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May 29, 2013 01:00 AM

ACA wellness rule called too flexible by some

Jonathan Block
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    The Patient Protection and Affordable Care Act provides incentives and flexibility for employees to participate in workplace wellness programs offered by their group health plans.

    But some employer groups are objecting to certain provisions of a final rule (PDF) issued today by HHS, the Internal Revenue Service, and the Labor and Treasury departments that provides incentives for nondiscriminatory wellness programs. They contend that the rule imposes an excessive burden on employers to provide flexibility to employees for their participation and how they qualify for financial rewards.

    Under the rule, wellness programs are divided into two major categories: participation-based and health-contingent. The first type is available to everyone under a group health plan regardless of their health status. These include programs that reimburse for the cost of gym membership or reward employees who participate in an online health education program, without requiring them to take further action.

    Under health-contingent wellness programs, individuals have to meet certain health goals, such as quitting smoking or losing a certain amount of weight, to obtain a reward. The rule requires these programs to be nondiscriminatory.

    Employees have the right to involve their personal physician in determining an alternative wellness program, a senior administration official said today during a briefing with reporters conducted on background. “The employer is supposed to accommodate those.”

    One of the major changes from the proposed to the final rule is subdividing health-contingent programs into two categories: activity-only and outcome-based. Administration officials explained that activity-only programs include activities such as walking, diet and exercise, while outcome-based programs involve achieving specific health-related goals, such as lowering cholesterol level or body mass index. Both kinds of programs need to be designed so as not to discriminate against an individual in terms of ability to complete them.

    Of the more than 5,000 comments HHS received on the proposed rule, one of the issues most commented on was the requirement for employers to offer reasonable, nondiscriminatory, alternative standards for wellness programs. Some commenters said this requirement would create an undue hardship on employers.

    “The key point is this whole rule really is a question mark,” says Steve Wojcik, vice president of public policy at the National Business Group on Health. “It depends on how many employees (elect) broader alternatives and then what the physicians' proposed alternatives are.”

    Paul Fronstin, director of the Employee Benefit Research Institute's health research and education program, said the final rule “gives the wellness industry a little more certainty, but there's a little uncertainty on what alternatives may be recommended. We'll see how this plays out over time. If you make it too complicated for employers to offer wellness programs, they'll stop offering them.”

    Wojcik adds that while the final rule moves toward individualizing wellness programs, he worries that some employees may abuse the alternative provision of the rule so that they keep on demanding programs that they like, but may not achieve the best health outcomes. The concerns “could be all about nothing, but it depends on employees being reasonable about reasonable alternatives.”

    But an administration official said that the final rule limits the number of reasonable alternatives an employer is required to provide. “We've restructured the rule to make it absolutely clear you can offer either activity-only or outcome-based wellness programs.”

    Another key change was increasing a wellness program's maximum reward to employees from 20% to 30% of an individual's premium contribution, with a 50% reward for participation in programs to stop tobacco use.

    The rule goes into effect Jan. 1, 2014.

    Follow Jonathan Block on Twitter: @MHjblock

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