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Refusing to Comply with Wellness Program Will Cost Penn State Workers

By Dena Bunis, CQ HealthBeat Managing Editor

July 24, 2013 -- Pennsylvania State University is joining an increasing number of large employers by rolling out a comprehensive wellness program this fall. But the educational giant has decided to use a stick rather than a carrot to get its workers to participate.

Penn State's human resources department recently sent an email to faculty and staff, outlining three steps that employees must take to avoid a $100-a-month surcharge. They have to fill out an online wellness survey; promise to get a physical exam during the 2013–2014 school year; and submit to biometric testing, which includes a fasting blood test, height and weight measurements and a blood pressure screen. If they do not comply, the HR notice says, $100 will be deducted from their paychecks each month.

In a July 15 email to her faculty and staff obtained by CQ HealthBeat, Susan Welch, dean of the College of Liberal Arts, said it took her 15 minutes to complete the online profile and she advised them to "have a tape measure handy," presumably because one of the online questions asks for one's measurements. "Ignoring these messages from OHR [Office of Human Resources] will cost you an additional $1,200 in your health insurance premiums in 2014," Welch wrote. "Our office will NOT be able to help you if you do not complete the requirements by the deadlines listed below." Employees must have the biometric screening by Oct. 8 and fill out the online wellness survey and physical exam attestation by Nov. 22.

Since then, faculty and staff members have been circulating emails in which they say they are worried about such issues as medical information privacy and the fact that the notification was sent out during the summer when much of the faculty is away. They raised questions about why the university decided to encourage participation in the laudable goal of making its people healthier with a penalty, rather than a financial incentive.

Employees said they also fear these steps are just the beginning. Will this be followed up with a program that charges smokers, those who are overweight or have high blood pressure higher health insurance premiums?

"It would seem just from looking at this they are using a really big, hard-to-resist incentive to get the information," said Karen Pollitz, a fellow at the Kaiser Family Foundation who has been studying these wellness programs.

Penn State spokeswoman Jill Shockey said in an email that "it is important to emphasize: Penn State will not have access to an individual's health records, will not ask for those records and will not charge an employee additional fees based on the results of any medical test or physical examination." Shockey also pointed to a 2012 Aon Hewitt nationwide survey that showed that more than four-fifths of its employer clients offer biometric health screenings to help inform employees of their health status.

Pollitz still questioned whether this is the first step towards more restrictive policies.

"If they are making you pay that much so they can get the information, they are going to want to do something with it at some point," she said in an interview. "This is not curiosity."

Employer wellness programs are becoming increasing popular. According to Mercer's 2012 national employer survey, 54 percent of large employers (500 or more workers) and 66 percent of very large employers (5,000 or more employees) have wellness programs that involve incentives to participate. Most often, the Mercer report says, those incentives involve cash payments or reductions in premiums to workers who join.

Such programs have been part of the health benefit landscape for decades. But in the past, they consisted mostly of discounts for gym memberships, newsletters encouraging employees to take care of themselves and smoking cessation programs.

Penalties Unusual

Howard Kraft, a Mercer partner who leads the firms health management practice in the Northeast, said he has seen penalties and surcharges used most often when it comes to smoking or case management programs associated with people who are very sick.

"We have only seen some organizations move to penalties on health promotion activities," Kraft said. "It's not the norm." Without specifically commenting on what Penn State is doing, Kraft said health promotion activities include such steps as filling out health surveys and getting physical exams.

"If Mercer was to express a point of view, we think that for things that are health-promotion oriented, encouraging people to know more about their health status, exercise more, eat better, probably an incentive approach is more effective,'' Kraft added.

Under the health care law (PL 111-148, PL 111-152), employers have been given the ability to charge up to 30 percent higher premiums to workers who have health issues. They can charge 50 percent more to smokers.

In the final wellness rule released in May jointly by the departments of Health and Human Services, Treasury and Labor, federal officials made it clear that employers offering "health contingent wellness programs" must offer a "reasonable alternative standard" so that all participants, regardless of their health status, can still meet the reward even if they don't achieve the program's specific goals.

Based on the results of the Mercer survey, the kind of penalty-based program Penn State has instituted is still the exception. Among the large employers that participated in its survey, 46 percent don't attach any incentives to their wellness programs and 42 percent use financial rewards. Only 15 percent use financial penalties to get workers to comply.

One Penn State professor, who asked not to be identified for fear of reprisals, said what's most disturbing about this is the penalty nature of the program.

"It's all phrased in the way of punishment," he said. "It would have been wonderful if it had been couched in a different way: join a program, you get a discount. The more you lose weight, the more you eat better, the more discounts we'll give you."

Asked why the university decided to impose a penalty rather than a reward, Shockey said in an email that "Penn State has had robust, voluntary wellness programming for more than a decade. Voluntary participation, however, has not positively impacted the health care cost curve at all. As a result, Penn State is implementing a more aggressive strategy.

"In order to offer an incentive, the University would have had to artificially inflate health care premiums for all employees and then discount for those who participate,'' she added. "Those involved in drafting and implementing the plan felt it was important to be straightforward about how the costs will be assessed. The current strategy, while employing a financial disincentive, keeps premiums stable for all with no hidden costs."

At the Employee Benefit Research Institute, senior research associate Paul Fronstin says the fact that the health law increased the incentive percentage employers can levy and is sanctioning such health management programs is probably leading more employers to use them.

He suggested that programs like Penn State's may lead to such actions as a third party getting the information and a nurse calling an employee who has high blood pressure or is pre-diabetic about ways to keep the condition from going any further.

"If you can find some people at risk for certain diseases it's a win-win," Fronstin said. It's a win for the employer whose health costs can be reduced with a healthier workforce and it's a win for the employee who gets healthier, he said.

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