The Obama Administration has finally issued final regulations on employer wellness programs. Not only are they a significant improvement over the proposed regulations issued last November, they may provide a window for getting employers to pay for obesity drugs and surgery for appropriate employees.
The regulations are a big setback for big business. The Chamber of Commerce had lobbied for stacking, i.e. a process whereby failing a tobacco biometric, a 50% penalty, could be stacked with obesity, a 30% penalty, to equal an 80% penalty. They didn’t get it.
Instead, the Administration (consisting of three Departments, Labor, Health and Human Services and Treasury) cleaned up their earlier draft and made it much easier for persons with obesity and others with disabilities or medical problems to qualify for the reward in wellness programs.
The final regulations have re-structured employer wellness programs which may make them easier to understand. There are two broad categories. The first is “participatory wellness programs” with which most people are familiar. They involve gym membership, classes and modest ‘everyone-gets-a-tee-shirt-rewards’ for participating. The other type (now “types”) have gotten the lion’s share of attention. They are called “health-contingent wellness programs” and, although they do not always say so, everyone (all employees) or those who fail a certain health biometric (like Body Mass Index) must participate. Previously, this was just one group. Now, the feds have broken them into two groups but both are still mandatory “health-contingent wellness programs.” The first category is now called “activity-only wellness programs.” The second category is called “outcome-based wellness programs.”
Both activity-only wellness programs and outcome-based wellness programs must ensure that their plan: is reasonably designed to promote health or prevent disease; has a reasonable chance of improving the health of, or preventing disease in, participating individuals, is not overtly burdensome; is not a subterfuge for discriminating based on a health factor, and is not overtly suspect in the method chosen to promote health or prevent disease.
Activity-only wellness program is one where the individual is required to perform or complete an activity related to a health factor in order to obtain a reward. They do not require an individual to attain or maintain a specific health outcome. Examples include walking, diet or exercise programs. Since some individuals may have difficulty in participating to achieve the award, these individuals must be given a reasonable opportunity to qualify for the reward.
A health-contingent outcome-based wellness program requires an individual to attain or maintain a specific health outcome (such as not smoking) in order to attain a reward. “Generally, these programs have two tiers: (a) a measurement, test, or screening as part of the initial standard and (b) a larger program that then targets individuals who do not met the initial standard with wellness activities. For individuals who do not attain or maintain the specific health outcome, compliance with an educational program or an activity may be offered as an alternative to achieve the same reward…Examples of outcome-based wellness programs include a program that tests individuals for specified medical conditions or risk factors (such as high cholesterol, high blood pressure, abnormal BMI, or high glucose level) and provides a reward to employees identified as within normal or healthy range (or at low risk for certain medical conditions), while requiring employees who are identified as outside the normal or healthy rand (or at risk) to take additional steps (such as meeting with a health coach, taking a health or fitness course, adhering to a health improvement action plan, or complying with a health care provider’s plan of care) to obtain the same reward.”
To meet these standards, health-contingent outcome-based wellness programs must offer a “reasonable alternative standard (or waiver of the otherwise applicable standard) to a broader group of individuals than is required for activity-only wellness programs. Specifically, for activity-only wellness programs, a reasonable alternative standard for obtaining the reward must be provided for any individual for whom, for that period, it is either unreasonably difficult due to a medical condition to meet the otherwise applicable standard, or for whom it is medically inadvisable to attempt to satisfy the otherwise applicable standard. For outcome-based wellness programs, which generally provide rewards based on whether an individual has attained a certain health outcome (such as a particular body mass index (BMI), cholesterol level, or non-smoking status, determined through a biometric screening or health risk assessment), a reasonable alternative standard must be provided to all individuals who do not meet the initial standard, to ensure that the program is reasonably designed to improve health and is not a subterfuge for underwriting or reducing benefits based on health status.”
Significantly, the final regulations declare, “The intention of the Departments in these final regulations is that, regardless of the type of wellness program, every individual participating in the program should be able to receive the full amount of any reward or incentive, regardless of any health factor.”
For health-contingent outcome-based wellness programs, the individual must have the opportunity to qualify at least once a year and the size of the reward/penalty cannot exceed 30% of the cost of the health insurance premium (50% in the case of smoking cessation programs). In addition, the program must be “reasonably designed to promote health or prevent disease” whether activity-only or outcome-based. The 2006 regulations and the 2012 proposed regulations described these programs as “experiments” which need not have a scientific record. I protested in my comments to the November 2012 proposed regulations that this made them human experiments subject to federal regulation which required at its core informed consent. So, they took out the language that they need not have a scientific record and about experiments. Instead, the preamble states, “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. The determination of whether a health-contingent wellness program is reasonably designed is based on all the relevant facts and circumstances.”
(Query: If, as it appears, an employer weight wellness program can achieve a one pound loss a year for three years, does anyone know of a study showing that is enough to prevent disease or promote health? In any event, I am not convinced these not still human experiments without the federal regulatory protections.)
Significantly, the final regulations require that the outcome-based wellness programs must require a full-scale, larger wellness program as a reasonable alternative. It states, “This approach is intended to ensure that outcome-based programs are more than mere rewards in return for results in biometric screenings or responses to a health risk assessment, and are instead part of a larger wellness program designed to promote health and prevent disease, ensuring the program is not a subterfuge for discrimination or underwriting based on a health factor.”
A lot of the comments dealt with what would be considered a “reasonable alternative” and who would decide. The final regulations make it very clear and the employee and his or her doctor won.
First, the regulations state that:
If the reasonable alternative is completion of an educational program, the plan must find such a program and make it available and pay for it;
The time commitment required must be reasonable;
If the reasonable alternative is a diet program, the plan is not required to pay for food but must pay for the cost of membership or participation fee; and,
If the individual’s personal physician states that a plan is not medically appropriate for that individual, the plan or issuer must provide a reasonable alternative that accommodates the recommendations of the individual’s personal physician with regard to medical appropriatness.
Expounding on time commitment, the regulations go on to say that “requiring attendance nightly at a one-hour class would be unreasonable.”
Perhaps more importantly for the future of coverage of drugs for the treatment of obesity and bariatric surgery, the regulations go on to say, “The final rules retain the clarification of the proposed regulations and add an additional clarification that an individual’s personal physician can make recommendations regarding medical appropriateness that must be accommodated with respect to any plan standard (and is not limited to a situation in which a personal physician disagrees with the specific recommendations of an agent of the plan with respect to an individual).” The regulations go on to note that these decisions are subject to external Federal review under 76 FR 37216 an plans may impose standard cost-sharing for medical items and services furnished in accordance with the physicians recommendations.
Thus, to my reading, an employee’s physician could recommend that the employee receive an anti-obesity pharmaceutical agent or bariatric surgery, if eligible. Review would take place by reviewers external to the employer and plan and normal deductible and co-payments for drugs or surgery could be required. We’ll have to wait and see how this works out.
Finally, the regulations address the issue of “What happens in year 2?” They note that smoking cessation may take may attempts and maintenance may be a perfectly good outcome. A physician’s recommendation of nicotine replacement therapy would constitute a reasonable alternative standard.
What the Departments are looking for are reasonable alternative standards “in light of the individual’s actual circumstances, as determined to be medically appropriate in the judgment of the individual’s personal physician…For example, if the initial standard is to achieve a BMI less than 30, the reasonable alternative for the individual cannot be to achieve a BMI of less than 31 on that same date. However,if the if initial standard is to achieve a BMI of 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. Second, an individual must be given the opportunity to comply with the recommendations of the individual’s personal physician as a second reasonable alternative standard to meeting the reasonable alternative standard defined by the plan or issurer, but only if the physician joins in the request.
There is more to these regulations which we will be covering in future posts.