As I said yesterday, I’ll be going through the final wellness program regulations just released by the government. I also gave a quick review of the existing standards, as well as a couple provisions that changed.
The biggest change is that benefit discounts can now be as high as 30%, or even 50% if tobacco use prevention/reduction is included in the wellness program. (It’s 20% right now.)
Now, however, it’s time to dive into the fireworks. Today we’re going to look at the overview of the regulations, and you’ll receive a nice little primer on just how intricate these regulations really are. Don’t worry, it shouldn’t be too labyrinthine. As always, if you have questions, send them to me or ask in the comments!
The Three Types of Wellness Programs
In the 2006 regulations, there were only two types of wellness programs: participatory and health-contingent. The 2014 regulations now address three types of wellness programs:
- Participatory wellness programs
- Activity-only wellness programs
- Outcome-based wellness programs
They’ve effectively split health-contingent programs into two subcategories: activity-based and outcome-based.
Participatory wellness programs (PWPs) are pretty much the same as they were in the 2006 regulations. They’re also the simplest to understand. These programs don’t base their rewards on the eight health factors discussed yesterday. You either qualify for the reward or you don’t. Examples include:
- reimbursing employees for gym memberships,
- providing a reward to employees who take part in a diagnostic screening program (but with NO REWARD based on the outcomes), and
- providing a reward to employees who attend a free monthly health education session.
Participatory programs also don’t have to meet the same requirements as health-contingent programs. Really, the main requirement is simply that rewards be available to all similarly situated individuals, regardless of health factors. Some comments were raised about how schedules can affect availability, but HIPAA regulations don’t include scheduling limitations as a means to discriminate participants.
As a result, even if an employee’s schedule makes it difficult for him/her to participate in this type of program, the wellness program has not violated any HIPAA nondiscrimination rules.
The two health-contingent wellness programs give out rewards based on whether employees satisfy various health factor-related standards. The caveat is that if employees don’t satisfy those initial standards, they have to take more action than other similarly situated people in order to receive the reward. It boils down to these two options:
- performing or completing an activity related to a health factor, or
- attaining or maintaining a specific health factor.
Activity-only wellness programs (AWPs) fall under the first bullet point. Employees have to perform or complete activities that relate to health factors in order to receive the reward. These programs don’t require adhering to certain health outcomes (like weight, cholesterol, or BMI). Your wellness program might be activity-only if it focuses on a walking program, a diet program, or an exercise program, and gives the reward to those who take part.
Outcome-based wellness programs (OWPs) fall under the second bullet point. Employees must reach or maintain a specific health-related guideline in order to qualify for the reward. Common examples include non-smoking protocols and certain results of biometric screenings, like weight, waist circumference, cholesterol, or blood pressure.
Outcome-based programs will typically have two parts. The first part consists of some type of assessment (measurements, screenings, tests) to see if the person meets an initial standard. The second part involves a larger program that seeks to help those employees who don’t meet the initial standard. This program, as you might expect, involves different wellness activities.
The tricky thing about activity-only and outcome-based programs is that they must answer these questions:
- Do employees have a reasonable chance to qualify for the reward?
- Is the reward size in compliance with guidelines?
- Is the program reasonably designed?
- Are the rewards uniformly available, and are there reasonable alternative standards?
- Are the methods for receiving rewards made clear, including reasonable alternative standards?
We’ll address each question on base level first, but rest assured that there is plenty of detail yet to be uncovered. There are still almost a hundred more pages to get through!
In other words, how often are you eligible to qualify for the reward? For both activity and outcome programs, eligible individuals must be allowed to qualify at least once per year. You can give more than one chance, of course. This was originally a bright-line standard as a way to determine a minimum reasonable frequency to promote health and prevent disease.
The Size of the Reward
These new guidelines bump up the maximum reward that companies can dole out for the two types of health-contingent programs. It’s gone up from 20% to 30-50%: the 50%, again, comes from the presence of programs to reduce or prevent tobacco use.
These percentages apply to each kind of employee coverage: individual, employee-plus-one, or family coverage.
That is, if Joe Smith decides to participate in his company’s wellness program along with his wife and two kids, and they achieve the required standards, they get the percentage off from their family coverage.
If Joe Smith was single, he would get the percentage off of the individual employee coverage. If he only had his wife alongside and they succeeded, he would get the discount on the employee-plus-one coverage.
The tricky part comes when a family participates, but not everybody succeeds. Say John and one child succeeds, but his wife and the other child don’t. There aren’t any detailed rules regarding “partial rewards” in the government’s regulations. Instead, the regulations state that health plans & issuers have the freedom to determine how to apportion rewards among family members, as long as those methods are reasonable.
Reasonable Program Design
(Aside: They use “reasonable” a lot in these regulations. It’s almost unreasonable to use it that much.)
These regulations define wellness programs as being reasonably designed if they
- have reasonable chances to improve health and/or prevent disease in the participants,
- don’t require too much time or effort from the employees,
- aren’t a smokescreen for discriminating based on health factors, and
- are not “highly suspect” in their methods to promote health and prevent disease.
Determining whether a program is well-designed takes into account all available facts and circumstances. Also, to be well-designed, the regulations explicitly state that they need not adhere to specific evidence-based clinical standards. (Somewhere, people who know that saturated fat isn’t diet apocalypse, that stringent cholesterol controls aren’t good, and that some people just can’t handle grains, just breathed a sigh of relief.)
The regulations did make the amusing, yet entirely true, observation that health plans and issuers are not prevented from giving more favorable eligibility rules or premium rates (including rewards for adhering to wellness programs) to people with adverse health conditions, and less favorable ones to people in good health.
Of course, reasonable design does come with conditions, including one you’re going to get very familiar with hearing: the reasonable alternative standard (RAS). To be well-designed, health-centered wellness programs MUST offer reasonable alternative standards (RAS’s). That way, all the people who don’t qualify for the initial standard have a way of earning the reward by some other means. This is one way to make sure that OWPs aren’t just a way to give rewards for biometric screening results or satisfactory HRA responses.
Reasonable Alternative Standards (Uniform Availability)
The main idea is that for AWPs and OWPs, the full reward of the wellness program must be available to all similarly situated individuals. This includes the presence of reasonable alternative standards for qualifying for the reward.
Under these rules, individual employees can request, establish, and satisfy an RAS. To meet the regulations regarding RAS’s, the full reward must be available to those who qualify by meeting the RAS requirements. That reward must be the exact same given to those who met the initial standard.
Example: Joe Smith’s company wanted men to have waist circumferences less than half their height. He’s 6′ tall, but his waist circumference was 40″ when the company did the testing in January, greater than the 36″ needed to qualify for the reward. If he opts to meet a well-designed alternative standard (say, a diet/exercise program) and succeeds in getting his waist circumference to 34″ by July, he must receive the entire reward for the year. He’d get the same reward as Bob Davis, who was 5’10”, measured 30″ in January, and received the discount for the entire year.
Specific schemes for rewarding mid- or end-of-year health outcomes can vary from company to company, whether you wish to pro-rate for the rest of the year or give money back in a lump sum payment. You can’t, however, roll discounts into the following year, because it violates the idea of qualifying for a reward at least once per year.
Now, health plans and issuers don’t have to pre-structure alternative standards. They can simply say that they’re available to those who request them, but they’re also bound to provide one if an employee requests one. They can also waive the standard in lieu of giving an RAS, and simply provide the reward. (I’m not sure when this would apply.)
Plans and issuers have flexibility in creating RAS’s for employees, including whether to give the same RAS to an entire class of individuals or create RAS’s on a case-by-case basis. There are a few regulations about creating valid alternate standards, though:
- If the RAS includes completing an educational program, the plan/issuer must make a program available at no cost OR help the employee find a program and pay for the expenses.
- The time commitment cannot be crazy. Requiring attendance at a program that meets for an hour each night falls under the “crazy” area. (They say “not reasonable.”)
- If the RAS is a diet program, the plan/issuer doesn’t have to pay for food, but it must pay for a membership or participation fee if it exists (e.g., Nutrisystem, Weight Watchers).
- If the employee’s primary care physician says that the plan’s standard (which might include recommendations from the plan’s medical professional) isn’t medically appropriate for the employee, an RAS must be given that accommodates the physician’s requests.
Plans and issuers cannot stop giving RAS’s just because somebody didn’t succeed the first time around. They must continue presenting opportunities for RAS’s, whether they be the same or different.
This can be applied to tobacco use, weight management, weight loss, etc. For example, if a standard is that employees can’t smoke, an RAS for the first year would be that employees who do smoke must attend educational classes. The employee would get the reward regardless of whether he/she quits smoking. If that doesn’t work, the next year would require completing a different standard or trying a different type of therapy.
As far as activity is concerned, the same thing goes. If Jill Jackson can’t take part in a running program (for some medical reason), and the RAS is a walking program and for some reason she can’t do that either, another RAS should be in place to accommodate her.
[[Okay, take a deep breath. You’ve gotten this far. We’re not too far from the finish. Take a break, stretch, stand up, walk around for a couple minutes, let some stuff sink in, then come back.]]
So, how do reasonable alternative standards apply to the two health-contingent programs, activity and outcomes?
For activity-only programs, plans & issuers can request confirmation from an employee’s physician that a mitigating health factor makes it too hard, or medically iffy to attempt to try, to satisfy the initial program standard… as long as the standard is already reasonable.
That is, if it is logical to see that medical judgment is necessary to verifying the request for an RAS (“you don’t look crippled”), the plan or issuer can request a physician’s confirmation. The regulations don’t expressly forbid plans and issuers from requiring physicians’ verifications in clinically-appropriate situations, nor do they require that any medical professional besides a physician be permitted to give those verifications.
The final regulations only implement wellness program provisions in the Obamacare bill. Employers subject to HIPAA or ADA regulations must comply with those applicable statutes as they pertain to things like confidentiality, privacy, and information disclosure.
For outcome-based programs, this allows for targeting of people who smoke, who have high blood pressure, are overweight/obese, and have an unhealthy waist circumference. It doesn’t have to involve the entire group of wellness program participants.
Simply providing tests, measurements, or screenings isn’t enough to promote health and prevent disease. (In other words, it’s not “reasonably designed.”) Furthermore, if rewards are given based on the results of those initial screenings as they apply to the standards you’ve set, your program is most decidedly outcome-based. RAS’s are needed.
Providing RAS’s doesn’t turn an outcome-based program into a participatory program. You can still require meeting an outcome-based standard; there are just different ways to go about it.
An RAS for an outcome-based program can be a participatory program. Example: if you’re a smoker and the company doesn’t permit tobacco use, you can participate in smoking cessation classes. If you attend, you fulfill the requirement in the RAS, and you get the reward.
An RAS can also be an activity-only program. However, this activity-only program must follow the exact same rules within these regulations. In other words, if an activity-only program is used as an RAS, it must behave as if it was the primary program.
An RAS can also be an outcome-based program. Yet just like the previous paragraph, this outcome-based RAS must behave just like the parent outcome-based program. But in order to keep plans/issuers from making this an endless cycle, a few extra rules come into play.
- The RAS can’t require an employee to meet a different standard in the same amount of time as the primary standard. For example, if a program says Dave’s BMI should be below 30, and he’s at 34, the RAS cannot require that he get his BMI below 31 by the same time that BMI should be below 30. He must be given an appropriate amount of extra time. An acceptable RAS would require that Dave reduce his BMI by a given amount or percentage over a realistic period of time. Of course, Dave also has an option of a second RAS if his physician gives recommendations and stands by Dave when the request is made.
- Requiring verification prior to giving an RAS that states that a health factor makes it too hard for someone to satisfy, or medically iffy to attempt to satisfy, the initial standard, IS NOT ALLOWED. You can’t force an employee to give a doctor’s note (saying that her cholesterol level of 385 makes it inadvisable to try to achieve the standard of < 220) before you create an RAS for her.
- If the RAS is an activity program, the plan/issuer may seek verification ONLY about the activity component. If a diet/exercise program is the RAS for keeping weight below a certain threshold, and Becky wants a second RAS, they can request verification about the diet and exercise because it is an activity-based program.
Disclosure of Availability of Reasonable Alternative Standard
In all materials that discuss the terms of an activity-only or outcome-based program, plans and issuers must say that RAS’s are available as a means to qualify for the reward. (Waivers too.)
This disclosure includes listing contact information for employees to call to obtain their alternatives, and a statement that recommendations of an employee’s physician will be accommodated.
For outcome-based programs, the disclosure must be included with notices that tell an employee that he/she didn’t meet the initial standard.
For both AWPs and OWPs, if plan material simply mentions that the wellness program is available and doesn’t describe the explicit terms of the program, this disclosure isn’t needed.
Example: A summary of benefits and coverage says that cost sharing can vary based on participation in a diabetes wellness program. The summary doesn’t mention any standards of the program at all, including completion requirements.
That doesn’t require the disclosure notice because it didn’t talk details. This next one, however, does require the disclosure of alternative standards because it discusses the terms of the wellness program:
Example 2: A plan disclosure references premium differentials based on tobacco use and the results of biometric exams.
Clarification of Grandfathered Plans and Individual Health Insurance
The regulations also clarified that wellness program standards apply to both grandfathered and non-grandfathered plans. Now, some sections of the Affordable Care Act don’t apply to grandfathered plans, but these latest regulations state that the provisions are allowed by HIPAA and ACA. The intent, of course, is to avoid inconsistency across different types of health coverages and to give grandfathered plans the same degree of flexibility as non-grandfathered plans.
Furthermore, participatory wellness programs in the individual health insurance market are stated to not violate nondiscrimination rules as long as they comply with state laws and are available to all similarly situated individuals who are enrolled (e.g., single males in a given age group). And remember, participatory programs don’t discriminate on health factors, so they don’t violate HIPAA.
Whew. That was a mouthful. And guess what… there are about a hundred pages left to go.
Leave your comments and questions below, or email them to me.