Wellness Promotion/Prevention: Overcoming Legal And Compliance Hurdles

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Wellness Promotion/Prevention Overcoming Legal
And Compliance Hurdles

• John R. Hickman, Esq.
• Alston Bird, LLP
• John.Hickman_at_alston.com

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Reasons to Consider Wellness Programs

• Rising Healthcare Costs
• Premiums for employer-based health insurance rose
  by 9.2 percent in 2005 -- The fifth consecutive
  year of increases over 9 percent.
• Since 2000, employment-based health insurance
  premiums have increased 73 percent (inflation
  only 14 wage growth only 15).
• The average employee contribution to
  company-provided health insurance plan has
  increased more than 143 percent since 2000.
• The annual premiums for family coverage have now
  eclipsed the gross earnings for a full-time,
  minimum-wage worker (10,712).

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Reasons to Consider Wellness Programs

• Poor Employee Health
• Obesity In 2005, 60.5 of adults in the United
  States were overweight, 23.9 were obese, and
  3.0 were extremely obese.
• Smoking 24 of adult males smoke 19 of
  females smoke. Each year in the United States,
  approximately 440,000 persons die of a cigarette
  smoking-attributable illness, resulting in 5.6
  million years of potential life lost, 75 billion
  in direct medical costs, and 82 billion in lost
  productivity.

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2008 PWC Study

• 500 billion annually spent (25 of total medical
  expenditures) due to behavioral habits
• Obesity 200B
• Smoking 191B
• Alcohol gt2B
• Non-adherence 100B

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Disease Management vs. EmployeeWellness Programs

• Wellness Programs Designed to improve general
  health of overall employee population before
  employees get sick.
• Example Weight Watchers
• Disease Management Programs Designed to improve
  health of particular employees after they have
  developed chronic health conditions (e.g.,
  asthma, diabetes, heart condition, hypertension,
  renal disease).
• Example Health coach to advise about options

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Health Risk Assessments

• Health Risk Assessment Series of medical and
  health-related questions aimed at obtaining
  baseline information about employees overall
  health to identify persons with chronic
  conditions or who are at risk for developing a
  condition.

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Compliance Issues

• Practical and legal compliance issues may arise
  with Disease Management and Wellness Programs
  under . . .
• HIPAA Nondiscrimination Requirements
• Americans With Disabilities Act (ADA)
• Genetic Information Nondiscrimination Act (GINA)
• Age Discrimination in Employment Act (ADEA)
• HIPAA Administrative Simplification (Privacy,
  EDI, and Security)
• COBRA
• ERISA
• Income Tax
• Plan Design/Integration Issues (e.g., HRAs and
  HSAs)
• State law

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Carrots and Sticks

• Two Competing Approaches
• Carrot
• Health club memberships
• Reduced health care premiums
• Smoking cessation programs
• Weight loss programs
• Free health examinations
• Healthy eating programs
• Stress reduction programs
• Stick
• Refusal to hire
• Disqualification from health care plan
• Termination

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HIPAA Implications for Wellness Programs

• Generally cannot vary benefit based on health
  status . . . but variation allowed for certain
  wellness programs
• Rule does not apply to programs that do not
  condition benefit on ability to meet health
  standard (i.e., a Participation Based Wellness
  Program e.g
• Incentives to participate in testing (regardless
  of outcome)
• Waiver of co-payment/deductible if participate in
  pre-natal program
• Reimbursement of health club membership
• Reimbursements for smoking cessation or weight
  reduction programs (regardless of outcome)
• Compensation to fill out health risk assessment

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Requirements for Standard Based Wellness
Programs

• Any program that provides a reward/penalty
  based on the ability to meet a health standard
  must
• Limit reward/penalty to specified percentage 20
• Be reasonably designed to promote health or
  prevent disease
• Annual qualification requirement
• Must be available to all similarly situated
  participants -- i.e., individually tailored
  adjustments to program may be required for
  individuals who cannot meet health standard
• Notice of individual accommodations must be
  provided

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Requirements for Standard Based Wellness
Programs

• Example Bonus for cholesterol levels below 200
  must include notice allowing those medically
  unable to comply to discuss alternatives
• Example Bonus for body mass index might allow
  for qualification based on walking 20 minutes
  three times a week
• Example Bonus for tobacco-free employees
  might allow for qualification based on enrollment
  in smoking cessation program (Note assumption
  that tobacco use addiction is a medical condition
  -- nicotine addiction)

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Age Discrimination in Employment Act (ADEA)

• ADEA prohibits employers from discriminating
  against individuals on the basis of age with
  regard to employment and the privileges of
  employment (e.g., benefits)
• Generally cant reduce or terminate benefits due
  to age
• May reduce benefits based on equal cost/equal
  benefit rule
• Recent case (Erie) has indicated that the ADEA
  applies to retirees
• Erie prevents employers from reducing benefits of
  retirees (e.g., at Medicare age) unless plan
  meets equal cost/equal benefit rule
• Does not require employer to offer retiree
  benefits
• ADEA impacts both
• The ability to stop DM/Wellness program
  incentives /surcharges upon reaching a particular
  age and
• Varying incentives/surcharge due to age
• Imposing additional requirements for incentive
  based on age

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HIPAA Administrative Simplification

• Are disease management, wellness programs subject
  to HIPAA Privacy/Security/EDI?
• Only if
• The DM/Wellness is part of a Health Plan or
• The DM/Wellness vendor is a Health Care
  Provider
• Most argue that DM/Wellness is part of a health
  plan
• Facilitates information sharing with health care
  providers without authorization and marketing
  concerns
• Enables VEBA/Trust funding

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HIPAA Privacy

• In a nutshell . . . .
• Covered entities are prohibited from using
  protected health information (PHI) without an
  authorization for any reason other than
  treatment, payment, or related health care
  operations. Specific authorization is required
  for any other use.
• For example, use of PHI for marketing requires
  authorization
• Be wary of PHI leakage outside of health plan

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HIPAA Privacy

• In a nutshell . . .
• Covered entities required to establish procedures
  to protect electronic PHI
• Covered entities subject to EDI requirements if
  engaging in certain electronic transactions
• Business associates (e.g., TPAs or Vendors)
  subject many of the same requirements via
  contract (the Business Associate Agreement)

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COBRA

• Most group health plans are required to provide
  COBRA continuation coverage to qualified
  beneficiaries if coverage is lost as a result of
  certain qualifying events
• Group health plan means a plan that provides
  medical care and is maintained by the employer
• Will DM/Wellness programs provided by the
  employer be subject to COBRA?
• If they provide medical care
• General health not medical care

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COBRA

• COBRA considerations
• Is Medical care offered?
• What type of incentive is offered?
• Impact of cash incentives/premium reductions?
• Impact of HRA/HSA incentives?
• Part of overall health program or stand alone
  arrangement?
• Participation limited to plan participants or all
  employees?
• What benefit must be provided?
• What is cost of program?

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Tax Issues

• Tax issues arise when
• Employer pays for coverage that does not
  constitute medical care
• General health and wellness programs
• Weight reduction programs not limited to obesity
• Membership in a gym
• If not for medical care, the value of such
  programs must generally be included in gross
  income and subject to withholding?

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Tax Issues

• Non-health incentives raise tax issues
• Cash payments
• Taxable and subject to withholding
• Gift certificates
• Likely taxable and subject to withholding
• If paid through VEBA, could be a disqualified
  benefit
• De minimis exception

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Tax Issues

• Health related incentives
• E.g., contribution to HRA or HSA or Health FSA
• Generally non-taxable if health plan related
• No tax exclusion for self-employed individuals
• Health FSA
• Possible change of election issues
• Potentials for health benefit restricted debit
  card
• HSA
• Must be structured to be made through the
  cafeteria plan

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State Law

• Statutory Restrictions
• Smokers Rights 20 states, including Arizona,
  Connecticut, District of Columbia, Indiana,
  Kentucky, Louisiana, Maine, Missouri,
  Mississippi, New Hampshire, New Jersey, New
  Mexico, Oklahoma, Oregon, Rhode Island, South
  Carolina, South Dakota, Virginia, West Virginia,
  Wyoming
• Example An employer may not require as a
  condition of employment, an employee or
  prospective employee to refrain from using or
  discriminate against an employee with respect to
  the employees compensation and benefits or terms
  and conditions of employment based on the
  employees use of tobacco products outside the
  course of the employees or prospective
  employees employment. Ind. Stat. 22-5-4-1

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State Law

• Statutory Restrictions
• Lawful Conduct / Lawful Products 11 states,
  including California, Colorado, Illinois,
  Minnesota, Montana, Nevada, New York, North
  Carolina, North Dakota, Tennessee, and Wisconsin.
• NY Example It shall be unlawful for any
  employer or employment agency to refuse to hire,
  employ or license, or to discharge from
  employment or otherwise discriminate against an
  individual in compensation, promotion or terms,
  conditions or privileges of employment because
  of an individuals legal use of consumable
  products prior to the beginning or after the
  conclusion of the employees work hours, and off
  the employers premises and without the use of
  the employers equipment or other property.

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State Law

• Common Law Tort Claims
• Wrongful Discharge in Violation of Public Policy
• Invasion of Privacy / Intrusion into Seclusion
• Example
• Rodrigues v. The Scotts Company (Mass. Sup Ct.)
• Facts
• Hired as lawn technician.
• Never smoked on the job only off the job.
• Fired for drug screen that was positive for
  nicotine.
• Law
• No statutory provision in Massachusetts
• Violation of Right to Privacy
• Unreasonable Search of his Person

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State Law

• Thoughts/Conclusions
• Patchwork Effect Practical Limitations
• Legal compliance issues for national employers
• Fairness issues for employees in different states
• Administrative costs/burdens
• Future Developments
• More and more action from state legislatures
• Lobbying by American Civil Liberties Union

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Americans With Disabilities Act (ADA)

• Americans With Disabilities Act
• Coverage 15 or more employees
• Substantive Provisions
• Non-discrimination / Accommodation
• Restrictions on Medical Examinations
• Confidentiality of Medical Information

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Americans With Disabilities Act

• Non-Discrimination/Accommodation
• Provisions only apply to disabled individuals
• Definition Physical or mental impairment that
  substantially limits one or more major life
  activities.
• Most behaviors targeted by wellness programs do
  not rise to the level of a disability under the
  ADA
• Smoking No
• Weight Maybe
• Alcohol Consumption Yes
• Beware Regarded As Disabled Claims

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Americans With Disabilities Act

• Non-Discrimination (contd)
• Disparate Impact Claims
• Using qualification standards, employment tests
  or other selection criteria that tend to screen
  out an individual with a disability or a class of
  individuals with disabilities unless the
  standard, test or other selection criteria is
  shown to be job-related for the position in
  question and is consistent with business
  necessity.

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Americans With Disabilities Act

• Medical Examinations and Inquiries
• Exams ADA restricts manner and method of
  administering medical exams to both applicants
  and employees.
• Medical Exams Vision tests, blood, urine and
  breath analysis blood pressure/cholesterol
  screens x-rays
• Questions ADA also restricts asking
  disability-related questions of applicants and
  employees
• Disability-Related Question Any question likely
  to elicit information about a disability.

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Americans With Disabilities Act

• Medical Examinations
• Broad Coverage
• Rules apply to both applicants and employees.
• Rules apply to both disabled and non-disabled.
• Consequently, anyone can sue you.
• Common Liability Scenarios
• Health Risk Assessments
• Policing mechanisms for wellness programs

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Americans With Disabilities Act

• Rules for Medical Examinations and Inquiries
• Applicants
• Pre-Offer No examinations or inquiries allowed
• Post-Offer Examinations permitted, but must
  apply to all employees.
• Employees Must be job-related and consistent
  with business necessity.
• Applies to all employees (whether disabled or
  not).
• Job-related Ability to perform essential job
  functions

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Americans With Disabilities Act

• Voluntary Wellness Program Exception
• Statute A covered entity may conduct voluntary
  medical examinations, including voluntary medical
  histories, which are part of an employee health
  program available to employees at that work
  site.
• Regulation EEOC has not promulgated any
  regulation about meaning of voluntary.
• Enforcement Guidance Voluntary means no
  penalty can be imposed for not participating
  anything other than de minimis incentive is
  prohibited.

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Americans With Disabilities Act

• Confidentiality Requirements
• Rule Information regarding the medical
  condition or history of applicants/employees must
  be
• collected and maintained on separate forms and
• in separate medical files
• Exceptions to Confidentiality
• Managers may be informed of restrictions/accommoda
  tions
• First aid and safety personnel for emergency
  purposes
• Government officials investigating ADA
  compliance.

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Genetic Information Nondiscrimination Act (GINA)
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How does GINA impact health plans generally?

• Effective first plan year after May 21, 2009.
• GINA amends the HIPAA nondiscrimination rules to
  restrict the access and use of genetic
  information by group health plans and group
  health insurers, including non-federal
  governmental plans.
• GINA also imposes similar restrictions on
  insurers in the individual market and issuers of
  Medigap policies with corresponding amendments to
  the PHSA and the Social Security Act.

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What is Genetic Information?

• Genetic information with respect to any
  individual means information about
• an individual's genetic tests
• the genetic tests of family members of such
  individual
• the manifestation of a disease or disorder in the
  individuals family members.
• Genetic test means an analysis of human DNA,
  RNA, chromosomes, proteins, or metabolites that
  detects genotypes, mutations, or chromosomal
  changes. .
• The term family members means the individuals
  dependents under the group health plan, as well
  as any first-, second-, third- or fourth-degree
  relative of the dependent or the individual.

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What are the group health plan limitations under
GINA?

• Generally, GINA imposes the following limitations
  on all group health plans and group health
  insurers
• Adjusting premiums/contributions Plans and
  insurers may not adjust the premium or
  contribution amounts for the group on the basis
  of genetic information. However, the premium or
  contribution amount for a group may take into
  consideration the manifestation of a disease of
  an individual who is enrolled in the plan so long
  as this information is not used as genetic
  information about other group members (e.g., a
  covered dependent) and to further increase the
  premium for the employer.
• Requesting Genetic Tests Plans and insurers may
  not request or require an individual or a family
  member to undergo a genetic test. However, a
  plan may obtain and use the results of a genetic
  test as necessary to fulfill its payment
  obligations under the plan so long as it only
  requests the minimum amount of information
  necessary to make payment.

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Prohibited Uses of Genetic Information

• Requesting Genetic Information for Underwriting
  Plans or insurers may not request, require, or
  purchase genetic information for underwriting
  purposes. For purposes of GINA, underwriting
  purposes means
• Rules for, or determination of, eligibility for
  benefits under the plan or coverage
• The computation of premium or contribution
  amounts under the plan or coverage
• The application of any pre-existing conditions
  exclusion under the plan or coverage
• Other activities related to the creation,
  renewal, or replacement of a contract of health
  insurance or health benefits.
• Obtaining genetic information prior to
  enrollment Plans or insurers may not request,
  require, or purchase an individuals genetic
  information prior to such individuals enrollment
  in the plan.

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What is the practical impact on group health
plans?

• Plans/insurers cannot request or require any
  person to undergo a genetic test. Genetic test
  results may be accessed by plans/insurers, but
  only for payment purposes (and the request must
  be for the minimum necessary for the purpose).
• Generally, GINA does not altogether prohibit
  plans/insurers from requesting an individual to
  provide genetic information (which may include
  history of disease/disorder in family members).
  However, plans/insurers must not
• request, require or purchase genetic information
  for underwriting purposes
• request, require or purchase an individuals
  genetic information prior to the individuals
  enrollment in the plan (except for incidental
  collection of genetic information) or
• require that an enrolled individual provide
  genetic information, unless it is for certain
  research purposes (subject to the conditions
  described above).
• Plans/insurers cannot take genetic information
  into account in setting group premium or group
  contribution amounts (but they can adjust
  premiums and contributions based on actual claims
  experience).

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How does GINA change HIPAAs privacy rules?

• GINA requires the Secretary of Health and Human
  Services to revise the HIPAA privacy regulation
  so that
• Genetic information is clearly considered
  health information subject to HIPAA privacy
  protection and
• The use or disclosure of genetic information
  (other than incidental use or disclosure) about
  an individual for underwriting purposes would not
  be permitted use or disclosure.

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Question Answer