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Restricting Wellness Initiatives
New DOL guidelines address wellness initiatives that employers may use to entice workers to change health-related behaviors. The new rules require employers using discount programs to accommodate some people with unhealthy lifestyles -- and give them alternative ways to earn credits.
The journey being taken by employers and healthcare insurers in search of the Holy Grail in guiding employee health choices has taken a detour. In early December, The Department of Labor's Employee Benefits Security Administration issued new regulatory guidelines that, according to legal experts, "close the door" on emerging cost-saving strategies employers might have considered using to entice workers to change their healthcare-related behavior patterns. Specifically, EBSA's guidelines apply to "supplemental coverage" that was primarily created for, among other things, reducing deductibles in standard healthcare insurance. Carriers have created products that use supplemental insurance as a basis for employee health and wellness programs, but with the new guidelines, employers must step much more carefully when choosing that strategy. "The guidance letter effectively plugs a loophole that could have allowed programs to discriminate against people with health problems that are beyond their control," says Tom Bixby, a partner in the Health Law practice group at Neal Gerber Eisenberg, a Chicago law firm. The loophole comes into play because while the Health Insurance Portability and Accountability Act does not allow employers to charge different premiums for different employees (thin vs. overweight, for example) in employer-paid health plans, supplemental coverages could circumvent HIPAA. Some employers have used supplemental coverages to offer "discounts" or "credits" to employees following specific "healthier" paths -- for example quitting smoking or losing weight. Currently, there are exceptions from strict HIPAA regulations for wellness programs -- permitting financial incentives of up to 20 percent of the cost of coverage per employee. But the supplemental coverages, which are not part of HIPAA restrictions, could be used to as a way around that number while, at the same time, penalizing those who can't meet certain criteria. Under the new guidelines, for example, Bixby says, if you want to launch a wellness program based on body mass index, it would be unreasonable to expect an employee to lose 100 pounds in a month. But as an alternative, over the course of a year, if they lose 20 pounds, that can be the incentive for lower deductible costs. The upshot is, employers using discount programs will have to accommodate certain people -- give them alternative ways to earn credits -- and that means higher administrative costs. Sharon Cohen, Group and Healthcare Benefits counsel at Watson Wyatt Worldwide, in Arlington, Va., says that while the EBSA's Field Assistance Bulletin spells out exactly how supplemental coverages can be used, it hasn't been an issue at this point in time -- but that doesn't mean it wouldn't have become one. "It's not a widespread practice, but if the government hadn't issued this bulletin, other companies might have followed suit," Cohen says. "Now, that door effectively has been closed." However, Cohen adds, the EBSA bulletin does not have the force of the law, although it does provides a "safe harbor" for employers who meet the bulletin's four requirements for what constitutes situations where supplemental insurance coverage may be used. "It leaves the door open maybe a crack," she says. "But if the government doesn't agree with the way an employer is using that coverage, there could be litigation." Cohen says employers and insurance companies are constantly looking for new ways to entice employees to get involved in improved health and wellness initiatives, and more plans are getting aggressive in that regard. But the EBSA bulletin gives them cause to be careful. "There are a lot of creative ideas, but you could have someone without the grasp of the rules designing a program," she says. "It makes good sense to have an attorney take a look at any program in this area." The new guidelines will have little impact on some plans. Tom Beauregard, senior vice president of UnitedHealthCare, the group health insurer based in Minneapolis, which partners with BeniComp of Fort Wayne, Ind., on its Vital Measures wellness program, said the initiative that provides credits via a supplemental policy was "designed it to be compliant with HIPAA and there are alternative ways to earn credit. In fact, we designed Vital Measures anticipating these guidelines." The program is targeted to employers with workforces between 100 and 1,000 employees, and can be purchased in Colorado, Ohio, Pennsylvania and Rhode Island. "Employers and employees are ready for these kinds of models and accept them, but only as long as there are fair, alternative ways to earn credit," he says. "Our focus was really on consumer reaction and opinion, which is comforting to employers." Bixby says the timing of the EBSA guidelines has probably prevented any significant litigation, mainly because programs that go outside the supplemental coverage criteria have been very limited. "Overall, the number of supplemental coverage-based programs is fairly insignificant," he says. "But that doesn't mean employers shouldn't be careful and take a hard look at any program like this before launch."
January 29, 2008 Copyright 2008© LRP Publications |
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