5 tips for setting up a health-contingency plan
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You might say that health-contingent wellness programs enable employers to put a premium on good health habits, but they are wise to proceed with caution. The Affordable Care Act provides additional guidance on how employers can reward good health habits and incentivize people to change bad ones through an individual employee’s share of health insurance premiums, but there are some limitations on how far employers can (and should) go.
“If that [checklist] is the only part of your program and then it’s done, the behavioral change piece, the intrinsic motivation piece, the desire-to-be-well piece goes away.” — Debra Lafler, wellness coordinator, Group Health Cooperative-South Central Wisconsin
Many employers have established basic participatory wellness programs, which have been made available without regard to an employee’s health status. Employers should have a participatory program in place before considering the transition to a health-contingent program, also referred to as a standards-based program.
Under these more advanced programs, rewards are linked to meeting some sort of health standard, such as weight loss, lowering cholesterol, or tobacco cessation.
“There are not many things an employer can do to control the cost of health insurance,” acknowledged John Healy, a partner and senior account executive with M3 Insurance in Madison. “One of the primary ways is to require that your employees be healthier, and health-contingent wellness programs require an employee to be healthier because in most cases, they need to meet a minimum standard.”
The part that’s alluring to some employers is premium flexibility. The ACA’s health-contingent rules increase the maximum premium differential allowed from 20% to 30% in most cases where standards are not met, and up to 50% in the case of smokers.
Some experts interviewed for this feature believe it won’t be long before more employers have a health-contingent wellness program. Others, citing the potential for unfair practices or invasion of privacy, are not convinced they are the wave of the future. So whether you handle everything in-house or outsource pieces of your wellness program, here are 5 key points to remember when setting up such a standards-based program.
Pointer #1: Set Alternative Standards
Employers that set up health-contingent programs have to offer employees the chance to meet an alternative minimum standard if a health condition prevents an individual from meeting a certain standard. It’s a critical program piece because Health Insurance Portability and Accountability Act (HIPAA) nondiscrimination rules apply to these programs.
For example, if an individual has a condition such as diabetes that skews the score he or she receives on a biometric test, employers must make certain provisions for that individual so that he or she won’t be treated unfairly. “You cannot create a situation where it’s unreasonably difficult, due to a medical condition, to meet the standard,” Healy noted. “That’s probably the most critical element of the whole program.”
Jo Steinberg, president of Midland Health, a Brookfield company that supports wellness initiatives, provided a hypothetical example that boils down to this: Don’t question the doctor. “Let’s say you have a participant who has a cholesterol level of 300, and no matter what kind of lifestyle adjustment he makes, it just doesn’t get any lower than that. The wellness provider would know, or that would be communicated with a note from the physician, that this is as good as the person is going to get,” Steinberg said. “We give them the points based on that because we know that person is doing everything possible to get the best kind of score, and that’s all we’re asking from people.”
Erin Barke, a consultant with Mueller QAAS LLC, a Waukesha consulting firm, noted that employers must provide notice that reasonable alternatives are available if it’s unreasonably difficult or medically inadvisable for someone to even try to reach a standard. “I always remind employers that they have to provide notice in all plan materials that those alternatives are available,” Barke stated. “Let’s say an employee has to participate in a running program, running a few miles a week, and this is medically inadvisable or unreasonably difficult.
“They have to provide an alternative, and the alternative could be a walking program or some other sort of lower-impact fitness program.”
Pointer #2: Base It on Biometrics
A health risk assessment is essentially a questionnaire used in participatory programs, but for health-contingent wellness, a biometric screening is vital. Steinberg, who helped develop one of the nation’s first biometric testing protocols, says biometric screening involves a blood draw and measures a person’s height and weight, waist circumference, blood pressure, total cholesterol, HDL and LDL, triglycerides, and glucose to create scores that wellness administrators use to evaluate an employee’s health status.
In taking actual readings from a blood draw, the health-contingent program does more than take the employee’s word for it. “Oftentimes, the biometric measurements are uploaded into the health risk assessment, so instead of asking the participant what their cholesterol is, we will upload or pre-populate that health risk assessment with the most current results, so they don’t self-report,” Steinberg says.
Trek Bicycle Corp. in Waterloo takes annual biometric screens and has developed a point system based on the test. An employee can accumulate a maximum of 1,000 points, and if any worker falls below 750 points in a given year — tobacco use can cost you 350 points, unless you take action — the company might charge him or her more for health coverage, says Marcus Gagnon, the company’s wellness coordinator.
The program, however, isn’t about making more money, and employees are reimbursed if they take steps to improve. “All the money we get from those programs, and more, we put back into wellness programs and programming for the affected people,” Gagnon explained.
Pointer #3: Don’t Be Punitive
The temptation to punish employees with bad health habits, particularly smokers, should be resisted in favor of getting them well — at least initially. “The incremental increase in premium they receive by requiring that someone pay a different contribution to their premium amount is not as important as trying to improve the health of the individual,” Healy stated.
Healy notes that the provision for a 50% premium differential is designed to reduce or prevent tobacco use. “Tobacco use is very unique in that if you charge that 50% differential, you must sponsor a smoking-cessation program,” he explained. “If the individual in question participates in the smoking-cessation program, then you cannot charge them more. Nicotine addiction is a health condition, and that’s why it is very similar to that alternative minimum standard.”
Barke says consultants generally leave program design up to employers. “The majority of them are interested in a crawl, walk, run approach,” she said. “The Affordable Care Act allows you to have a 30% penalty, up to 20% more if a person uses tobacco. Most employers that are just getting to health-contingent wellness programs don’t want to go that hard, that fast. So maybe they will do a 5% penalty or a 10% penalty and, if necessary, increase it in the future.”
Kim Meyer is director of human resources for Baraboo’s Teel Plastics, which has implemented a three-tiered, health-contingent premium model. The premium is ultimately linked to employees’ health-assessment results, including biometric testing and screening. The premium tiers include a gold tier for those who score 86 and above, a silver tier for those who score between 71 and 85, and a bronze tier for those scoring below 70.
“We look at their overall score when they take the health risk assessment and the biometric testing, but we also consider their improvement,” Meyer explained. “For example, somebody could be in the bronze tier, and if they had an improvement of 10 points over the previous year, they might still be in the bronze tier but we would bump them to the gold tier because they had made at least a 10-point improvement.”
As for tracking progress, Meyer says Teel Plastics will look at its annual health renewal to determine whether the program is changing behaviors, but she suspects the health assessments will be more telling. “I don’t get the individual results, but I do get the overall summaries. I had someone that went from a score of 31 to a score of 57, and that is huge. The summary I got was that this individual lost 13 pounds, and that had a huge impact on their glucose and their cholesterol panel.
“That’s really where we’re going to see significant impact, and ultimately it will reflect on our health insurance premiums.”