Health Care Reform Provides Support for Wellness Programs

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Many employers already recognize the value of comprehensive wellness programs in reducing health care costs and improving the health and productivity of their workforce.  The White House has publicly backed the expanded use of wellness programs through passage of the Patient Protection and Affordable Health Care Act (PPACA), which President Obama signed into law on March 23, 2010.  The new law includes a number of measures designed to promote wellness programs, including:

  • In 2011, businesses with fewer than 100 employees who work 25 hours or more a week will be eligible for grants to help implement new wellness programs.  To be eligible for funding from this $200,000,000 grant program, the workplace wellness program must be available to all employees and include health awareness initiatives, initiatives to change unhealthy behaviors and lifestyle choices, a supportive environment, and mechanisms to encourage employee participation.
  • For plan years beginning on or after January 1, 2014, the PPACA increases the incentives that may be made available to wellness program participants.  Currently, under the Health Insurance Portability and Accountability Act (HIPAA) nondiscrimination rules, employers are allowed to give a premium discount, rebate or other reward of up to 20% of the costs of coverage  for employees who participate in wellness programs and satisfy a standard related to health status.  Under the PPACA, employers will be able to allow discounts of 30% of the cost of individual or family health care premiums.  That amount could go up to 50% if the Secretaries of Health and Human Services, Labor and Treasury deem it appropriate.
  • The PPACA will also expand wellness discounts in the individual market, with an initial demonstration project in 10 states launched in July 2014 by the Secretaries of Treasury and Labor. 
  • The PPACA also designates that businesses will receive technical assistance and other resources available to help employers evaluate and launch such wellness programs.  To expand the use of evidence-based prevention and health promotion activities in the workplace, the Centers for Disease Control and Prevention (CDC) will provide employers with technical assistance on, among items, measuring participation and methods to increase employee participation.  The CDC will also examine workplace wellness programs and make recommendations to Congress about effective employer-based health policies and programs.  This 2-year national study may serve as a tool for employers about best practices for designing and administering chronic disease and health promotion activities.  
  • The health care reform law also includes reporting requirements intended to spur the use of workplace wellness and health promotion activities.  Group health plans and health insurance issuers will be required to submit an annual report to both the Secretary of Health and Human Services and enrollees regarding quality of care measurements.  The quality of care measurements include information about benefits and reimbursement structures that implement wellness and promotion activities.  Such activities may include smoking cessation, weight and stress management, physical fitness, nutrition, heart disease prevention, healthy lifestyle support, and diabetes prevention. Regulations defining the criteria for these quality of care reimbursement structures will be issued by March 23, 2012.  This provision also directs the Government Accountability Office (GAO) to conduct a study and report to Congress regarding the impact of wellness and health activities on the quality and cost of care.  The GAO report could provide support for what many employers have already found, that wellness programs do improve the quality and reduce the cost of health care.

PPACA’s provisions all demonstrate an interest in supporting wellness programs as a means to find cost savings through encouraging healthy behavior.  The health care law appears to validate the important role incentives play in workplace wellness programs, a position which seems to be in conflict with previous regulatory guidance on the Genetic Information Nondiscrimination Act (GINA).  Employers may, therefore, find a bit of hope in the PPACA’s push for wellness programs – both for its future impact on designing wellness incentives and for its current signal to the regulatory agencies about the value of incentive-based wellness programs.

This is a departure from the regulatory approach towards incentive-based wellness programs in October 2009,  when the Departments of Health and Human Services, Labor and Treasury issued Interim Final Rules for Title I of GINA.  The Interim Final Rules were antithetical to the continued use of financial incentives, such as premium discounts to encourage employees to complete health risk assessments (HRA) that requested any genetic information such as family medical history.  Employers are concerned that the Equal Employment Opportunity Commission (EEOC) – tasked with drafting Title II of GINA, the employer-based regulations – may take a similar dim view in final regulations.  Specifically, Title II of GINA includes an exception that allows an employer to request genetic information in connection with a wellness program if the employee provides prior voluntary and written consent.  In final regulations, the EEOC  may take the position that any wellness program that offered an incentive for participation could not be considered “voluntary” for purposes of the statutory exception.

The EEOC’s final GINA regulations have been stranded at the Office of Management and Budget (OMB) for a number of months as the health care debate made its way through Congress.  We will soon know if the favorable view of wellness programs as evidenced in the PPACA will prevail in the EEOC’s final GINA regulations.  The EEOC announced at the end of April 2010 that it plans to unveil the final regulations this month. 

While the PPACA does not provide as dramatic or significant of an expansion to workplace wellness programs as some had hoped for, it will likely boost their adoption and participation rates.  Even as incentive-based wellness programs face scrutiny under GINA, the new health care law may lay the foundation for creating a culture of  health and prevention both in the workplace and beyond. 

 

Ilyse Schuman authored this entry.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.