Under ACA, wellness dropouts could feel the burn

By Elise Oberliesen

For decades, corporations have experimented with wellness programs in an attempt to improve their employees health and reduce the cost of health insurance. Lunch-hour yoga classes, free flu shots, smoking cessation programs and other offerings have often been provided, occasionally with incentives for participants.

Now, as additional elements of the Affordable Care Act are implemented, organizations and their employees will have new encouragement to get in the game.

Starting with health insurance policies effective Jan. 1, 2014, losing weight, controlling cholesterol, quitting smoking or even just attempting to achieve better health could be profitable. In some states, employees could see their premiums cut by as much as 30 to 50 percent for achieving certain wellness goals. Colorado has limited them to a maximum of 20 percent of premiums.

The system is struggling to achieve a delicate balance, however. Real incentives to achieve healthier lifestyles are generally applauded, but at the same time the Affordable Care Act and Colorado statutes call for a cautious approach by employers to avoid charges of discrimination against the disabled and employees who may not be able to reach the wellness goals.

Affordable Care Act game changers

Wellness programs fall into two categories under the Affordable Care Act: participatory and health-contingent.

Participatory programs are offered to all employees, regardless of their health status, and may provide rewards to those who take advantage of them.

The cafe at Oakwood Homes is stocked with fresh fruit and a nutritionist designs healthy lunches served to employees on Fridays.

Health-contingent wellness programs are those that require employees to achieve certain goals to receive rewards, such things as weight loss, diabetes control, lowering blood pressure or smoking cessation.

Under the new federal rules, the maximum reward can be a discount of up to 30 percent of total cost of coverage and as much as 50 percent with smoking cessation, said JoAnn Volk, senior research fellow at the Georgetown University Center on Health Insurance Reform. Volk has studied the impact of the Affordable Care Act on employees, employers and private insurers.

Theres a rare but growing type of wellness program that could become problematic for employees, said Volk. This is especially true for those with less than stellar health records or family histories that include costly diseases such as diabetes or heart conditions.

Many wellness programs are not linked to your group health plan, said Volk. But when they are, it requires federal oversight because your benefits may differ depending on your health status.

Someview therules as punitive, discriminatory and coercive.

Its not just encouraging people to take a health risk assessment or smoking cessation class, said Volk. Its actually tying your health plan costs to achieving a particular health outcome, like whether you meet a particular BMI (body mass index) target.

If you dont meet health targets, Volk said you could pay higher premiums, deductibles or co-pays.

To ensure compliance with the Affordable Care Act, Henderson said federal rule-makers required employers using health-contingent wellness plans to create a reasonably defined wellness plan that include realistic goals, such as achieving a 10 percent weight loss to qualify for reward status. And it applies even if the employees BMI is still too high, based on what constitutes normal verses overweight or obese.

The U.S. Department of Labor said the programs also must have a reasonable chance of improving health or preventing disease and not be overly burdensome for individuals.

It stipulates explicitly that wellness programs must not be used as a subterfuge for discriminating based on a health status factor.

A wellness program implemented at Penn State University last summer drew a hostile reaction over both the incentive program and allegations that it did not protect the privacy of participants. A New York Times story reported that university administrators may not have investigated the program sufficiently before they approved it.

Experiences vary

Bootcamp programs are offered every Monday for Oakwood Homes employees.

Denver-based Oakwood Homes was ranked No. 1 for small businesses in the Denver Business Journals 2011 Denver Healthiest Employer awards, largely because of its established wellness program.

Under its program, employees who track their participation in such things as walking and weight loss or engaging in workplace health education programs can receive rewards. After 10 hours of workouts per month, employees receive 50 Oakwood Bucks, equivalent to $25. Rewards run a colorful gambit of benefits such as ski passes, time off or a Nike shopping spree.

Sierra Henderson, human resources manager for the company, said employees who use the wellness program are part of the driving force behind real health care savings for the company, which also decided to partially self-fund its insurance program to trim costs.

(Self-funded plans work like a la cartemenus allowing employers more control over whats offered in employee health plans. Plans are generally based on aggregate employee health status, so healthy employees should save the company money by using fewer services. A report from the Self-Insurance Educational Foundation estimates that organizations can save 10 to 25 percent with self-funded plans.)

We have spent 15 percent less so far this year on health insurance than we had in the previous years when we were fully insured, said Henderson, who attributed the savings to our healthy workforce.

Cost savings a tricky business

When assessing savings associated with wellness programs, Volk said it is critical to determine whether costs have shifted to employees or whether improved health has actually led to less spending.

While projected savings are estimated at $3 to $6 per $1 spent on wellness programs, interpreting those numbers is not easy. Even the State of Colorado may not be able to calculate an accurate bottom line on its new wellness program.

Weve avoided making long-term projections [about savings], said Nate Sassano, the newly-appointed state wellness coordinator. Its not something weve calculated yet, but we expect to see return down the road.

The state implemented a participatory wellness program on July 1, 2013 with about 9,500 employees about 30 percent of the state workforce enrolled in the program.

Michaela Turner, communications specialist for the state, said the cost of the wellness program was shared with Kaiser Permanente and United Health Care, so it is difficult to estimate the actual cost to taxpayers.

Employees enrolled in the program can earn tokens for cash by completing a health risk assessment and tracking activities such as exercise or getting a flu shot.

As the program unfolds, the structure could change to make healthy living a lot more lucrative.

We dont base our incentives off of health outcomes, said Sassano, but we may grow to include those.

The goals are to help employees have healthier lifestyles and to trim health care costs. The path to achieving them, however, is anything but clear.