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May 30, 2013 02:00 AM

Final wellness program rules expand employee protections, incentives

Crain News Service
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    By Matt Dunning, Crain News Service

    WASHINGTON (May 30, 2013) — The U.S. Department of Health and Human Services (HHS) has finalized healthcare reform rules that expand non-discrimination protections for employer-sponsored wellness programs.

    Enacted under the Patient Protection and Affordable Care Act, the final HHS rules significantly broaden conditions under which employers that provide wellness incentives based on specific health metrics—such as body mass index, weight, cholesterol and tobacco use—will be required to offer alternative incentive standards to employees who do not meet the initial requirements.

    The final rules, effective Jan 1, 2014, also provide more clearly defined guidelines to design and implement workplace wellness programs than were in HHS' initial proposal.

    The final rules also increase the maximum dollar amount of rewards or surcharges offered to employees based on specific health standards and outcomes to 30 percent of the total premium cost of their healthcare coverage, and up to 50 percent of total premium costs for incentives tied to smoking prevention or reduction programs.

    During a May 29 conference call, senior Obama administration officials said the final rules give employers greater flexibility to design wellness programs that will drive better health management among their employees and curb growth in healthcare costs. They also said they expect most employers' existing wellness programs would require little if any restructuring to comply with the new regulations.

    "The one thing we've learned from the many, many comments that we got is that many of the wellness programs out there are not cookie-cutter programs," a senior administration official said. "We think most employers, particularly most large employers, won't have to make any major changes. They may have to tweak or make minor changes to their existing wellness programs but, by and large, it's our sense that most employers won't have to do very much."

    Non-discrimination rules expanded

    Under the final rules, if an individual employee does not meet a wellness program's target health standard for incentive eligibility, their employer must provide a "reasonable alternative standard" through which the employee could still earn the incentive regardless of whether their medical condition or health status prevents them from meeting the initial standard.

    The final rules also state that if an alternative incentive standard is simply a less stringent variation of the initial standard, employees must be given additional time to comply. Additionally, an employee must be permitted to submit a second alternative standard based on the recommendations of their personal physician.

    The expansion of the "reasonable alternatives" clause under the final rule was designed to address concerns raised this year that health outcomes-based incentive standards would become a subterfuge for discrimination or adverse underwriting based on the status of an employee's health, which would fly in the face of other provisions in the healthcare reform law, senior administration officials said.

    Concerns about overuse

    Steve Wojcik, vice president of public policy for the Washington-based National Business Group on Health, said that while many of HHS' final rules regarding wellness programs likely would help employers, overuse of the expanded reasonable alternatives provisions by employees could undermine the performance of an otherwise well-designed wellness program.

    "It remains to be seen how that piece of the final rules is going to affect employers' ability to actually move the needle on workforce health, and their willingness to continue to offer outcomes-based wellness programs," Mr. Wojcik said. "It's going to be a real test to see how many employees avail themselves of the broader alternative standard provision, and whether the reasonable alternative programs can be as effective as the initial programs in terms of actually improving health outcomes.

    "If not, employers are going to be questioning why they're offering the program at all."

    This report appeared in Business Insurance magazine, a Chicago-based sister publication of Tire Business.

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