A Review of the New Wellness Regulations: A Departure from Personal Responsibility & Accountability for Health
On May 29, the U.S. Departments of the Treasury, Labor (DOL) and Health and Human Services issued the final new wellness regulations that amended the 2006 HIPAA nondiscrimination wellness regulations. The new regulations clarify wellness program categories and clearly define and elaborate on a "reasonable alternative" and its application in a health contingent model.
The DOL has categorized wellness plans into two main categories, participatory and health contingent plans. Health Contingent plans are categorized into two distinct subcategories: activity based and outcomes based plans. These changes in definitions may place some employer current participation plans into an activity category in 2014 that will require reasonable alternatives, certain disclosure language and increased administrative cost.
Due to these changes, it is very important that employers begin working with their wellness program vendors or internal legal departments to review the new regulations against current practice in order to ensure compliance in 2014. The amended regulations now apply to self funded group health plans, fully insured plans and individual group health plans.
The wellness plan must be part of the group health plan and the complete plan documents and summary plan documents must state this. As such, the law reinforces and modifies the loophole in the HIPAA non-discrimination rules and mirrors the PHS Act section 2705 that allows a wellness plan to "discriminate" or reward a participant based upon a health factor when all of the wellness rules and regulations administered properly by the plan. Under the amended rules, the following plans are defined:
Participatory - a wellness plan that is voluntary and offered to all similar participants and may or may not have an award that is not dependent on achieving any standard or measurement. If you participate, you qualify for the award. An example is an HRA that is offered, taken by the participant but no further action is required based upon the results of the HRA.
Activity - a wellness plan that is voluntary and offered to all similar participants and requires completion of an "activity" to get the reward. An example would be if upon completion of a HRA then an " activity" is required, like a smoking cessation program or weight loss program based upon the results of the HRA or any type of screening or risk factor determination.
This then becomes an "activity" based plan and now must have "reasonable" alternative(s) offered. "Specifically, for activity-only wellness programs, a reasonable alternative standard for obtaining the reward must be provided for any individual for whom, for that period, it is either unreasonably difficult due to a medical condition to meet the otherwise applicable standard, or for whom it is medically inadvisable in an attempt to satisfy the otherwise applicable standard."
Outcomes - a wellness plan that is voluntary and offered to all similar participants, and has an award dependent upon a participant meeting a health factor. If the HRA or any other type of screening procedure or risk evaluation then requires the participant to meet a standard of measurement like a specific cholesterol level or BMI, then this plan is determined to be an "outcomes" based program and must offer reasonable alternative..
"A reasonable alternative standard or waiver of the standard must be provided to all individuals who do not meet the initial standard, to ensure that the program is reasonably designed to improve health and is not a subterfuge for underwriting or reducing benefits based on health status."
Reasonable Alternative(s) must be offered at reasonable times and have to be supplied at no cost to the participant except if a diet, the food costs are not covered by the wellness plan, but all other memberships or other administrative costs have to be paid by the plan. It could be possible that a personal physician recommends a fitness center as a reasonable alternative to achieving a BMI of 26.
It might be possible under the new regulations that the employer might have to pay for the fitness center membership. Reasonable alternatives can be determined by the participant or in cooperation with the participant's personal physician. According to the amended wellness regulations, any plan that is determined to be a health contingent program must meet the following five conditions:
- The program must give eligible individuals an opportunity to qualify for the reward at least once per year.
- The reward for a health-contingent wellness program, together with the reward for other health-contingent wellness programs with respect to the plan, must not exceed 30 percent of the total cost of employee-only coverage under the plan, or 50 percent if the program prevents or reduces tobacco use.
- The reward must be available to all similarly situated individuals. For this purpose, a reasonable alternative standard (or waiver of the otherwise applicable standard) must be made available to any individual for whom, it is unreasonably difficult due to a medical condition to satisfy the otherwise applicable standard, or for whom it is medically inadvisable to attempt to satisfy the otherwise applicable standard.
- The program must be reasonably designed to promote health or prevent disease. For this purpose, it must have a reasonable chance of improving the health of, or preventing disease in, participating individuals and not be overly burdensome, a subterfuge for discriminating based on a health factor, and not highly suspect in the method chosen to promote health or prevent disease. The proposed regulations also state that, to the extent a plan's initial standard for obtaining a reward is based on results of a measurement, test, or screening that is related to a health factor, the plan is not reasonably designed unless it makes available to all individuals a different means of qualifying for the reward.
- The plan must disclose in all plan materials describing the terms of the program the availability of other means of qualifying for the reward, or the possibility of waiver of the otherwise applicable standard.
Employers should keep in mind that the intent of the amended wellness regulations is to make sure that no person is discriminated against because of a health factor and that all participants be able to qualify for the reward. They must qualify even if they do not participate in the wellness plan's initial activity or achieve the initial standard in an outcomes based program.
Participants qualify by engaging in a reasonable alternative, with said reasonable alternative created or determined by the participant or their personal physician. The reasonable alternative offered by the wellness plan can be circumvented by invoking their right to have their personal physician design and suggest the alternative.
Any plan that falls into the health contingent category must inform all participants through all plan communications, and the plan document, that the participant can have an alternative and that they can invoke the help of their personal physician to design such an alternative. The very nature of the definitions now allow the participant the opportunity to create "alternatives" upon "alternatives" such that the participant is not required to ever achieve the initial standard like a normal BMI.
In an outcomes based program, upon not receiving the award or getting the penalty, the participant must be informed that they failed to achieve the initial standard and perform the alternative. In an activity based program, it is not reasonable for the employer or wellness plan to written documentation from a personal physician stating that the participant cannot meet the standard.
The participant themselves can determine whether they want a reasonable alternative. They can then invoke the help of their personal physician. An outcomes based program, however, allows the wellness plan to receive written exceptions from the participant's personal physician stating the reason that they cannot meet the standard. Pages 67 and 81 of the regulations provide examples depicting the types of wellness plan activities and measurements that constitute a participatory, activity or outcomes based program.
The thinking of the framers of this legislation assume that most participants are truly concerned about their poor health habits and want to change them, and that the vast majority of employers will offer plans that have a positive effect on participant's health. However, data over the last 10-15 years show conclusively that although Americans may want to change their poor health habits, they do not.
The advent of the 2008 wellness regulations allowed employers to use preventive practice as a powerful tool to help employees become responsible and accountable for their health. The amended regulations may have a negative impact on the "growth" and positive impact of employer sponsored "health contingent" workplace wellness programs in that they usurp, via personalized alternatives, the very goals that the wellness program has set out to achieve.
Based on the new regulations, employers should continue their worksite wellness efforts. However, we recommend a simple and focused approach that applies a hybrid plan using participation and activity based programs to address the four critical factors that drive 75 percent of today's chronic disease and healthcare costs.
It may also be necessary for employers to amend their group plan summary to say that any consultation, office visit, labs or x-rays or procedures incurred by the participant when seeking an alternative to a wellness standard from their medical provider(s) or medical provider treatments, supplies, devices or direct provider services associated with this alternative visit are non-covered services.
In addition, employers should couple their wellness program with a higher risk sharing benefit design that includes higher deductibles and consumer driven plans. In our experience, healthcare affordability will be achieved through the application of personal economics, which will drive most all Americans to change their health behavior.
Personal economics can be achieved by implementing tools and resources in the worksite that motivate change by increasing value in an individual's economic future via health savings accounts and defined contribution plans, which are facilitated by obtaining a better state of health.
The changes in the final regulations serve to obfuscate the ability of employers to change their participants health habits through personal economics, add more administrative costs to achieve the same dismal results and may lead to the rise of "wellness alternative doctor mills."
About The StayFit Plan a division of Simplicity Health PlansThe StayFit Plan is a national health and wellness company that uses its own superior technology and patent pending products to impact your employees' overall well-being. The StayFit Plan is your strategic and trusted wellness advisor.
In conjunction with our clients, we create a comprehensive health and wellness program that is focused on the key factors that drive 75% of illness and claims cost. We excel at integrating with existing benefit programs and services. To learn more contact The StaytFit Plan at email@example.com
About the Authors
Lisa M. Holland, RN, MBA ,CCWS has been in the healthcare care industry for over 18 years and held senior level positions within major healthcare organizations. Lisa is an accomplished wellness subject matter expert and President of the StayFit Plan administered by Simplicity Health Plans. Contact Lisa at (216) 367-3092 or firstname.lastname@example.org
Gregory J. Hummer, M.D., has spent the last 18 years developing and perfecting Simplicity Health Plans to solve the vexing complexities, out-of-control costs, burdens and inefficiencies associated withtoday's healthcare system. Dr. Hummer is Chairman and CEO of Simplicity Health Plans. Contact email@example.com or log onto www.simplicitiyhealthplan.com for more information.