Quantitative Research

American Journal of Health Promotion

2018, Vol. 32(7) 1498-1501
Financial Incentives for Medicaid ª The Author(s) 2017
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Beneficiaries With Diabetes: Lessons DOI: 10.1177/0890117117746335
journals.sagepub.com/home/ahp
Learned From HI-PRAISE, an
Observational Study and Randomized
Controlled Trial

Ritabelle Fernandes, MD, MPH1, Chuan C. Chinn, PhD2, Dongmei Li, PhD3,
Timothy Halliday, PhD4, Timothy B. Frankland, MA5,
Christina M. B. Wang, MPH, RN2, Zi Wang, MS2, Misha Morioka, MEd, MBA2,
Robin G. Arndt, MSW6, and Rebecca Rude Ozaki, PhD2

Abstract
Purpose: The Hawaii Patient Reward and Incentives to Support Empowerment (HI-PRAISE) project examined the impact of
financial incentives on Medicaid beneficiaries with diabetes.
Design: Observational pre–post study and randomized controlled trial (RCT).
Setting: Federally qualified health centers (FQHCs) and Hawaii Kaiser Permanente.
Participants: The observational study included 2003 Medicaid beneficiaries with diabetes from FQHCs. The RCT included 320
participants from Kaiser Permanente.
Intervention: Participants could earn up to $320/year of financial incentives for a minimum of 1 year.
Measures: (1) Clinical outcomes of change in hemoglobin A1c (HbA1c), blood pressure, and cholesterol; (2) compliance with
American Diabetes Association (ADA) standards of diabetes care; and (3) cost effectiveness.
Analysis: Generalized estimating equation models were used to assess differences in clinical outcomes. General linear models
were utilized to estimate the medical costs per patient/day.
Results: Changes in clinical outcomes in the observational study were statistically significant. Mean HbA1c decreased from 8.56%
to 8.24% (P < .0001) and low-density lipoprotein decreased from 106.17 mg/dL to 98.55 mg/dL (P < .0001). No significant dif-
ferences were found between groups in the RCT. Improved ADA compliance was observed. No reduction in total health cost
during the project period was demonstrated.
Conclusion: The HI-PRAISE found no conclusive evidence that financial incentives had beneficial effect on diabetes clinical
outcomes or cost saving measures.

Keywords
health incentives, behavioral economics, Medicaid, diabetes, financial analysis, Pacific Islander

1
Department of Geriatric Medicine, John A. Burns School of Medicine, University of Hawai’i at Mānoa, Honolulu, HI, USA
2
Center on Disability Studies, University of Hawai’i at Mānoa, Honolulu, HI, USA
3
University of Rochester School of Medicine and Dentistry, Rochester, NY, USA
4
Department of Economics, University of Hawai’i at Mānoa, Honolulu, HI, USA
5
Kaiser Permanente, Center for Health Research Hawai’i, Honolulu, HI, USA
6
Myron B. Thompson School of Social Work, University of Hawai’i at Mānoa, Honolulu, HI, USA

Corresponding Authors:
Ritabelle Fernandes, Department of Geriatric Medicine, University of Hawaii, 347 N. Kuakini St, HPM-9, Honolulu, HI 96817, USA.
Email: fernandes.ritabelle@gmail.com
Rebecca Rude Ozaki, Center on Disabilities Studies, 1410 Lower Campus Road, Bld. 171 F, Honolulu, HI 96822, USA.
Email: rozaki@hawaii.edu
Fernandes et al.
Purpose
The National Diabetes Statistics Report estimated that 9.4% of
the US population had diabetes in 2015, with 23.1 million
diagnosed and 7.2 million undiagnosed.1 Diabetes is a public
health problem, with 86 million people living with prediabetes
and more than 20% of health-care spending is for people with
diagnosed diabetes. Low-income populations are disproportio-
nately affected by diabetes.2 In 2014, the Patient Protection and
Affordable Care Act (ACA) allowed states to expand Medicaid
eligibility to cover all individuals living up to 133% of the
federal poverty rate. Additionally, Section 4108 of ACA autho-
rized the Medicaid Incentives for Prevention of Chronic Dis-
eases (MIPCD) initiatives. This 5-year grant provided a total of
$85 million to 10 states, including Hawaii, to test the effective-
ness of providing incentives to Medicaid beneficiaries who
participated in evidence-based prevention programs to reduce
health risks through adoption of healthy behaviors.3,4
Methods
Design
From 2013 to 2015, a pre–post, observational study design with
2003 participants was conducted with 9 federally qualified
health centers (FQHCs) in Hawaii. In addition, a randomized
controlled trial (RCT) with 320 participants was conducted at
Kaiser Permanente Hawaii from May 2014 to December 2015.
Sample
Eligible participants of the observational study were estab-
lished patients from the FQHCs in Hawaii who were 18 years
of age and older, Medicaid eligible, and had a known diagnosis
of type 1 or type 2 diabetes. Pediatric population and women
with gestational diabetes were excluded. Recruitment strate-
gies for the observational study included informational flyers
and posters, direct invitation by FQHC clinicians, and commu-
nity health workers. The study recruited 2003 adult Medicaid
beneficiaries through rolling enrollment from February 2013 to
December 2014. For the cost analysis, a randomly selected
comparison group (n ¼ 2719) of Medicaid adults with diabetes
was obtained through the Hawaii Department of Human Ser-
vices (DHS). The RCT target population were adults enrolled
in Kaiser Permanente Quest Integration (Medicaid) and receiv-
ing care coordination services or usual care for diabetes. The
RCT recruited 320 (159 intervention and 161 control) partici-
pants from May 2014 to January 2015.
Supplemental service payments were provided to all parti-
cipating sites for recruitment, enrollment, goal setting, health
coaching, incentive distribution, and data collection. Each site
received $283 per participant/year for the completion of these
tasks. Hawaii Patient Reward and Incentives to Support
Empowerment (HI-PRAISE) distributed a total of $1 444 224
supplemental services, $1 305 599 to the 9 FQHCs and $138
625 to Kaiser Permanente.
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Measures
Clinical outcomes collected included weight, height, body mass
index (BMI), blood pressure, fasting blood glucose, hemoglobin
A1c (HbA1c), fasting lipid profile, renal function, smoking cessa-
tion, retinopathy, and influenza/pneumococcal vaccination
status.
Intervention
The following items were incentivized to improve diabetes
self-management: blood glucose monitoring $20; diabetes
education session $20; pneumococcal or influenza vaccina-
tion $10; retinal eye examination $20; urine for microal-
bumin test $10; cholesterol testing $20; HbA1c testing
$20; reduction in HbA1c by 1% $20; HbA1c at 7% goal
$50; blood pressure control <140/90 mm Hg $20; low-
density lipoprotein (LDL) cholesterol <100 mg/dL $20; if
applicable, smoking cessation class $20; counseling with
behavioral health $20; and achieve weight loss of 7%
$50 for those with a BMI 25. Participants could earn a
maximum of $320/year from enrollment through December
2015. Each FQHC determined the optimal type of incentives
that would motivate and meet the needs of their patients.
Preferred options included gift cards to grocery stores, phar-
macies, gas stations, or retail stores. Less common forms of
incentives were vouchers for farmer’s markets, massages, or
food. Kaiser Permanente administered a debit card which
provides electronic payment to participants upon achieving
incentivized outcomes. The HI-PRAISE project distributed
a total of $414 062 incentives to participants: $339 667 to
participants from the FQHCs and $74 395 to participants from
Kaiser Permanente. The average amount/participant of incen-
tives earned was $180 in the observational study and $203 in
the RCT.
Analysis
Generalized estimating equation (GEE) models were used to
assess both the pre–post differences in participants in the
FQHCs and the group differences in the RCT for clinical out-
comes. Likelihood ratio tests were used to choose the variance–
covariance structure. Linear contrasts were used to examine the
longitudinal changes in clinical outcomes. Estimated coeffi-
cients and corresponding 95% confidence intervals from linear
contrasts were used to quantify the differences in all GEE
models. General linear models were utilized for cost analysis,
in which the effects of the intervention on medical costs per
patient/day were estimated by the coefficients and standard
errors of the interaction term (difference-in-differences). The
cost effectiveness ratio was also calculated.
Results
In the FQHC observational study, the mean age of participants
was 54.1 years with more females (59.8%) than males (40.2%).
The largest racial group was native Hawaiian and other Pacific
1500
Islander (NH/OPI 44.1%) followed by Asian (17.9%). Twenty-
three percent received dual Medicare and Medicaid benefits.
The DHS comparison group differed from the FQHC group in
race, majority was Asian (39.1%), and also had a greater num-
ber of dual eligible (37%). In the RCT study, the mean age was
48.5 and 47.8 years in the intervention and control groups,
respectively. Gender distribution was similar between groups.
The NH/OPI (34.0%) was the racial majority in the interven-
tion group followed by multiple races (25.2%), while multiple
races (32.9%) was most reported in the control group followed
by NH/OPI (29.8%). Nine percent were dual eligible.
In the observational study, participants showed small but
statistically significant improvements in clinical measures from
baseline to the end of the study. Mean HbA1c decreased from
8.56% to 8.24% (P < .0001). Mean systolic blood pressure
decreased from 125.16 to 124.18 mm Hg (P ¼ .0137), and
mean diastolic blood pressure decreased from 75.54 to 74.78
mm Hg (P ¼ .0005). Mean total cholesterol also decreased
from 180.77 to 174.21 mg/dL (P < .0001) as did the LDL which
decreased from 106.17 to 98.55 mg/dL (P < .0001). No statis-
tically significant improvements in the clinical measures were
observed in the RCT.
For the cost analysis, outcomes reflected both the amount
billed and paid. Adjusting for gender, Medicare eligibility, and
race, the amount billed and paid increased in the observational
study by 60.0% and 61.9%, respectively, but remained the
same in the RCT.
Discussion
Pre-ACA Medicaid beneficiary incentives programs have
achieved mixed results, and some have faced skepticism from
the health policy community.5 The HI-PRAISE project showed
statistical improvements in key clinical outcomes of HbA1c,
blood pressure, and cholesterol along with increased participant
compliance with American Diabetes Association (ADA) stan-
dards of diabetes care in the observational study. However, these
improvements in clinical outcomes were small and not clinically
meaningful in reduction of glycemic control or cardiovascular
risk. No statistical improvements in clinical outcomes or ADA
compliance were observed in the RCT. The project did not show
reduction in health cost at the end of the study.
The key limitations included small sample size of the RCT
study and the use of an unmatched ad hoc comparison group in
the cost analysis of the observational study. The small sample
size limited the power of the RCT study. While the FQHCs have
a large participant pool, they were not amenable to an RCT
design. The ad hoc comparison group enabled the cost-
effectiveness analysis, but it was not an ideal option. Addition-
ally, the project was conducted in the usual care setting, without
study visits for data collection leading to a high number of
missing orders and test results.
Another limitation of HI-PRAISE was the eligibility status
of Medicaid beneficiaries which impacted the sample size and
decreased the number of data points analyzed. Compact of Free
Association migrants lost Medicaid eligibility on March 1,
American Journal of Health Promotion 32(7)
2015 because of policy change at the state level reducing the
HI-PRAISE sample size by 38%. Additionally, the HI-PRAISE
project faced delays in establishing contracts with DHS, parti-
cipating FQHCs, and Kaiser Permanente. Competing priorities
such as Patient-Centered Medical Home certification and the
implementation of electronic health records limited the ability
of FQHC staff to fully participate. High staff turnover at the
FQHCs demanded ongoing training. These limitations resulted
in delays in the timely distribution of incentives, which meant
that the pairing of incentives with positive behaviors may not
have been as clear as intended.
Three FQHCs became ADA certified. Future studies on
financial incentives could consider offering higher dollar
amounts for achieving clinical outcome measures or pairing
other potential behavioral economic solutions with financial
incentives to improve health. Incentives could be expanded
to providers too, encouraging provider–patient dyads in com-
mon shared goals. To evaluate the effectiveness of financial
incentives on Medicaid beneficiaries with diabetes independent
SO WHAT?
Implications for Health Promotion Practitioners and
Researchers
What is already known on this topic?
Pre-ACA Medicaid beneficiary incentives programs have
achieved mixed results, and some have faced skepticism
from the health policy community. The more recent
MIPCD programs found that participants receiving incen-
tives used significantly more of the incentivized preven-
tive services.
What does this article add?
The MIPCD initiatives represent the most comprehen-
sive test to date of incentive programs to prevent
chronic diseases in Medicaid beneficiaries. Because
chronic diseases develop slowly and our project only
lasted 3 years, we were not able to directly measure the
long-term effects of the incentive program on chronic
diseases. However, our observational study demon-
strated an significant effect of incentives on HbA1c,
which shows promise for the long-term control of dia-
betes. Incentives did not have an impact on HbA1c in the
RCT.
What are the implications for health promotion
practice or research?
Our follow up time period was too short to allow for
measurable changes in chronic diseases outcomes and
associated costs. Lessons learned from the initiative may
aid implementation of future Medicaid incentive
programs.
Fernandes et al.
of the education/coaching, future studies could consider RCT
design with 3 groups: education/coaching only, financial incen-
tive only, and control. This type of RCT design would allow
robust evaluation of the independent effectiveness of financial
incentives and education/coaching on Medicaid beneficiaries
with diabetes. Conducting future studies with longer follow-up
period may help determine the long-term impact of financial
incentives on health cost.
Authors’ Note
The contents of this publication are solely the responsibility of the
authors and do not necessarily represent the official views of the US
Department of Health and Human Services or any of its agencies. The
research presented here was conducted by the awardee. Findings
might or might not be consistent with or confirmed by the findings
of the independent evaluation contractor.
Acknowledgments
The authors are grateful to the patients of the FQHCs and Kaiser Per-
manente Hawaii for their participation. Many thanks to the executive
team, management team, research team, and health coaches. The
authors appreciate the guidance from our community partners who
served on the advisory council and evaluation council. The authors wish
to acknowledge the support received from State of Hawaii Department
of Human Services, IMPAQ, RTI, Econometrica, and CMS.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to
the research, authorship, and/or publication of this article.
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Funding
The author(s) disclosed receipt of the following financial support for
the research, authorship, and/or publication of this article: The project
described was supported by Grant Number 1B1CMS330884 from the
Department of Health and Human Services, Centers for Medicare &
Medicaid Services (CMS).
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