Blueprint for HIPAA and ADA Compliant Wellness Programs: Encouraging Good Health Reduces Workers’ Compensation Expenses

Blueprint for HIPAA and ADA Compliant Wellness Programs: Encouraging Good Health Reduces Workers’ Compensation Expenses

By John Stahl, Esq.

The article “Guidance for a Reasonably Designed, Employer-Sponsored Wellness Program Using Outcomes-Based Incentives” in the Journal of Occupational and Environmental Medicine demonstrates how employer-sponsored outcomes-based wellness programs (wellness programs) reduce workers’ compensation and other employment-related healthcare costs.

This report is a consensus statement of the Health Enhancement Research Organization; American College of Occupational and Environmental Medicine; American Cancer Society and American Cancer Society Cancer Action Network; American Diabetes Association; and the American Heart Association.

The overall theme is that healthier employees are less expensive employees. This message includes detailed and specific a-to-z methods for implementing successful federal anti-discrimination healthcare law compliant wellness programs.

An appropriate wellness program’s relevancy to workers’ compensation includes:

  • Reducing the incidence and extent of pre-existing conditions that compensable incidents might aggravate; and
  • Improving return-to-work time and other recovery-related statistics.

A finding related to the benefits described above states that “The Centers for Disease Control and Prevention estimates that as much as 75% of all US health care spending is for people with chronic conditions.”

Motivating Wellness Program Participation

Reported conclusions include that financial incentives increase “simple behaviors,” such as completing a health assessment or undergoing preventative screening. The research shows as well that “the key to a successful worksite wellness program capable of sustaining behavioral change is the creation of a culture and environment that supports health and wellness.”

An outcome-based incentive program is described as a wellness program that involves rewards or punishments that are “tied to an individual achieving or making progress toward a standard related to a health status factor.”

HIPAA and Obamacare Considerations

The nondiscrimination provision of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) that generally prohibits charging one person a higher health insurance premium than someone else based on a health factor affects elements of a wellness program. The better news is that “HIPAA allowed a specific exemption for premium discounts or rebates ‘in return for adherence to programs of health promotion and disease prevention.’”

The 2006 Final Wellness Rules for Group Health Plans, which were incorporated into the Patient Protection and Affordable Care Act (Obamacare), further defined the HIPAA exception described above.

The five requirements for qualifying for that HIPAA exception are:

1. Incentives for satisfying a health standard “must not exceed 20% of the total cost of coverage applicable to those who may participate fully in the wellness program.”

2. “The program must be reasonably designed to promote health and wellness.”

3. Employers must offer employees “an opportunity to qualify for the reward under the program at least once per year.”

4. “The reward must be available to all similarly situated individuals. If the standard is unreasonably difficult due to an employee’s medical condition or if it is medically inadvisable for an employee to attempt to satisfy the standard during the period allotted, the individual must be offered a reasonable alternative standard or waiver of the applicable health factor standard.”

5. Every written description of a wellness program “must clearly disclose the availability of the reasonable alternative standard or the possibility of a waiver.”

Additionally, the article emphasizes that “the rules are explicitly designed to reduce the risk that [wellness] programs using an outcomes-based approach to incentives would merely shift costs to high-risk individuals [such as workers’ compensation claimants] or create premium differentials so large as to discourage enrollment, deny coverage, or create an excessive financial penalty.”

The article states as well that is equally important to remember that “any individually identifiable medical information obtained through the assessment and screening process is considered protected health information and is subject to the same privacy, storage, and security requirements as any other sensitive medical information.”

HIPAA requires specifically that protected health information cannot be used for employment-related determinations, such as firing and promotion decisions.

ADA Considerations

The article additionally emphasizes the importance of wellness programs complying with the requirements of the Americans with Disability Act (ADA). One such standard is that “medical information be kept apart from general personnel files.”

Elements of HIPAA/Obamacare Compliant Wellness Programs

The overall requirement for varying employee-health-plan premium contributions or benefit levels based on a health factor is that the variance be tied to a wellness program. The definition of a reasonably designed wellness program is “one that has a ‘reasonable chance of improving the health of or preventing disease in participating individuals.’”

The determination of “reasonable chance” is very specific regarding both the type of behavior targeted and the nature of the employee to whom the program applied.

The article additionally identifies the following key elements of a wellness program:

  • “leadership and grassroots support”
  • “a healthy workplace environment”
  • “supportive policies and benefits design”

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