • Data on participation, satisfaction and process evaluation • Outcomes measurement and program evaluation planning and alignment with overall strategy • Meaningful reports to key stakeholders • Integration • Vendor Summits and regular calls • Use Nurse Line Navigational service to best triage participants to appropriate services EngagementMethods • Long-term incentive strategy based on sustainable outcomes • Link to benefit design • Annual print piece • Explain previous year results • Impact on health care costs at PSEG • Wellness Council training • Lunch ‘n learns • Quarterly focus • Bulletin boards • Stop-by booths • Informal discussions • Communications • Multiple channelsand media • Focus on HA, follow-up programs, and other resources available to all employees 22 22

  23. Tips to Avoid Unintended Consequences • Align and strengthen all “three pillars of engagement” • Minimize use of “do this, get that” communications • Keep it credible by making “gaming the system” difficult or risky • Plan for future sustainability • Assure compliance with HIPAA, Health Care Reform, and ADA • Caps incentives at 30% of health coverage cost • Discrimination rules related to “health status factors” • Reasonable alternatives and consistent communications • Annual qualification requirement • Consult with your legal counsel

  24. Thank You…

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