Wednesday, November 21, 2012
On November 20, the Obama administration took three important steps in implementing ACA. The administration issued notices of proposed rulemaking (1) prohibiting health insurers from discriminating on the basis of preexisting or chronic conditions; (2) outlining policies and standards for determining the essential benefits package that must be included in coverage; and (3) setting standards for employer-based wellness programs. In this post, I take up the NPRM concerning employer-based wellness programs; later posts will deal with the pre-existing conditions and essential benefits proposals.
"Wellness" programs are controversial because they may discriminate against individuals with health conditions, because they are seen as unjustifiable paternalistic restrictions on liberty, and because there are concerns that they may be subterfuges for additional charges. They are praised for their potential to improve health, to engage insured individuals in health-improvement efforts, and to reduce overall health care costs. The section of ACA that allows plans to vary premiums for participants who meet wellness targets has attracted limited discussion in the controversies over ACA. However, as ACA is implemented it seems likely that interest in these programs will grow--with cost implications for individuals that are not trivial.
The NPRM proposes a common standard for wellness programs in group health plans, group health insurance, and individual health insurance. There are two types of wellness plans: participatory wellness plans that are programs available to all participants (such as a discounted gym membership) and "health-contingent" programs that reward individuals for satisfying a standard based on a health factor (such as a premium discount for maintaining normal blood pressure or complying with a prescribed plan of care). Both types of wellness programs must be made available to all participants, but health-contingent plans are the more controversial and must satisfy additional requirements. To be non-discriminatory, health-contingent plans must meet 5 standards:
--individuals must be eligible for the reward at least once a year
--the maximum permissible reward may not exceed 30% of the total cost of coverage (this is an increase from 20% for previously-covered plans); tobacco cessation programs may offer rewards up to 50%
--the rewards must be available to all similarly situated individuals--and there must be reasonable alternatives for individuals for whom it is medically inadvisable to meet the standard or for whom the standard would be unreasonably difficult to meet because of a medical condition. Plans may require individuals to request alternatives. Plans must pay the costs of participation in educational or weight-reduction programs. Alternatives must accommodated the recommendations of the individual's physician and may seek reasonable physician verification.
--programs must be reasonably designed to promote health or prevent disease, and may not be subterfuges for increased charges
--programs that state methods for qualifying for the reward must specify that alternatives may be available for qualifying.
The NPRM asks specifically for comments on many of these standards for health-contingent programs. The NPRM can be located here, http://www.ofr.gov/OFRUpload/OFRData/2012-28361_PI.pdf, and will be published in the Federal Register on November 26. Comments should be identified by "Wellness Programs" and may be submitted to the Department of Labor through http://www.regulations.gov. Comments are due January 25, 2013.