The Office of the Federal Register has just released its final regulations on corporate wellness programs. They go into effect for all group health plans, all group health insurance issuers, and all individual health insurance plan issuers, at the start of 2014.
What I’m going to be doing for you all is going through this thing line by line. You’ll get the most relevant bits, free from legalese and verbosity, and how they affect your wellness programs going forward. It might take a few posts, but I guarantee it’ll be worth it. A quick review first, though: of existing standards in wellness programs with regard to non-discrimination, and the regulations on participatory and outcomes-based programs.
A primary aim of these regulations is to prevent discriminatory wellness programs. Indeed, non-discrimination clauses have been included in wellness program legislation for many years now. The basic idea is that group health plans and group health insurance issuers cannot discriminate someone based on any of these “health factors”:
- Health status
- Medical conditions, both physical and mental
- Claims experience
- Receipt of health care
- Medical history
- Genetic information
- Evidence of “insurability” (including conditions that are consequences of domestic violence)
In other words, your group health plan can’t include Jimmy McBodybuilder (with perfect health) and exclude Raymond O’Bigmac just because Mr. O’Bigmac has diabetes, weighs 300 pounds, has a family history of heart attacks, and uses a CPAP.
The same thing goes for wellness programs. You have to include everyone without discriminating on the eight factors listed above.
Here’s the one exception: What Jimmy and Raymond pay for their health plan can be different. This is, of course, contingent on participation in a company wellness program and fulfilling the conditions necessary to receive the health plan discounts. This can be through premium discounts or rebates, or through changing their deductibles, copays, or coinsurance.
Participation vs. Outcomes
2006 HIPAA guidelines said that participatory wellness programs comply with the nondiscrimination principle as long as programs are offered to all “similarly situated” employees regardless of health status.
What does “similarly situated” mean? Obviously it doesn’t have anything to do with health. No, it actually has to do with an employee’s status within the company. By that, I mean things like whether the employee has a spouse or dependents: you can group those employees together as “similarly situated.” Groups also can be made based on pre-existing business practices: things like over-the-road truckers (they’re all similarly situated) and administrative staff (they’re similarly situated, too).
Those same 2006 guidelines established five criteria for wellness programs that are based on employees upholding certain health outcomes:
- Limiting the reward: The maximum reward for outcome-based wellness programs was 20% off of the full cost of the health plan.
- Requiring reasonable design: Plans couldn’t demand crazy time commitments. They also had to have the ability to reasonably promote health and prevent disease. If the design includes a health screening of some kind, those who don’t meet the required standard must be given an alternative standard. (Example: if your waist circumference was above 40″, and the benefit plan hinges on being below that point, you must be allowed a different way to get the reward.)
- Requires at-least-once-per-year participation opportunities: Plans had to allow for opportunities at least once per year for employees to participate.
- Reasonable alternative standards: A tricky one. If a program is based on health factors, you can’t prevent someone from receiving the reward if the employee is unable to meet the standard (say, due to a medical condition). A different standard must be provided that doesn’t violate nondiscrimination based on health factors.
- Disclosure: All plan materials that describe the program’s terms have to include mentions of the reasonable alternative standards. You can’t sneak it into the rules and not tell your employees about it.
So, what’s changed in this regard?
First, the new guidelines extend HIPAA nondiscrimination provisions to individual health plan & insurance markets.
Second, the reward limit has changed for outcome-focused programs. Instead of a hard cap at 20%, rewards can now have a maximum of 30% off the full cost, with an option to bump up to 50% if the program is also designed to reduce/eliminate tobacco use.
This is where the rubber meets the road. These regulations set criteria for programs of health promotion or disease prevention that are offered by group health plan or health insurance issuers.
The neat part is that they give a step by step way for plans and insurance issuers to tell whether a wellness program is up to snuff. Each step will be covered in detail over the next few days as each applies to the different types of wellness programs.
- Is the program reasonably designed to promote health or prevent disease?
- Does it have a reasonable chance to improve health, or prevent disease, for those who participate?
- Is it too demanding on participants?
- Is it a clever, roundabout way to discriminate based on any of the eight health factors protected under nondiscrimination?
- Is it too suspect in the methods chosen to promote health or prevent disease?
- And, most importantly, to meet the above standards, does the program offer reasonable alternative standards (or waivers of said standards)?
Tighten your seat belts. This is going to be a fun ride.