Health Promotion Blog

Compliance with health insurance portability and accountability act (HIPAA) non-discrimination rules is a big challenge for wellness programs.  The old rules were unclear about which incentives passed muster.

That’s all changed, with the rules established earlier this year by the DOL and USA  Treasury Department.  The rules themselves haven’t changed, but they’ve been clarified. Here’s what you need to know -

â..Participation incentives’ are fine

As long as you structure incentives as rewards for wellness participation, the new rules provide a lot of freedom. All of these are fine under HIPAA -

o  reimbursing all or a portion of the cost of fitness club membership

o  financial rewards for undergoing health risk appraisals so long as the reward is based on participation rather than test results

o  stimulating preventive care by waiving co-pays or deductibles for these services (i.e., well-baby visits or prenatal care)

o  reimbursing staff for the cost of use of tobacco-cessation programs without regard to the result, and

o  offering rewards tied to staff attending a monthly health education seminar or working with a wellness Coach.

Conditional rewards OK ifâ..

But what when you want to make the reward conditional on participants meeting specific health goals? Example – Staff Members who achieve a cholesterol count under 200 get a 20 percent reduction in the cost of their health plan contributions pending results of an annual cholesterol test.

The feds say it’s OK under health insurance portability and accountability act (HIPAA) to do this, too, but your plan must meet five additional requirements -

o  The reward can’t exceed 20% of the cost of employee-only (or, if you allow dependents to participate, employee-plus-dependent) coverage under your health plan.

o  The standards must be reasonable (e.g., you can’t limit rewards to folks who can run a marathon).  The rewards also can’t be used as a backhanded way to adversely single out certain employees (e.g., rewards for all non-diabetics).

o  Participants must have the opportunity to qualify for the reward at least once per year (e.g., a smoker who fails to quit this year gets another chance next year).

o  Rewards should be available to all “similarly situated individuals.” In other words, you can’t make a company-compensated weight control program available to certain staff members but not others.

When, for medical reasons, it’s unreasonably challenging for a personal to satisfy conditions that are otherwise reasonable, you must offer an alternative. Example –  A pregnant worker may not be able to meet certain standards, so you must offer her an alternative.

Negative incentives violate HIPAA

So what’s not permitted under health insurance portability and accountability act (HIPAA)’s non-discrimination rules? Anything that punishes people  for their health conditions or health risks.

The rules prohibit companys from charging different premiums, contributions, co-pays or deductibles based on personal health factors such as obesity or tobacco use. Nevertheless, it’s OK to reimburse these expenses based on someone’s participation in your health promotion program, without regard to success.

In addition, the feds have added an important new non-discrimination rule – Businesss’ medical programs can’t deny benefits for treatment of injuries resulting from a medical condition, even if the condition wasn’t diagnosed before the injury.

For example, some medical plans have a “suicide exclusion” that denies payment for treating self-inflicted wounds from a suicide try. Now let’s suppose the employee suffers from clinical depression. Even if the depression was undiagnosed prior to the suicide try, it’s illegal for your plan to deny benefits to this employee.

Ever set out to organize and dispose of old employee files and paperwork in the office? the job is tougher than it seems.

Best practice – Develop a records retention policy as your first step. A host of federal and state laws specify how long you must retain pay- and benefits-related documents.

Compliance is essential if a current or former employee sues or the DOL, IRS or the state audits your records.

Here is a records-retention schedule advised by employment lawyer Jacqueline McManus -

o  Retain for two years worker personnel files, including performance reviews and training.

o  Hold these for three years –  wage records, including time cards, base pay and overtime wage-rate calculations and records explaining wage diferentials for workers performing the same job, and hold I-9 forms for three years from hire date or one year after termination, whichever is later.

o  Keep these four years –  all Payroll documents, including – home address records, and all wage records, including weekly OT earnings, straight time pay, deductions, bonuses, pay period designations and payment dates.

o  Use a five-year retention window for worker health info such as medical and first-aid records from on-the-job injuries, and alcohol and drug testing records.

o  Keep this benefits data for six years (or one year after plan termination) –  elections and enrollment forms, benefit change documents, and COBRA notices.

o  Retain 401(k) files indefinitely.

Many employers attempt to reward workforce during the holidays. But be cautious -

There’s a common misbelief that the IRS considers gift cards worth $20 or less de minimus benefits and, as a result, they’re tax free. Regretfully, that’s not true.  With few exceptions, the IRS considers almost anything with cash value a taxable form of compensation.

Practically speaking, the IRS is unlikely to go after your firm or an staff member over a few small-value gift cards for which you withheld no taxes. But they could, namely when your firm regularly hands out gift cards.

At some firms, those $5 to $20 cards can add up to a few thousand dollars worth of uncompensated taxes in a few years. Each $15 gift card would generally require about $5.55 withheld.

To be safe, you are able to use gift cards sparingly and pay the tax for the recipient. Or else you are able to educate folks proactively that Uncle Sam requires you to take out for taxes.

Read the fine print

Gift cards could be money-wasters or or morale-killers if staff members have a bad experience attempting to redeem them. Read the fine-print before you buy. Three common pitfalls to watch -

o  expiration dates. Some retailers offer cards that last forever. But many have expiration dates, rendering the cards worthless after a period of time

o  dormancy fees. A $50 card can end up worth only $40 at stores that deduct “dormancy fees” after a certain period of time, and

o  redemption fees. Some stores charge a fee for redeeming cards that could be used in multiple locations.

The good news –  There are some good deals out there. Corporation use of gift cards has doubled since 2001, and related sales bring in $20 billion a year to retailers. With such fierce competition, it compensates to shop around.

In recent years, it’s become increasingly common for corporations with as few as 200 employees to explore self-insurance. But beware of hidden traps.

If your corporation is weighing self-insurance â.” or has already taken it â.” here are three pitfalls that can develop unexpected costs.

1. Unfavorable staff member mix

It’s impossible to completely eliminate the risk of unexpected, high-dollar health claims. But here’s a guideline to lower your risk. Health claim stats suggest the “ideal” staff member population for a self-insured plan is predominately young, non-smoking and male.

Be aware that stop-loss insurance carriers often “laser” those staff considered higher risk. Lasering means that your company would’ve to pay out much more in claims for these staff before the stop-loss coverage kicks in.

2. Loss of network discounts

Some firms learned after the fact that going the self-insurance route caused them to lose providers’ network discounts they previously received under fully insured plans. When evaluating  plan vendors’ administration-only choices, ask -

o  Will the provider’s network alliances work in your best interests, cost-wise?

o  Will the provider only oversee claim payments or negotiate to build the best provider network, quality-wise, for your workers.

Bottom line –  You should get the same kinds of plan designs, networks and discounts as a fully insured plan.

3. Wasteful reinsurance contracts

When the language of your reinsurance contract doesn’t match your health plan’s summary plan description, you may be paying for coverage you don’t need and can never use.

It’s also key to be certain your firm has enough money in reserve to cover run-out claims and other costs that may occur before reinsurance will cover payments. Best practice –  annual audits of your financial reserves.

Evidence-based medicine has become a large buzzword in healthcare over the last few years. But certain non-traditional treatments, like chiropractic care, might also prove effective in certain cases.

The key –  Using these treatments as well to â.” not instead of â.” conventional medicine may prove more cost-efficient in the long term.

What the latest research says

Do these five common complimentary treatments belong on your health plan? Here’s what recent research suggests -

1) Chiropractic care. Studies suggest these treatments may help cut absenteeism for workforce with uncomplicated lower back pain, in particular for people  who’ve had it for less than a month.

2) Acupuncture. Research shows acupuncture can help relieve osteoarthritis, chronic migraines, post-operative pain, low-back pain, fibromyalgia and carpal tunnel syndrome. There’s less evidence about its effectiveness as a tandem treatment for other conditions.

3) Acupressure. There’s no meaningful research to show this needle-free variation of acupuncture (a therapist applies pressure to specific points on the body) has the same medical benefits.

4) Biofeedback. As reported by the Mayo Clinic, there’s now some research to suggest this treatment can help with some types of chronic pain, in particular tension headaches and muscle pain.

Exactly how it works –  Monitors display a patient’s heart rate, breathing patterns, body temperature and muscle activity. A therapist then teaches the patient how to lower these readings via relaxation.

5) Aromatherapy.  As yet, there’s no evidence of direct medical benefits. While it can be a relaxing treatment to reduce stress, few firms â.” if any â.” foot the bill on employees’ behalf.

When an worker ignores directions from a doctor, who’s responsible if the worker causes a serious accident on the job?

In some cases, it’s your firm that ends up on the hook â.” both for workers’ comp and for other individuals ’s injuries caused by misuse of a prescription drug.

Situations such as these raise three questions that even HR/benefits pros have trouble answering. How are you â.” or supervisors â.” supposed to know what meds people  are on and whether they’re taking them as directed by their doctors?

In most cases, you won’t.

Are you able to determine without violating health insurance portability and accountability act (HIPAA) or other laws?

You can’t, unless the staff member volunteers the info or a doctor notes the effects of medication being the reason for the accident.

So if you won’t know and can’t find out, how on earth can your firm be held responsible after the fact?

It all depends on the circumstances. Three key danger signs -

o  A supervisor already has knowledge of an employee’s health condition, when not the meds themselves. Example –  the employee requested a schedule change and said it was due to a particular health problem

o  The individuals has a history of erratic behavior that management suspects is medication-related, and/or

o  The employee’s job involves potentially dangerous situations.

Spotting possible danger

A Florida case (Johnson v. Rentway) is a classic example of the two of the three big danger signs.

1.  The supervisor knew an worker had insulin-dependent diabetes.

2.  The worker was under physician’s orders to take insulin at specific times, which required the corporation to adjust the employee’s schedule.

But as a result of short staffing, the worker was often forced to work shifts that overlapped with times he was supposed to take injections.

What’s more, the worker worked a potentially dangerous job (he was a expert truck driver).

In conclusion, the inevitable happpened.  The employee suffered a diabetic blackout at the wheel, causing a serious crash that injured himself and another driver.

The worker filed for workers’ comp, and the injured driver sued the company.  The firm fought â.” and lostâ.” both cases. Total cost –  $5 million.

Having even one problem drinker on your medical plan – including a covered family member with abuse issues â.” can cost your business big.

Some estimates place the potential cost as high as $35,000 a year per case. What’ your company’s risk?

Many health promotion programs are geared toward managing employees’ health risks associated with illnesses like diabetes or asthma.

But unless the wellness program is integrated with an staff member assistance program (EAP), chances are alcohol abuse-related risks go undetected. Here are two strategies that’re getting good results.

1. Include alcohol in medical screenings

When you already sponsor confidential employee health-risk assessments, it’s easy to screen for alcohol risks, too. This could be as simple as making sure three questions are added to the current appraisal -

o  Exactly how often do you’ve a drink containing alcohol?

o  Just how many alcoholic drinks do you have on a average day? And

o  Precisely how often in the last month have you had six or more drinks?

For male staff, more than 14 drinks per week, or one or more episodes of heavy drinking suggests a possible problem. for women, more than seven drinks in a week, or one or more episodes of drinking four or more drinks, is a red flag.

Alternative – If you don’t offer appraisals, you can refer personnel to a free, confidential internet based screening.

Benchmarking tools

Many experts say drug-free workplace policies and employee assistance programs (EAPs) are the two most proven solutions within companies’ grasp for minimizing the risks and costs of alcohol abuse by health plan enrollees.

To see when sponsoring an employee assistance program makes financial sense, you can calculate your own firm’s current cost risk for free here. Plug in your organization kind, locale and number of workers.

You’ll get a personalized estimate of annually direct (absenteeism, disability, ER visits) and indirect (presenteeism, turnover) costs from alcohol misuse by a covered worker or family member.

To design a drug-free worksite policy â.” or check when your existing one is up to par and compliant with the law – more guidance is available here.

It’s easy to feel like your PBM holds all the power over you. In most cases, it does.

A landmark 2004 study compared what drug store benefits managers (PBMs) charge employers’ plans to what they actually pay pharmacies.

Scientists found staggering overcharges – especially for generic drugs. Regrettably, four years later, the situation has hardly changed. All too often, PBMs improve their own bottom line at the expense of the plan sponsor’s.

Chances are, it’s your health insurance provider – not yourself – who contracts with the PBM to administer the prescription drug portion of your health benefits.

So how can you feel confident your firm is getting the best value and service? Start by asking your health-plan broker these four questions about the current or prospective PBM.

1. Precisely how does the PBM calculate price?

A lot of PBMs gain hidden profits off your plan through a practice called “differential pricing,” says consultant Gerry Purcell.

In other words, the PBM pays one price to drug retailers and then sets a lesser discount off the typical wholesale price (AWP) for your company’s plan. Example -

o  The PBM compensates the drugstore the AWP minus 18%

o  your plan and personnel pay AWP minus 15% for meds, and

o  The PBM pockets the difference.

Now for some good news. You do have some leverage in this area. When your drug plan is covered beneath the ERISA umbrella, the PBM must disclose this info.

Ideally, you’ll find the rates are the same on both contracts. But if there’s differential pricing, insist your firm get the full discount.

2. What’s the PMPM?

One key cost figure PBMs can’t manipulate is the per-member-per-month (PMPM) cost of your plan. This number will show if your plan’s costs actually increased or lowered.

The PMPM is calculated by dividing the sum costs spent by the number of staff members enrolled in the drug plan.

It’s also a great tool for comparing different PBMs to see which is the most cost-efficient for the size of your company, says Peter Reed of Managed Benefits Strategies.

3. can we get rebates, too?

Some PBMs receive money from drug companies that your brokers won’t tell you about – but could  be able to leverage to your plan’s advantage. Example – Many PBMs get rebate checks from drug companies (typically 50 cents to $1.25 per claim) for helping increase the sales of their products.

When you push hard enough for it, your broker may able to work an arrangement where you either -

o  split rebates from your plan evenly, or

o  let the PBM keep the entire rebate in exchange for a price break on administrative fees.

Important –  Ask to find out all the payment kinds the PBM gets from the drug firms. Rebates are often couched in the form of grants or classified as access fees or formulary fees.

4. Just how do changes in the formulary work?

In most states, PBMs can change your plan’s list of approved medications without prior notice.

The problem –  PBMs often make mid-year switches that save them money, but may not save your business or staff members a dime.

Example – If the PBM adopts a mail-order-only coverage policy on a certain formulary drug, an employee who needs same-day access to the medication might  be forced to pay full price for it at a drug store.

Meanwhile, your plan is still charged the formulary price.To avoid such unpleasant surprises, insist the PBM give written notice of formulary changes, including the addition of new generics.

The best worker recognition practices are often the simplest.

Here’s one that’s recently been adopted at the publishing organization where I work –  a progam called “See something good, say something good.”  It’s a way for personnel to bring positive attention to things that their colleagues, managers and the company’s different departments do well.

Precisely how it works –  the company provides colorful index cards, placing them conspicuously in a few commonly traveled areas in the building. When staff and supervisors want to publically recognize someone else’s efforts, they are able to grab a card and fill it out. It takes very little time.

When the index card is filled out, the employee drops it into a wrapped box (there are two in the building).  The boxes are later accumulated and the cards displayed in a room the corporation uses periodically for meetings, presentations and quarterly employee appreciation events.

In order to build awareness and participation in “Say Something Good,” management put up fliers around the building, so individuals  from every department can see them, as well as visitors and job applicants who’ve come in for interviews.

The health promotion program, which was originally thought up by the head of our product advertising division, doesn’t cost anything apart from the cost of the index cards and paper. There’s minimal administration time, and it takes staff members only a moment or two to fill out a card on a fellow employee’s behalf.

But the return is considerable, and the recognition possibilities are endless. It’s a good way to boost morale, encourage productivity and differentiate the corporation culture from work environments where the negative things seem to get the lion’s share of the attention.

When it comes to health promotion programs, it could be tough to get past all the hype. Here is how to avoid the three most common traps businesss fall into.

Trap #1.  The “one-size-fits-all” approach

For good reason, your corporation doesn’t simply copy other firms’ 401(k) plans or compensation designs. Yet, all too often, firms adopt ill-fitting wellness programs based on things that have worked elsewhere.

Your CFO may have seen data on the cost savings other employers have achieved via certain wellness incentives. Or an old coworker of your CEO swears by the health promotion program at his or her own firm.

In response, the top brass pushes for a copycat health promotion program â.” for instance, offering smoking cessation incentives.

That could  be a good idea, as long as use of tobacco-related diseases are a key driver of your company’s health care costs. But how can you be sure? is it good enough to have your workers undergo a health risk assessment?

Normally, the answer is no.

Health risk assessments are a excellent beginning place, but it’s often a mistake to stop there.  The assessments help you get a feel for what your employees’ baseline physical problems are before you attempt to design a wellness program around them.

This creates rough outlines of what your wellness program goals must be and where to target worker initiatives. When you want the maximum bang for your wellness buck, you’ll have to dig a little deeper for information. Key places to look -

o  your organization’s medical-claims breakdown for the last three years

o  prescription-drug claims

o  worker absence information

o  EAP use

o  disability claims, and

o  employee demographics (workers’ ethnic, gender, age and dependent coverage status points to greater â.” and lesser â.” health risks associated with each category).

Trap #2. Leaving the health promotion program on autopilot

A lot of health promotion programs often get off to a good begin and then fizzle out. Businesss are left wondering what went wrong. Their mistake –  They failed to revisit the health promotion program on an ongoing basis â.” at least every other year.

Why it’s crucial –  Your cost-drivers can easily shift as personnel come and go from the company.

Example –  This year, emphysema and other tobacco use illnesses could  be your biggest cost driver. But two years from now, it could be obesity and diabetes.

Unless you continuously track the wellness program and adjust your goals as necessary, you might not be prepared to meet those new challenges.

Trap #3. Unrealistic expectations

Normally, it takes at least a year and a half for corporations to break even on the cost of a health promotion program.  As a rule of thumb, the average program cost per employee per month to the corporation is about $3 to $5.

When, after three years, you still aren’t seeing results, something went wrong. Currently, the benchmark Return On Investment after the third year of a health promotion program is $4 to $5 saved for every dollar spent.

Precisely how can you manage the cost in the short-term? In many cases, businesss pass the cost of the wellness program on to the workers. for  instance, let’s say you want to roll out a wellness program effective January 1 (or whatever your first day is of the new plan year).

You can roll that $3 to $5 per staff member per month cost directly into the employee’s monthly share of their healthcare premium. That makes the wellness program a budget-neutral expense for your company.

But remember –  You get what you pay for â.” both in time and money invested.  The less guesswork that’s involved in the planning and execution, the better the chance for success.