The recent decision by pharmacy giant CVS Caremark to require employees who receive health insurance through the company to disclose their weight is raising red flags among patient privacy advocates, but it does reflect the need for companies to hold down health care costs.

With obesity contributing to conditions such as diabetes and heart disease, weight management is a key issue being addressed in wellness programs. (CVS is also requiring employees to quit smoking by May 1 or participate in a smoking cessation program.)

Now, into the obesity debate comes intriguing new research from Mayo Clinic showing that financial incentives can help people lose weight.

The study involved 100 overweight people and lasted one year. Participants who met their four-pounds-a-month weight loss goal were given $20 per month, while those who failed to meet their goal had to pay $20 a month into a “bonus pool.” Half of those in the study were not involved in the financial arrangement.

In the incentive groups, participants lost an average of 9.08 pounds, compared with 2.34 pounds for the non-incentive groups.

"The take-home message is that sustained weight loss can be achieved by financial incentives,” says lead author Steven Driver, M.D., an internal medicine resident at the clinic.

Researchers found that even participants in the incentive group who paid penalties were more likely to continue their participation in the study than those in the non-incentive groups, Dr. Driver says.

Senior study author Donald Hensrud, M.D., preventive medicine expert at Mayo Clinic and medical editor of The Mayo Clinic Diet, said: "Traditional therapies are not working for a lot of people, so people are looking for creative ways to help people lose weight and keep it off," Dr. Hensrud says. "The results of this study show the potential of financial incentives."

Incentive company HealthyWage (which describes itself as being at the “forefront of the weight wagering movement”) has developed “competitive, cash-fueled” employee weight management programs involving cash incentives, goal-setting and tracking technologies for companies like Office Depot, Zales and 7-Eleven.