Ever since final rules under the Affordable Care Act dictated that outcomes-based wellness programs must offer reasonable alternatives to employees unable to achieve the program’s health benchmarks, employers have continued to worry over the effectiveness of their health improvement efforts.

The Business Roundtable, an association of chief executive officers of leading U.S. companies, expressed concern in a Wall Street Journal article recently that allowing employees to gain the incentive without achieving the wellness program’s benchmarks could lead to abuse. It could also hurt employees who are reaching the desired health outcome.

In its report, the BRT notes that “better value, as well as better health outcomes are, achievable without asking consumers, providers, employers or government to shoulder significant additional costs.”

Also see: 10 ways to design better wellness incentive programs

In 2013, the BRT said, the average annual premiums for employer-sponsored coverage were $5,884 for an individual and $16,351 for a family – triple the averages reported more than a decade earlier. And last year, a RAND Health study found that half of U.S. employers offer wellness programs.

Gary Loveman, chief executive of hotel and casino operator Caesars Entertainment Corp., tells WSJ that this is an essential issue “for the most progressive employers.”

“You have a group of employees getting older. What can we do to keep folks healthier at a lower cost?” Loveman says. “We can encourage them to be active in addressing their health care.”

BRT says the problem with reasonable alternative rule is that employees may be able to earn the health care incentives by simply filling out a health risk assessment, taking an online course or reading recommended materials. Meanwhile, other employees are reaching mandated health goals through diet and exercise and getting the same incentive.

According to Gretchen K. Young, senior vice president of health policy at the ERISA Industry Committee, a nonprofit association that represents major employer interests in employee benefits and compensation, this is a “really hot issue” in the employer-sponsored health sector.

“When the regulations were finalized, we were all very concerned at the prospect that anybody who didn’t want to work at meeting that [health outcome] goal would go and get a doctor’s note,” Young tells EBN. “I think the basic point is that we are extremely concerned but, most of my employers are not at the point of it being a prevailing issue.”

Also see: Employers reluctant to use ACA wellness incentives

Lynn Henry, senior vice president of employer account management at StayWell, a health management and wellness provider, notes the company has not witnessed any changes to employer wellness programs due to these alternative ACA incentive rules.

“StayWell has not seen a decrease in interest or commitment to wellness programs from employers, nor do employers, in general, view the new incentive limits and the alternative standard as a limitation to their program design and implementation,” Henry says. “An alternative standard can be the difference between getting someone who might not even try to meet a [body mass index] standard because they are so far away from the target weight that it seems unattainable, to take that first step toward changing their behavior, even if that step is something as simple as participating in a webinar coaching program on nutrition.”

Last summer, final ACA rules said that employers that provide incentives to wellness participants in group health plans are required to offer an alternative incentive option in order to prevent discrimination. The reasonable alternative standard is applicable to all individuals who deem it “unreasonably difficult [to reach the reward health improvement standard] due to a medical condition to meet the otherwise applicable standard,” according to the Federal Register.

Under the ACA, the maximum permissible reward for health-contingent wellness programs, connected to a group health plan, is 30% of the cost of coverage. Also, for reduced tobacco use, the maximum incentive is 50%.

In the meantime, Young explains that benefit managers have been busy coping with the ACA, its excise tax and other mandates.

“The people who normally pushed through changes in wellness programs, the ones who make strategic changes to kind of beef them up, were completely embroiled in complying with the Affordable Care Act,” Young says. “I am thinking once they get all their reporting mechanisms in place for this coming, then I think they will turn their attention to wellness.”

While noting that the wellness program problem will be front and center very soon, Young states that future strategic decisions will hopefully address how employers can get healthier employees and lower costs for themselves and their employees.

Meanwhile, Henry foresees data helping with this strategic employer cause; she says it is likely to become an invaluable resource for employer-sponsored health improvement and financial outcomes programs.

“Targeted use of data will continue to deliver value in the future as programs become more personalized and the industry becomes more sophisticated in its use of data and how it interprets data,” Henry explains.

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