New PPACA Wellness Incentives Rules

Transcription

1 White Paper New PPACA Wellness Incentives Rules What Employers Need To Know shapeup.com

2 Introduction This update discusses four significant changes to the new PPACA regulations, plus how ShapeUp s approach can help employers operate compliant, successful wellness programs. Since the Patient Protection and Affordable Care Act (PPACA) passed in 2010, employers have been deciphering its implications for company health plans. The picture became clearer on June 3, 2013, with the publication of new regulations governing workplace wellness incentive programs. In an overview issued with the regulations, the Departments of Health and Human Services, Labor and the Treasury asserted that appropriately designed wellness programs have the potential to contribute importantly to promoting health and preventing disease. The rest of the 123-page document details what wellness incentive programs should and should not do, to meet federal standards for health promotion and non-discrimination. In this Update, ShapeUp discusses four significant changes and clarifications found in the new PPACA regulations. Then we explain how ShapeUp s approach can help employers operate compliant, successful programs in this new regulatory environment. Define the goals of your program: participation, activity, or outcomes Under the new regulations, wellness programs that provide incentives fit into two categories: They either are participatory or health-contingent. Each kind of program rewards participants in separate ways. Participatory programs are not linked to any specific health measurement or outcome, and employees are rewarded simply for taking part. There are no requirements other than showing up. For example, a participatory reward program may reimburse people for their fitness center membership or provide a reward to everyone who completes a diagnostic test like an HRA, regardless of outcomes. 2 PPACA Wellness Regulations

3 The second category of wellness programs are healthcontingent programs. These programs are related to specific health benchmarks like blood pressure, cholesterol, and weight, and are further divided into two types: 1. Activity-only programs are designed to achieve a particular healthy goal, like increased exercise or lowered blood pressure, but rewards are given based on participation, not on outcomes. For example, participants may be given a reward for joining in a walking challenge or following a diet plan, no matter how they fare. 2. Outcomes-based programs provide rewards based on meeting specific health goals, like quitting smoking, achieving a healthy weight, or lowering cholesterol a certain amount. Design programs to include every employee, regardless of health status Under the new regulations, participatory wellness programs comply with federal standards if they meet a single requirement: Employers must make the programs available to all members of their workforce, regardless of health status. For activity-only and outcomes-based wellness programs, however, the regulations list additional criteria that must be met to comply with the nondiscrimination provisions of HIPAA (the Health Insurance Portability and Accountability Act). Those provisions forbid discriminating against participants in eligibility, benefits, or premiums based on a health factor such as a medical condition, medical history, physical or mental illness, or disability. The new regulations describe how to operate wellness incentive programs so they encourage people to meet healthrelated standards but don t discriminate against people who cannot. For example: An activity-only incentive program might require employees to complete a walking course to obtain a reward. But what about people who, because of a health issue, cannot complete the course or would be unwise to 3 PPACA Wellness Regulations

4 attempt it? An individual may be unable to participate in a walking program due to a recent surgery or pregnancy, or may have difficulty participating due to severe asthma, the regulations note. In those cases, to be compliant, employers may do one of two things. They may set a reasonable alternative standard for an activity--such as attending an educational seminar that the individual can perform despite health constraints, and still qualify for the same reward. Or if employers prefer, they may simply waive the standard and give the individual the reward. An outcome-based incentive program might require employees to achieve a certain body mass index (BMI) to obtain a reward. But if an employee has tried a dietand-exercise regimen and the BMI has not budged, the employee must be offered an alternative way to measure progress (and earn the reward) that is reasonable in light of the individual s actual circumstances and medical condition, the regulations say. For example, if the initial standard is to achieve a BMI less than 30, the reasonable alternative standard cannot be to achieve a BMI less than 31 on that same date. However, if the initial standard is to achieve a BMI less than 30, a reasonable alternative standard for the individual could be to reduce the individual s BMI by a small amount or a small percentage over a realistic period of time, such as within a year. As in activity-only programs, employers also have the option of simply waiving the standard. By mandating reasonable alternative standards, the new regulations seek to insure that every employee has an equal opportunity to benefit from a wellness program and its incentives. Notify all workers up front about alternative wellness program options The new regulations require that employers communicate clearly to employees about their wellness program options. All employees must be told that if health factors render them unable to meet the overall standards of their company s reward program, the company must set a reasonable alternative standard that 4 PPACA Wellness Regulations

5 allows them to qualify for rewards. The regulations don t require employers to design these alternatives until they are needed only to communicate to all employees, at the outset of the wellness program, that the accommodations are available upon request. The regulatory agencies offered the following sample text for communicating with employees: Your health plan is committed to helping you achieve your best health. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at [insert contact information] and we will work with you (and if you wish, with your doctor) to find a wellness program with the same reward that is right for you in light of your health status. Incent participation with regular rewards Like the old regulations, the new ones give employers a mandate about timing: At least once in a coverage year, employees must be offered the opportunity to qualify for the reward in their wellness program. In addition, the new regulations increase the maximum size of the rewards in those programs. In the past, the rewards made to employees in healthcontingent wellness programs could be no more than 20 percent of the annual cost of coverage. Under the new regulations, the rewards can be as much as 30 percent of the annual cost of coverage. The new regulations also increase to 50 percent the maximum reward for wellness programs designed to reduce or prevent tobacco use. 5 PPACA Wellness Regulations

6 Find the right vendor to ensure your compliance When ShapeUp partners with employers to introduce wellness into the workplace, we offer them three key steps to building successful programs. In light of the new PPACA regulations, ShapeUp s steps are as relevant to the compliance of existing programs as to the creation of new ones. Step 1: Determine your organization s wellness goals up front. ShapeUp s experience and research confirm that incentive-based wellness programs are most successful when employers have established clear goals. Deciding what your company s program seeks to achieve is the first step in choosing among participatory, action-only or outcomesbased approaches. Step 2: Start small on any area of measurement. The new regulations require that health-contingent wellness programs have a reasonable chance of improving the health of, or preventing disease in, participating individuals. In ShapeUp s experience, the key to promoting real improvement is to choose one measurement where an activity-only or outcomes-based program can have genuine health impact, and then build around it. For example, we ve built an incentive program around the simple act of self-weighing, which leads to desired weight loss outcomes. Step 3: Reward in real-time. ShapeUp considers it essential to recognize and reward progress in real-time. We believe that s how organizations keep their employees motivated to stay the course and cement healthy behaviors. The new PPACA regulations require that health-contingent programs allow participants to qualify for a reward at least once per year and pointedly describe that as the minimum frequency recommended for such incentives. With the PPACA regulations set to take effect starting January 1, 2014, ShapeUp is helping employers prepare today, by designing wellness programs that meet workforce needs and comply with federal rules. Providing three key steps to building successful wellness programs. To learn more about these rules and introducing wellness into your organization, visit us at shapeup.com or contact your sales representative. 6 PPACA Wellness Regulations