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Rule Shouldn't Tie Employer Cash Incentives to Family Wellness, Groups Say

By John Reichard, CQ HealthBeat Editor

January 25, 2013 -- A proposed federal rule allowing employers to tie stronger pocketbook incentives to employee wellness programs should be rewritten to prevent entire families from being punished financially, the Georgetown University Center for Families and Children said in a recent letter.

Other groups weighing in on the proposal said it places intolerable administrative burdens on doctors and that it permits too many employees to be exempted from wellness standards.

At issue is a proposal jointly issued by the departments of Labor, Treasury and Health and Human Services. It's intended to implement a provision of the health care law (PL 111-148, PL 111-152) that increases the maximum permissible financial rewards and penalties relating to employer sponsored wellness programs.

The health care law says maximum permissible rewards and penalties will increase in 2014 from the current ceiling of 20 percent to 30 percent of the cost of health coverage. It also says that in the case of programs to prevent or decrease tobacco use, the maximum rewards could be increased to as much as 50 percent.

The financial incentives can be tied either to simple participation in wellness programs or to meeting "health-contingent" standards, such as those for weight or cholesterol levels in the blood.

Employers have the power under a 2006 federal regulation to vary premiums or cost-sharing for family coverage, not just employee-only coverage, if family members are eligible to participate in a wellness program, the Georgetown center says. Like the 2006 rule, the proposed rule recognizes that power, the center adds. The proposal sought comment on whether the reward or penalty should be prorated for family members failing to meet the standard set out in a health-contingent program.

"We urge the departments to adopt an approach that allows health-contingent rewards only for an employee, not for other individuals—especially children—who are covered under an employee's family plan," the Georgetown letter said. The comment also was signed by the children's advocacy group First Focus and Voices for America's Children.

"Families should not be penalized based on a child's ability or willingness to participate," the letter said. The rewards and penalties are problematic when adult family members are involved as well, it said. They "may not have access to the same resources and supports as an employee, such as a fitness center, health care provider, or health coach located at the workplace," the letter added.

Joe Touschner, a health policy analyst with the Georgetown center, said in a telephone interview that while a number of employers invite families to participate in employer wellness programs, it's unclear how many actually tie financial incentives to family participation.

Meanwhile, the Texas Medical Association is worried about the burdens wellness programs place on physicians' time. Doctors are complaining that the programs can require "many pages of paperwork" to verify that their patients have met the requirements of a wellness program or that the patient qualifies for an exemption. The association wants the final rule to say a physician verification form can be no longer than a page and that a doctor is entitled to charge a fee for filling it out.

For its part, the Wisconsin Association of Health Plans said it's worried about a part of the proposal that requires use of a "reasonable alternative standard" if a particular health-contingent program isn't in the view of a worker's doctor appropriate because of a medical condition. This alternative could be granted "without limitation and could offset any potential gain of the wellness program," the association said.

The American Public Health Association (APHA) said that while it "supports the goal of increasing employee participation in wellness programs, we are concerned about incentives that vary employees' costs of health care coverage. There is little or mixed evidence that such incentives are effective at improving health outcomes, and there is potential for them to have negative impacts on health outcomes by increasing costs and reducing access to health care." It also expressed concern that women, low-income, and minority individuals could be at a disadvantage when employers tie the cost of insurance to the ability to meet certain health targets.

APHA said it also "opposes the fact that a program's 'reward' could actually mean increased costs for some individuals." It said that "one allowable reward is the 'absence of surcharges' for those who meet wellness program goals, which appears to mean that employers can actually increase insurance costs for individuals who fail to meet program goals, and then reward successful employees merely by not raising their costs."

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