To incent or not to incent
Originally posted October 18, 2013 by Rhonda Willingham on lifehealthpro.com
There is a lot of confusion and more than a few questions about the use of incentives in benefits these days.
What do the Health Insurance Portability and Accountability Act’s (HIPAA) new wellness regulations mean? How can we incentivize employees, without risking noncompliance with new regulations?
Incentives are an especially big question mark for employers because so many want to find ways to motivate, encourage and lower the health care costs for the 5 percent to 10 percent of their employee population that is driving 80 percent or more of their costs.
Often these are employees who have chronic conditions such as diabetes or heart disease, or who may be obese – a condition now classified by the American Medical Association as a disease. Often these are also valuable tenured employees who have the skills, knowledge and expertise a company may need; helping them helps the company.
Here’s what you can tell your group health employer clients about the complex issues surrounding incentives today:
1. Offer a health risk assessment
One of the first steps toward getting employees to improve their health is the health risk assessment (HRA), which is the entry point for most wellness programs. Employers frequently offer financial incentives, premium discounts, or even PTO to get people to take the HRA.
Yes, HRAs have come into question of late in benefits circles – but, despite the current controversy, they remain a very smart tool for employers. They provide important information about the health status of employees and what programs (based on aggregate, not individual data) could provide the most value to the organization.
But . . . and here’s where a lot of employers have gotten into trouble . . . you must fully explain their value, including how they work. Include the steps that need to be taken to protect privacy and ensure employees know they can opt out – preferably without penalties - if wanted.
2. Understand what new regulations do and don’t say
What employers can and can’t do with incentives is governed in part by the Patient Protection and Affordable Care Act (PPACA) and HIPAA.
One of the many provisions of PPACA is that it allows employers to link greater financial incentives to the achievement of predetermined health targets, such as smoking cessation or healthy weight. HIPAA also governs what group health plans can do with benefit programs.
Most importantly, HIPAA prohibits employers from charging different premiums based on health status. People can’t be penalized just because someone is overweight or has diabetes or heart disease.
HIPAA’s new wellness regulations, introduced in June of this year, state that:
…a group health plan…may not require any individual (as a condition of enrollment or continued enrollment under the plan) to pay a premium or contribution which is greater than [that] for a similarly situated individual enrolled in the plan on the basis of any health status related factor…
The other major component for HIPAA is guidance on the dollar amount allowed for incentives.
Health plans and insurers will be able to offer higher financial rewards to participants achieving healthy behaviors such as quitting smoking or reducing cholesterol. Specifically, as of Jan. 1, up to 30 percent of the total cost of health plan coverage (employer and employee cost of coverage with no cap) may be tied to an incentive. Tobacco cessation and usage reduction programs allow rewards to be increased to 50 percent. Now, in reality very few employers will go up to that 30 percent, but it is an option.
The real trick to compliance with HIPAA’s wellness regulations is that wellness programs will have to ensure they do not discriminate against people based on health factors. For example, if an employee is extremely obese and unable to participate in a walking program that provides financial incentives, there must be an alternative program for that employee.
3. Determine if you will use a carrot or stick
Employers have developed a range of approaches to incentives over the past few years. Most incentives today are based either on participation, outcomes or progress. Participation-based programs are simple.
You participate, sign a sheet that you came to the stop-smoking class or joined a gym, and you qualify for the incentive. Outcome-based programs usually include financial incentives.
Employers have learned over time that money is a great motivator for participation in either the HRA or a wellness program. The threshold for motivating employees seems to be right around $300 to $500 annually.
The key characteristic of an outcome incentive is that the employee doesn’t get that incentive unless he or she achieves a pre-determined goal or health standard, such as quitting tobacco use, losing 10 percent of body weight within six months, or bringing cholesterol levels within normal limits, etc.
Progress-based incentives are viewed as a “kinder, gentler” approach. They reward employees based on incremental, individually-attainable goals rather than a singular goal for all. In other words, you may need to lose 50 pounds, but the employer says, “We know losing even five pounds helps you and helps us, so you will still get the incentive.” (Studies show even small reductions in risk lower health care costs.)
Here again is where the incentive question gets tough and complicated. A Towers Watson 2012 survey reports that 62 percent of employers plan on switching from incentives for participation – which employees like – to incentives for improvements – which employers like – because it holds employees more accountable and the thought/hope is it will produce more tangible and measurable outcomes.
So what’s an employer to do when it comes to incentives? As we are learning from recent high profile news stories, employees will push back hard if they don’t support a wellness program and its goals (which typically happens if there is poor communication), or if they think non-participation penalties are too punitive. We all understand the need for accountability, but if that comes at the price of an unhappy employee population, what have you really won?
Every organization is different; I think it’s difficult to mandate you must do X, Y or Z. As part of my job with a leading health and wellness company and as a member of a number of key organizations evaluating worksite wellness programs and incentives, my recommendation is to consider a developing and evolving plan with incentives that engage, motivate and encourage all employees.
Start with simply incentivizing participation. Then as the program becomes better accepted with employees experiencing success – and as you do more education and communication – you can always migrate to the incorporation of a program that incentivizes progress.
Again, there is no one-size fits all, but we do know that what truly motivates people are programs that build intrinsic motivation. Program designs with the best chance of fostering such intrinsic motivation are those that use extrinsic tools (e.g., a weight loss program for employees) in a way that doesn’t make employees feel pressured but creates a supportive and empowering environment that promotes individual choice.
The last word on incentives is that the ultimate goal is not to get people to engage in behaviors for a short period of time just to get dollars. The objective is for employees to internalize the goal and learn how to make and sustain better lifestyle choices themselves.
Bike and health expert advocates collaborative approach to wellness
Originally posted September 25, 2013 by Kathleen Koster on https://ebn.benefitnews.com
The workplace strategy for health improvement is easily expressed as a bicycling metaphor where bicyclists struggle with the uphill stretches and use caution to coast on downward slopes. Gary Earl, former vice president of benefits and health care for Caesars Entertainment Corporation, suggested employers could learn from the biking world when improving their wellness strategy, speaking during a panel discussion at the Benefits Forum & Expo in New Orleans on Monday.
“Our job [as HR professionals] is to improve the lives of human beings. We’re responsible for that,” explained Earl, founder and team captain of Journey for Health Tour, for which Earl and his team are riding a bicycle 3,000 miles across America to promote health improvement.
While working for Caesars, Earl transformed the company’s outlook on wellness programs and health benefits from a cost-only perspective to an asset for the workforce and business.
“[My employer’s] vision was the traditional vision: to offer affordable benefit plans to employees and to reduce costs. We turned that upside down. We wanted to move it from an expense to an asset,” he said.
He created an affordable equation to prove his strategy would improve the population’s health by developing a mathematic equation to show company executives the value in this paradigm shift.
That equation illustrated how employees’ positive health experience and positive attitude generates an increase in productivity, sustainability and satisfaction, which would lead to an improvement in company earnings.
“We have to look at health benefits as an opportunity, an asset,” Earl stressed.
Earl believes HR and benefits professionals need to hold themselves accountable to improving population health and always passionately advocate wellness—not simply view this responsibility as part of a dry job description.
Over time, we have created the problems afflicting our health system and it’s our responsibility as a community to fix today’s prevalent issues, said Dr. David Whitehouse, MD, chief medical officer, UST GLOBAL, a fellow panelist at the conference session.
“The ecosystem of health and the obesity endemic exist because of modernization. During World War II there were food shortages and we developed preservatives [to make our food last longer]. We then wanted to make our lives more convenient, so we developed transport and we stopped exercising and walking. We have, in fact, through modernization and our own design for comfort, created the epidemic,” said Whitehouse.
Earl seconded that point, adding that these health issues “can’t be viewed in isolation. They are systematic problems, which means that they are interconnected and interrelated. We need to approach this by connecting all aspects of the community, whether it’s faith, safety, education, business or economic development—there’s a real balance to be able to draw them all together.”
He added that business owners could drive this change. “They don’t own that change but they can be a catalyst. By coming together in uncommon ways but for a common purpose stimulates the change,” he said.
Employers and company leaders must connect with communities to make significant change. Applying the bike metaphor again, Earl said that we need to encourage each other when facing uphill challenges and learn from one another to find solutions. And for those downhill stretches, Earl explained that in biking, “you don’t ever coast downhill; you want to keep that leg-mind momentum going.” Employers must also use caution to stay in control of their initiatives and keep forward momentum, without swerving off the edge of the road.
“You’re not going to improve an individual’s health without understanding what those social and environmental elements are,” Earl said. “You have to put in the energy.”
Employers can align medical groups and local systems by working with the community. They can make a customized approach through patient-centered medical homes, on-site clinics or Accountable Care Organizations. Whatever employers develop with their local groups, they must work together to fix the dramatic health issues Americans face and struggle with.
“If we don’t overcome our shyness and work collaboratively then we will live with the misfortunes of our unintended consequences,” said Whitehouse.
A faster, cheaper way to wellness programs that work
Originally posted September 6, 2013 by Vlad Gyster on https://ebn.benefitnews.com
The debate over whether wellness programs "work" is becoming increasingly heated. Many question the validity of research demonstrating that wellness programs reduce health care costs. At the same time, others swear by their wellness provider. So, who's the liar?
As with most things, the truth is in the eye of the beholder. Wellness is a business, and it would serve us well - no pun intended - to consider this business formula as we attempt to determine where the truth lies and understand why this debate is so heated: Value = Benefits/Cost.
To begin with, we don't truly know the value of a wellness program. This formula helps quantify the importance of knowing value. When making a purchase, all of us have some understanding of a product's benefits, and in return we pay a cost. Together, those two factors create a value. If the benefits and costs are generally understood, then value is pretty predictable. But if there's a lack of agreement about the benefits, it's tough to come to consensus on value and cost. The result is very different calculations and a big debate about whether something is really worth it. This is what we're experiencing with wellness programs. The reality is that we don't really know all the benefits a wellness program provides, and, as a result, their value is up for debate.
This debate will eventually be resolved in one of two ways:
1. We come to a consensus that wellness programs deliver the stated benefits and continue to pay the current cost; or
2. We conclude the benefits are lower than initially thought, and adjust the cost accordingly.
I've got my money on option 2. Here's why:
Gartner - a research advisory firm that's been evaluating technology for more than 30 years - discovered a funny pattern: Every few years, a new technology emerges that gets a lot of people really excited. There's a lot of enthusiasm and promises, but, given limited use, no real data about the technology's actual benefits. This is the "peak of inflated expectations"; i.e., when we make statements like "This is going to change the world."
After a while, though, people realize that their perception of the technology's benefits are unrealistic; they feel they received bad value, get disgruntled and criticize the technology as worthless. This is the "trough of disillusionment." It occurs when the benefits are lower than originally assumed, and the cost is experienced as too high relative to the perceived lesser value.
It's reasonable to assume we are in the midst of a sober re-evaluation of the benefits of wellness programs, somewhere in the "trough of disillusionment." The good news is, as history has proven, that over time, the market comes to understand the technology's actual benefits, accepts them and broad adoption can occur. For this to happen, there needs to be a consensus about the benefits (aka ROI) and the price adjusted accordingly. This doesn't mean wellness programs are worthless, just that they may be worth less than the benefits declared during the "peak of inflated expectations."
Minimize cost
In a scenario where the value of something is unclear, it's wise to minimize - rather than wait for the market to drive down - cost, as cost is the variable you have control over. Traditional approaches to launching wellness initiatives come with huge overhead - strategy, vendor selection, implementation and vendor fees can easily run into the hundreds of thousands of dollars - and can take years before having any real impact on even a single employee. Cut as much of this overhead as possible. Vendor selections should come in the form of free trials with groups of employees. Vendor fees should be contract-free and have monthly options for easy exit. Strategy work should turn into small experiments with employees to identify what works and what doesn't.
In other words, spend less. But how do you drive a high level of engagement in wellness with limited resources? We suggest using the Lean Startup methodology used by startups to drive engagement in new products using limited resources. This approach advocates using small, inexpensive steps that lead to quick wins and continuous improvement. Its use could help HR quickly and cheaply differentiate what works from what doesn't, so HR can focus time and dollars on what's actually effective.
Four steps
Here's our version of the Lean Startup methodology adapted for HR:
Step 1: Think in terms of a "Minimum Viable Product". MVP is the smallest thing you can do to learn how to make progress toward your objective. For most employers, the objective of their wellness programs will be somehow tied to employee participation. Instead of spending limited resources on building business cases and other costly activities, pick something to do that is small and will help you learn what works to gain employee participation.
Step 2: Build something that's "good enough". Start with something easy, like an employee video testimonial about a benefit that's already available (but likely underappreciated), such as gym reimbursement. Upload the video to a video hosting tool for businesses so you can track how many people click the link and view your video. Send an email to employees inviting them to watch the video. Explain that this is a "beta" and you're testing concepts for a potential wellness initiative. Distribute it to a small group first to ensure everything is working.
Step 3: Measure. Measuring is essential. If you don't measure results you can't test your assumption about how a particular strategy will work or learn from it. Once the email is sent, you'll know how many people clicked the link and how many people viewed the video and for how long. These key performance indicators - KPIs - provide a baseline for identifying progress and future improvements.
Step 4: Learn. This is the most important step. By this point, you should have gained some idea of what's working well and what's not, and the data necessary to improve key metrics. These are the types of tangible outcomes necessary to propel any wellness initiative forward. What can you do to increase those numbers? The faster you can repeat this process and improve your KPIs, the more momentum you'll gain - and the sooner you can determine the potential effectiveness of wellness initiatives without a huge expenditure of scarce resources.
Debate will continue
Whether the results achieved with wellness programs are worth their cost is a debate that will likely continue. That said, there's little doubt that a key ingredient to achieving ROI on wellness programs - or any HR initiative - is employee participation. The HR-adapted Lean Startup approach lets you know whether you've got this key ingredient - before you've spent a lot of time and money hoping to get it.
New PPACA wellness rules include fat rewards
Original article from https://www.benefitspro.com
By Allen Greenberg
May 29th, 2014
Workers who lose weight or quit smoking while enrolled in a workplace wellness programs could see their health care premiums drop under new rules issued Wednesday as part of the Patient Protection and Affordable Care Act.
Beyond lowering premiums, the Health and Human Services Department said the rules — released by HHS along with the Labor and Treasury departments — also are aimed at protecting individuals from unfair underwriting practices that could reduce their health benefits.
Wellness programs typically tie financial incentives to weight loss or reducing blood sugar.
As the mounting cost of health insurance continues to strain budgets, both employers and policy makers are increasingly turning to wellness programs as a way to help bring those costs under control.
Proponents say wellness programs can save employers as much as $7 for every $1 spent, as well as deliver higher employee morale, reduced absenteeism and increased productivity and retention.
The rules support “participatory wellness programs” that, for example, reimburse employees for the cost of membership in a fitness center, or provide some kind of reward to employees for attending a monthly, no-cost health education seminar.
The rules also outline standards to reward individuals who meet a specific outcome related to their health, say losing weight or cutting smoking.
Some Democrats in Congress worried that the outcome-based programs could allow insurers to discriminate against unhealthy people.
Businesses, meanwhile, expressed concerns about overly burdensome regulations, requiring them to provide tests to determine whether employees met wellness program benchmarks. Helen Darling, president of the National Business Group on Health, in a letter said she worried that "certain provision[s] of the proposed regulations will impede innovation and increase administrative and cost burdens for wellness programs, with little to no benefit to participants."
But HHS said it had "clarified" some "confusion" about how the new incentives would work, though it left intact the size of the incentive employees can receive for meeting wellness goals. Some had wanted the incentives reduced.
Under the rules, employers can bump up the maximum permissible dollar amount of the rewards offered to employees to 30 percent — it had been 20 percent — of the total cost of their health care coverage, and can raise incentives tied to smoking prevention or reduction programs to up to 50 percent of total coverage costs.
"Today’s final rules ensure flexibility for employers by increasing the maximum reward that may be offered under appropriately designed wellness programs, including outcome-based programs," HHS said in a statement.
"The final rules also protect consumers by requiring that health-contingent wellness programs be reasonably designed, be uniformly available to all similarly situated individuals, and accommodate recommendations made at any time by an individual’s physician based on medical appropriateness."
The intent, HHS said, is that, regardless of the type of wellness program, anyone taking part in the program should be able to receive the full amount of any reward or incentive, “regardless of any health factor.”
Above all, HHS said, it has tried to be reasonable.
"These final regulations state that a wellness program is reasonably designed if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals, and is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease," agency officials said.
The rules will go into effect Jan. 1.
Final ACA wellness rules issued
Original article from eba.benefitnews.com
By Amy Gordon and Jamie Weyeneth
On May 29, the U.S. Departments of the Treasury, Labor (DOL) and Health and Human Services issued final regulations amending the 2006 HIPAA nondiscrimination wellness regulations to implement the employer wellness program provisions of the Affordable Care Act. The final rules retain the two categories of wellness programs – “participatory wellness programs” and “health-contingent wellness programs.” The final rules do not deviate extensively from the proposed regulations issued in November 2012, although the content has been reorganized to more clearly set forth the requirements for each type of wellness program. The participatory wellness program rules are basically unchanged from the current 2006 regulations – participatory wellness programs comply with the HIPAA nondiscrimination requirements as long as the participant does not have to satisfy any additional standards and participation in the program is made available to all similarly situated individuals, regardless of health status. However, the final rules update and expand on the requirements for health-contingent wellness programs, which condition a reward on a participant’s satisfaction of a standard related to a health factor.
Under the final rules, there are two types of health-contingent wellness programs – “activity-only” programs and “outcome-based” programs. An activity-based wellness program provides a reward if an individual performs or completes an activity related to a health factor, but it does not require the individual to satisfy any specific health outcome. Examples include walking or exercise programs in which a reward is provided just for participation, or rewards for taking a health risk assessment without requiring any further action. An outcome-based wellness program requires an individual to either attain or maintain a specific health outcome – for example, not smoking or achieving certain results in biometric screenings – in order to obtain a reward.
All health-contingent wellness programs must meet five requirements:
1. Eligible individuals must be given an opportunity to qualify for the reward at least once per year.
2. Generally, the reward may not exceed 30% of the total cost of employee-only coverage (including both the employee and employer portion of the cost of coverage). If dependents are permitted to participate, the reward can be calculated on the basis of 30% of the cost of coverage in which the employee and any dependents are enrolled. In the case of a program designed to reduce or prevent tobacco use, the maximum reward amount is 50% of the total cost of coverage. The reward limit is cumulative for all health-contingent wellness programs.
3. The program must be reasonably designed to promote health or prevent disease.
4. For an activity-based wellness program, the full reward must be available to all similarly situated individuals by offering a reasonable alternative standard for obtaining a reward if it is either unreasonably difficult due to a medical condition to satisfy or medically inadvisable to attempt to satisfy the otherwise applicable standard. A wellness program can require verification from a physician that an individual’s health factor makes it unreasonably difficult or medically inadvisable to attempt to satisfy the regular standard.
For an outcome-based wellness program, the full reward must be available to anyone who does not meet the standard based on the initial measurement, test, or screening. The alternative standard cannot be a requirement to meet a different level of the same standard without additional time to comply – for example, if the initial standard is to achieve a body mass index of less than 30, the reasonable alternative standard cannot be to achieve a BMI of less than 31 on that same date, but it might be reasonable to require the individual to reduce his or her BMI by a smaller amount over the course of a year or other realistic period of time. If the individual’s physician joins in the individual’s request for an alternative standard, the physician can be involved in setting (and adjusting) a second alternative standard, consistent with medical appropriateness.
An alternative standard is not reasonable under either type of program unless the time commitment required to satisfy the standard is reasonable. If the alternative standard requires completion of an educational or diet program, the employer must assist the individual in finding the program, and the individual cannot be required to pay for the cost of the program. The alternative standard must accommodate the recommendations of an individual’s personal physician as to medical appropriateness.
5. The availability of a reasonable alternative standard to qualify for the reward must be disclosed in all materials describing the terms of the wellness program. For an outcome-based wellness program, a similar statement must be included in a notice that the individual did not satisfy the initial outcome-based standard. Sample language is provided in the final rule.
The final rules apply to both grandfathered and non-grandfathered group health plans in both the insured and self-insured markets and are effective for plan years beginning on or after January 1, 2014. Plan sponsors and issuers should review their current wellness programs and health plan communications in light of these final rules.
Training Is the Key to Effective Wellness Programs
Original article from safetydailyadvisor.blr.com
By Chris Kilbourne
Many employers turn to wellness programs to manage healthcare costs and improve employee productivity. However, recent research shows that educating employees about the programs is critical to their success.
"Well on the Way: Engaging Employees in Workplace Wellness," a white paper released by Colonial Life & Accident Insurance Company, explains that strong communication drives the effectiveness of wellness programs. The company has found that more than half of workers do not know enough about their company’s wellness programs to participate in them. In fact, 52 percent of workers whose employers offer wellness programs say they are only somewhat or not at all knowledgeable about them, and the lack of knowledge is highest among young workers, less-educated workers, and lower-paid workers.
"Just offering a wellness program and expecting a majority of employees to participate—the 'if you build it, they will come' scenario—is prone to failure," says Steve Bygott, assistant vice president of marketing analysis and programs at Colonial Life. "Communication that clearly delineates the benefits of participation to employees is the first step to long-term engagement in wellness programs."
Case Studies
Winners of the National Business Group on Health's 2012 Best Employers for Healthy Lifestyles awards, for example, have demonstrated a commitment to promoting wellness and educating employees about it.
Cardinal Health received an award for its Healthy Lifestyles program, which is part of the company’s overarching benefits strategy to support the well being and development of its employees. Cardinal Health incorporates work/life effectiveness initiatives, programs, and incentives that emphasize wellness and prevention. Among other offerings, the company provides its employees with education and awareness programs, as well as health coaching.
NextEra Energy, Inc. is another award-winner. Its NextEra Health & Well-Being initiative provides a wide variety of health and productivity management programs—with services in five primary categories: health promotion, fitness, nutrition and weight management, health centers, and an employee assistance program.
Other award winners include American Express® and HP.
American Express's Healthy Living corporate wellness program encourages preventive care and healthy lifestyles. Developed in 2009, the program was introduced in an effort to help employees achieve greater physical, psychological, financial, and social wellbeing through superior resources, enhanced access to care, and incentives to foster healthy changes, including health coaching, on-site medical clinics, and lifestyle and disease management programs. The company also received a Best Communication Tactics award for its global communication efforts to engage employees and develop a strong culture of wellness.
HP has created a global culture of wellness with its Winning with Wellness initiative. The program, which was implemented in 33 countries over the course of 1 year, equips employees with user-friendly tools and resources to take charge of—and be accountable for—managing their personal wellness, according to Aon Hewitt, which worked with HP to, among other things, articulate its wellness strategy and create a plan to implement and communicate the initiative globally.
Why It Matters
- More organizations are realizing the connection between wellness programs and the productivity of employees and the profitability of their companies.
- More organizations are, therefore, instituting wellness programs of various kinds ranging from gym membership subsidies to weight loss programs and smoking cessation plans.
- As today's Advisor indicates, however, merely starting a wellness program isn’t enough; wellness training and education about the programs are critical steps to making wellness programs effective.
Employers getting pushy in drive to better health
Original article from benefitspro.com
By Allen Greenberg
Short of bribery and potentially violating anti-discrimination laws by not hiring obese smokers, there’s little employers can do to improve the health of their workforce.
Or is there?
What looks to be a growing number of employers are, in fact, embracing outcomes-based disincentives to prod employees to achieve specific health outcomes, rather than merely enroll in their wellness programs.
Off the bat, I know that sounds like Big Brother. But I also think it sounds like a constructive and fairly non-intrusive way for employers to try to regain some control in the losing battle to reign in health care costs.
The Midwest Business Group of Health, a Chicago-based nonprofit group with more than 120 large, self-insured public and private employers, dug into this question in one of its latest surveys and came up with some interesting findings about the carrots and sticks employers rely on.
Let’s start with what everyone enjoys.
Among employers offering incentives, 62 percent report they offer employees who follow their wellness programs reduced premiums. Another 38 percent use gift cards and 35 percent offer merchandise.
Not bad. Put down the Hershey’s Kisses between meals and get a nicely loaded Starbucks gift card at the end of the month.
Actually, in a lot of instances, we’re talking about something of much greater value. Twenty-two percent of the companies in the survey reported their incentives were worth $500-$1,000.
Seventy-one percent of the surveyed companies said they found their incentive strategy was “very successful” or “successful.”
So, how about the stick?
More than 37 percent said they have begun to rely on penalties in response to nonparticipation in their wellness rewards. Increased health care premiums and coverage plan limitations are among the more common sticks.
This is a new trend, to be sure, so there’s some measure of experimentation going on and certainly room for improvement. Just 45 percent of those surveyed viewed their disincentive strategy as “very successful” or “successful.”
That shouldn’t be taken to mean we won’t see more of this. As Cheryl Larson, vice president for the Midwest Business Group on Health, will tell you, employers are fairly desperate nowadays to find ways to save health care dollars.
Which is why more than 40 percent of those surveyed now expect their employees to kick in a higher share of their plan premiums if they don’t stay on track with the company’s wellness programs, while another 16 percent are considering doing so.
Wellness programs have been around for decades, but there’s still a lot for HR managers to learn about what works and what doesn’t, and there's naturally going to be squeamishness about pulling out disincentives.
One key lesson shared by an employer cited in the MBGH survey:
“Even though our employees were not happy about the implementation of the program, we have a very compliant population. We know they complain about it, but they end up participating to take advantage of the incentives.”
In other words, yes, incentives, are always going to be popular. But if they don’t work, you might try throwing a few disincentives into the mix, rather than tossing away millions more in benefits dollars.
Putting the 'cent' in incentives
Original article https://ebn.benefitnews.com
By Kathleen Koster
In addition to popular incentives for participating in wellness program activities, employers and insurance carriers have turned to outcomes-based incentives hoping to lower plan costs and improve population health. While laws such as HIPAA, ERISA and, most recently, PPACA provide guidance for incentivizing employees to improve body metrics and sustain healthy behaviors, plan sponsors should tread cautiously around more aggressive incentives and premium surcharge strategies.
Employers' focus on rewarding healthy results "has been fueled by regulation," says Eric Herbek, vice president for consumer health product at Cigna. Specifically, the health care reform law increased the percentage employers can award as an incentive or disincentive from 20% of the individual health premium to 30% and up to a 50% differential if they include a smoking metric.
Activity-based incentives can spur participants to complete a health risk assessment or biometric screening, self-report physical activity, or join a pregnancy class or other program that requires action, but not necessarily achieve outcomes. "These can be highly effective tools to tailor action and identify risk for the individual and make a plan for a healthier lifestyle, but doesn't necessarily translate into financial results," says Herbek.
That's why the wellness industry is moving toward an outcomes-based incentive model that measures health outcomes such as tobacco use, BMI, cholesterol, blood pressure or blood glucose levels. Penalizing smoking is most popular among wellness programs, with many employers applying a premium surcharge against smokers. But employers can reward or apply a penalty for each metric. According to Frank Hone, managing director of Healthcentric Partners, Inc., many employers are considering structuring incentives as a tiered health plan, similar to the auto insurance market.
In terms of implementation, Hone suggests determining how a wellness incentive structure fits in with the employer's overall human capital approach and company culture. Another factor is whether the employer is more paternalistic or leans toward a model of accountability based on the insurance plan selected. A value-based plan or consumer-driven health plan would have accountability built into the overall structure. For example, employees could earn additional contributions into their health savings accounts by participating in a health coaching series or achieving a health goal.
"The employer wants to fund some aspect of the HSA, but also wants to ensure that there's skin in the game by the participant" so that they take action, adds Hone.
To keep incentive structures compliant with health laws and regulations, employers should give all participants an equal opportunity to earn the reward and not design specific incentives for any particular segment. Legal experts recommend having an alternative available to help individuals achieve their goals and for those unable to reach a goal. For example, they advise employers with premium surcharges for smokers to offer smoking-cessation programs and tools through their wellness program. For BMI goals, employers should consider offering employees with penalized BMIs a chance to enroll in a weight loss program or to make improvements to earn the premium discount.
To comply with HIPAA nondiscrimination requirements, the employer doesn't need to know the alternatives if an employee can't reasonably achieve a lower BMI, for instance, but they should clearly state in their plan document and notices outlining the wellness program that such alternatives exist. They can determine the alternative standard, if an employee asks for an alternative, with possible input from their individual's doctor, suggests Tiffany Downs, a partner with FordHarrison LLP.
"Our view is that employers don't have to offer a weight management program as an alternative, but we advise that employers with an outcome-based incentive program offer some form of alternative for participants who don't meet the optimal rates as a cultural shift [takes place]," advises Herbek. He suggests employers take a tempered approach and don't move from zero incentives to a rigid incentive approach immediately.
Downs recommends employers implement wellness incentives as part of a group health plan to avoid litigation under discrimination of employment laws. She adds that employers should pay attention to state laws because some states allow for smokers' rights.
The number one red flag she sees is prohibiting individuals from enrolling into a health plan until they lower their BMI or achieve another health outcome, which could violate HIPAA's discrimination rule.
To avoid penalties, she suggests that "the more aggressive the wellness program, the more cautious the employer should be before implementing it and getting legal counsel before applying incentives."
Cigna's Herbek believes the next stage in incentive programs will be making metric reporting easier to monitor. Instead of self-reporting data or measuring health status in a lab, self-monitoring devices that are objective will measure the individual's health.
Precise health testing by the participant will follow what auto insurance companies have started. The Progressive Snapshot program reports the speed of driving, through remote monitoring plugged into the car, and drivers can earn great rates if they drive safely.
Cigna already has teamed up with BodyMedia to measure health and fitness aspects with wearable devices. Eventually, these "can be used as a reinforcement mechanism to help people achieve healthy goals," he says, adding that Cigna professionals are looking at how to apply results to a premium incentive plan.
Hone believes that as employers look to address stress and emotional health in the workplace, they will need to move away from incentives that typically work as a stick for physical improvements.
"I'm hopeful that as an industry we can move away from these pay- for-performance ideas for individuals towards a tiered insurance plan structure that will educate individuals and guide them toward better lifestyles," Hone says.
"We're missing the big picture: the strategy of promoting healthy living. The industry has fallen into the trap of paying people to change their behavior instead of really investing in education, information, motivation and other aspects that influence and give individuals the personal reasons why they should behave differently, adjust their lifestyle or be happier."
He believes that incentives do play a role in promoting better health, but are best delivered in the context of a tiered health plan. Participants who pay more for premiums will be the same demographic that utilizes the health system at a higher rate because of the behavior they've chosen, not a genetic condition.
Employers report increased use of health incentives
A pair of recently released surveys from Aon Hewitt indicate that employers are increasingly turning to incentives to drive health programs and get employees to take actions to improve their well being. Eighty-three percent of 800 American employers use some form of incentive to get employees more aware of their health status, the consulting firm finds.
Out of the 83% that uses incentives, 79% offer rewards, 5% offer consequences, and 16% offer a mix of both. In terms of dollar amounts, 64% use monetary incentives of between $50 and $500, and 18% use incentives of more than $500.
"Employers recognize the first step in getting people on a path to good health is providing employees and their families with the opportunity to become informed and educated about their health risks and the modifiable behaviors that cause those risks," says Jim Winkler, chief innovation officer for health and benefits at Aon Hewitt.
"HRQs and biometric screenings are the key tools in providing that important information and serve as the foundation that links behaviors to action. Motivating people to participate through the use of incentives is a best practice in the industry, and these strategies will continue to be a critical part of employers' health care strategies in the future."
A separate Aon Hewitt survey - conducted in partnership with the National Business Group on Health and the Futures Company - reports that 86% of employees who received suggested action steps based on their HRQ results took some action.
Further, more than half of employers who offered incentives saw improved health behaviors and/or an increase in employee engagement.
Of those employers who offer incentives, 24% say they offer them for progress toward, or attainment of ,acceptable ranges for biometric measures such as blood pressure, body mass index, blood sugar and cholesterol.
More than two-thirds say they are considering this approach in the next three to five years. Fifty-eight percent are planning, in the next few years, to impose consequences on participants who do not take appropriate actions for improving their health. -Tristan Lejeune
Wellness programs dealt setback under proposed IRS rules
Original article https://www.benefitspro.com
By Allen Greenberg
The IRS, in what would be a blow to employers, is proposing companies shouldn’t be allowed to count the cost of wellness programs in their health care plans under the Patient Protection and Affordable Care Act.
Should it be affirmed, the rule would force employers to spend more to meet the law’s minimum value provisions.
Wellness programs are a key part of the PPACA.
The law was written with the idea that more employers would put wellness programs in place or expand existing such programs to help improve the health of Americans and help control health care spending.
Specifically, the hope is that more employers might reimburse workers for the cost of fitness center membership, reward employees for attending a monthly, no-cost health education seminar; or that they reward employees who complete health risk assessments.
The proposed rules from the IRS, however, wouldn’t allow employers to consider the costs of wellness programs in establishing whether they’ve reached the government’s definition of “minimum coverage” under the ACA.
Only wellness programs designed to prevent smoking will qualify, the IRS said.
Under PPACA, a large employer must pay an excise tax penalty if it fails to provide minimum coverage for even one full-time employee, forcing that employee to get a tax credit to buy health insurance through one of the new insurance exchanges, or marketplaces.
Labor unions that worried some employers might try to skirt minimum health care coverage by including wellness programs welcomed the news.
"We are very happy with the rules," Dania Palanker, senior counsel for the National Women's Law Center, told reporters.
But employer advocates were disappointed, calling it a setback.
The public has until July 2 to submit comments to the IRS for changes.
Click here to read the IRS’s proposed ruling.
6 key compliance deadlines for 2013 and beyond
As PPACA moves forward, employers must keep track of 6 key compliance deadlines for 2013 and beyond
Original article https://ebn.benefitnews.com
By Kathleen Koster
For plan sponsors, 2013 is a year of crossing Ts and dotting Is on PPACA compliance for their health care plans and strategizing for next year, when the employer mandate and public exchanges go into effect. The health care reform law has many moving parts and a great deal of regulations yet to come, which will keep benefits professionals on their toes all year.
"Employers have never experienced this complexity and oversight in compliance for their health plans. Employers are used to a compliance-rich environment around their retirement plans, but they need an equally robust and hands-on approach to managing the compliance of their health plans," says Mike Thompson, a principal in the human resources services practice of PricewaterhouseCoopers. He adds that "the rules, regulations and level of enforcement have never been greater."
Thompson believes "2013 is a period of strategic re-evaluation of whom the employer will provide benefits to in light of the changes in the individual market allowing guaranteed issue and subsidies for lower- and middle-income Americans."
He believes that employers will also transition around financing as "more employers look at community-type programs with the interest of moving away from their own programs and potentially contributing towards a private exchange or facilitating access to coverage in the open market."
To help employers keep all their compliance ducks in a row while managing and determining long-term strategies for their plans, EBN asked legal and health care experts for top issues to keep in mind for 2013 and beyond.
1. Preparing for the 2014 employer mandate
"At the top of the list is the interpretation of employer responsibility provisions that includes what constitutes minimum essential coverage that employers have to provide or be subject to penalties. Along with that, there are very important issues around the minimum value of the coverage they provide as well as who they have to provide it to," says Paul Dennett, senior vice president of health care reform at the American Benefits Council.
The employer mandate applies only to large employers. Whether an employer is defined as large under PPACA (generally companies with 50 or more employees) depends on the number of its full-time equivalent employees. Companies with 50 or more full-time workers (averaging at least 30 hours per week) must offer minimum health care coverage that is affordable.
In 2013, an employer ought to be determining whether it is a large employer and, therefore, subject to the mandate. "If they offer coverage in 2014, the coverage must meet the minimum value standards and the contributions the employer requires of employees cannot be so high the coverage is unaffordable relative to the employee's household income," says Jean C. Hemphill, practice leader of Ballard Spahr's health care group.
To determine the minimum value, fully insured plans will rely on their insurance carrier for information on whether they meet the minimum value of 60% for their plan. Self-insured plans can turn to an actuary or determine their value with the aid of a government-provided calculator or government-provided checklists.
When it comes to determining the affordability of the plan, an employer cost-sharing arrangement must be affordable relative to the employees' household income, as stated under PPACA. So, "the employee's contribution and cost-sharing obligations can't exceed 9.5% of their household income," says Hemphill.
However, the IRS acknowledges that employers don't know workers' household income, and suggests employers use W-2 wage information instead to determine their plan's affordability.
Hemphill expects more guidance on this issue since employees' contributions are typically much greater for dependents coverage than their own. An employee offered otherwise qualifying coverage by their employer can't use the public exchange unless they prove their employer-sponsored coverage is unaffordable.
The affordability issue may be of greater concern to employers with fairly low-income workforces or for employers not offering comprehensive plans to employees or all employees, such as the mini-medical plans sometimes offered in the retail industry. Employers only need to offer one affordable plan with minimum value to satisfy the rules, however mini-medical plans will be illegal after 2014.
Actuarial experts predict that most high-deductible health plans with deductibles in the $2,000-$3,000 range will most likely qualify, however those with much higher cost-sharing may not meet the minimum value.
While sponsors can vary the deductible and coinsurance amount of HDHPs, they should remember that the higher the deductible, the lower actuarial value of the plan.
"There are variables that can be adjusted in the plan design, but the most important one is where to set the amount of the deductible," says Dennett. He adds that guidance so far has indicated employer contributions toward HSAs or credits toward HRAs will count toward the minimum value. The question is whether the amount contributed is counted 100% to the plan or if it is discounted in the actuarial value formula that HHS would use in the calculation of actuarial value coverage.
Overall, "the Affordable Care Act was designed so employers don't need to make too many plan design changes to their plan," says J.D. Piro, national practice leader for Aon Hewitt's health and benefits legal department. "They may need to open it up to more employees but, generally speaking, they should be able to meet the affordability and minimum value requirements."
2. Public exchanges
Employers are required to provide employees with notice alerting them of the existence of public insurance exchanges. It is thought that the government will issue a model notice for this purpose. At press time, the government had yet to produce this model notice or other guidance about the notice requirement. The March 1 notification deadline has been extended until "late summer or fall," according to a recent FAQ announcement from the Centers for Medicare and Medicaid Services.
"There may still be unanswered questions about whether the state exchanges, partnership exchanges or the federal exchanges are really at an operational readiness stage to be able to go live as of October 2013," says Dennett.
Assuming the exchanges are on track and sponsors receive the guidance they need, they should expect many questions from workers about how the process affects them.
"While most major employers will continue to offer coverage to employees, there will be some confusion around the availability of coverage in the public exchanges and what the implications are [for employees] getting coverage from their employer, says Thompson.
He suggests employees will primarily want to know:
* Do I still have coverage through my employer?
* Am I eligible to get coverage through the exchange?
* Can I potentially get subsidies through the exchange?
* Is it in my best interest to go through the exchange?
3. Waiting periods
Another design-related issue employers must factor into their plans is that under PPACA, waiting periods for health care coverage cannot exceed 90 days. The 90-day period begins when the employee is otherwise eligible for coverage. Employers with a high-turnover workforce that currently have long waiting periods will have to shorten them.
If an employer requires employees to work a minimum number of hours to qualify for coverage, it may need to monitor workers' timesheets in 2013 to determine if and when coverage needs to be offered in 2014; this may be complicated for seasonal employees and other employees with variable hours.
Thompson believes this is part of a larger question of meeting qualifications for providing coverage.
"It's part of a package in my mind," he says. "Employers must evaluate employee classes when looking at whether they meet the minimum threshold of providing coverage to full-time employees. Seasonal, temporary, or contract workers are classes that need to be evaluated in order to avoid or at least understand what the penalties might be."
4. Pre-existing and non-discrimination prohibitions
"The non-discrimination rules are new for insured plans in 2014," says Hemphill. Even though these prohibitions should already be in effect, government agencies have delayed enforcement until they release regulations.
"It will be an important issue because right now there is no requirement to offer coverage to part-time employees, but with the definition of full-time employees as an average of 30 hours per week and new non-discrimination testing rules, the employer obligation may be different," she says.
Either way, employers can expect notice and guidance well before implementation because, "it is a big plan design issue," says Edward I. Leeds, counsel in the employee benefits and executive compensation group at Ballard Spahr.
5. Wellness programs
PPACA includes rules that prohibit plans from discriminating against individuals based on a range of health-related factors. Plans cannot impose restrictions on eligibility or increase employee costs for coverage based on these factors.
"When the government issued guidance under ACA, they actually revised the HIPAA regulations. So now the ACA and HIPAA rules ... will be the same," says Leeds. "By and large the rules follow HIPAA with some changes, the most significant of which is that the potential reward for meeting requirements under the wellness programs will increase as of January 1, 2014."
The potential reward for meeting a wellness requirement will increase from 20% of cost of coverage to 30% of cost of coverage. Incentives related to tobacco cessation will increase up to 50%. (For more details, read "Regs increase wellness rewards," page 28.)
6. Upcoming fees and taxes
Patient-Centered Outcomes Research Institute, established by PPACA, will collect and publish information about clinical effectiveness of treatments for patients. It will be paid for through fees assessed against insurers and self-funded plans equal to $2 ($1 in the first year) per covered life. The assessment will last seven years and eventually be adjusted for inflation. Employers with self-funded plans will need to report and pay these fees starting in July 2013.
The Transitional Reinsurance Program aims to stabilize the individual health insurance market as insurers provide coverage, starting in 2014, to large numbers of individuals who do not currently have coverage and present uncertain risks. The program will provide reinsurance payments to insurers that take on high-risk individuals. The program is funded through a three-year tax (expected to be $63 per covered life in the first year.)
The Additional Medicare Tax, in effect this year, is an additional 0.9% tax applied to high-income individuals. Employers are responsible for withholding the tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year.