BNA’s Health Care Daily Report™ sets the standard for reliable, high-intensity coverage of breaking health care news, covering all major legal, policy, industry, and consumer developments in a...
The Obama administration May 29 released a final rule increasing, from 20 percent to 30 percent, the maximum permissible reward of a health-contingent wellness program offered through a group health plan.
The regulation, released by the Internal Revenue Service and the departments of Labor and Health and Human Services, also increases the maximum allowed reward to 50 percent for wellness programs intended to prevent or reduce tobacco use, the agencies said.
The final rule (TD 9620, RIN 1210-AB55, CMS-9979-F) includes clarification on the reasonable design of health wellness programs and the reasonable alternatives they must offer to avoid prohibited discrimination, the agencies said.
“Today's final rule promotes wellness, while also … ensuring that the individuals are protected from unfair underwriting practices that the Affordable Care Act was designed to prevent that could otherwise reduce health benefits based on the individual's health status,” a senior administration official said on a call regarding the release of the rule.
The final rule largely retains the spirit of the proposed rule, which was released in November (224 HCDR, 11/21/12), but is “reorganized” in places to make clarifications, the agencies said.
The agencies anticipate issuing further guidance on wellness programs, either in the form of subregulatory guidance, such as frequently asked questions-and-answers, or possibly proposing tweaks to the final rule if needed, the agencies said.
The final rule is effective for plan years beginning on or after Jan. 1, 2014.
The final regulation continued dividing wellness programs into two categories: “participatory wellness programs,” which make up the majority of wellness programs, and “health-contingent wellness programs,” the agencies said.
Participatory wellness programs are defined in the final rule as programs available to all similarly situated individuals that either do not provide a reward or do not include any conditions for obtaining a reward based on an individual satisfying a standard that is related to a health factor. The final rule states that participatory wellness programs are permitted under the nondiscrimination rules of the Health Insurance Portability and Accountability Act, provided they are available to all “similarly situated individuals outside of health status.”
The final rule defines health-contingent wellness programs as programs requiring an individual to “satisfy a standard related to a health factor to obtain a reward.” The final rule lists five requirements that health-contingent wellness programs must meet: frequency of opportunity to qualify, size of reward, uniform availability, reasonable design, and notice of other means for qualifying for the reward.
The departments further clarify the requirements, which are the same as those listed in the proposed rule, by creating two “sub-categories” of health-contingent wellness programs: activity-based and outcome-based, the rule said.
“If you offer either of these two health-contingent wellness programs, you have to offer a reasonable alternative standard and that has to be made available to everybody, regardless of their health status, who don't meet the biometric test, or the other outcome based initial standards,” a senior administration official said.
“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 discriminating or underwriting based on a health factor,” the final rule said.
The departments also released a report to Congress on wellness programs as required by Public Health Service Act Section 2705(m)(1). The study was examined for the final rule's economic analysis.
The study, Workplace Wellness Programs Study, which was done in collaboration with RAND Corp., found that about half of employers in the United States offer wellness incentives to employees, with larger employers more likely to offer a wider range of wellness options.
In addition, the study found that 75 percent of employees working in a company of 50 or more employees are offered wellness incentives by their employer.
“Most employers who offer workplace wellness programs regard them as a viable strategy to contain health care costs. A review of the literature identified randomized controlled trials that found workplace wellness programs did result in significant decreases in healthcare costs, including a savings in medical costs ranging from $11 to $626 per year. The employer survey found that 60 percent of employers offering a wellness program stated that their programs reduced healthcare costs, and around four-fifths reported that they decreased absenteeism and increased productivity,” the study said.
The rule will be published in the June 3 Federal Register and will take effect Aug. 2, the departments said.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)