The Rewards of Wellness

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The Rewards of Wellness

• Gaston Regional Chamber
• October 3, 2008

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Wellness questions to start with

• How do you define Wellness?
• Do you believe Wellness works?
• Do you believe Wellness works for
• Large employers
• Small Group

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Wellness questions to start with

• Who pays for Sickness, in the absence of
  Wellness?
• What are the obstacles?
• Do you believe that Wellness can be effective?

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What Does This Chart Tell Us?
Average Cost Per Employee vs. Consumer Price
Index
SOURCE Add source here
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Traditional Drivers

• The skyrocketing price of health benefits
  Medical costs for employers have outpaced
  inflation in all but four of the past 20 years.
• Among the culprits expensive technology, less
  stringent HMO cost management, and rapidly rising
  drug costs.

SOURCE Mercer National Survey Of
Employer-sponsored Health Plans 2003 Bureau Of
Labor Statistics
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What Are the Real Culprits?

• Unhealthy Lifestyles
• Demographics
• Lack of Personal Responsibility

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Sick to Healthy
Health Care Spending
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Sick to Healthy
3/4 of spending is due to diseases caused by
unhealthy lifestyles
Health Care Spending
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Unhealthy Lifestyles
SOURCE Add source here
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Unhealthy Lifestyles
Blood Pressure
Smoking
Overweight
Exercise
Diet
STRESS
1 out of 4 adults smoke
1 out of 3 has high blood pressure
2 out of 3 are overweight or obese
3 out of 4 lack proper exercise
4 out of 5 have poor diets
SOURCE Add source here
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Personal Responsibility
of Selected Chronic Diseases That Are Likely
Lifestyle Related and Avoidable
SOURCE The Culprit The Cure, Why lifestyle is
the culprit behind Americas poor health. Steven
G. Aldana, PH.D
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Cost per Risk Factor
Annual Medical Cost
SOURCE Employee Benefit News May 1997
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The Chronic Impact

• Average number of lost annual work days per
  person/condition

• Depression 25.6 days
• Cancer 16.9 days
• Respiratory Disorders 14.7 days
• Asthma 12 days
• Migraines 10.7 days
• Allergies 8.2 days
• Heart Disease 6.8 days
• Arthritis 5.9 days
• Diabetes 2 days
• Hypertension 1 day

Chronic disease has 1 TRILLION impact on U.S.
lost productivity each year.
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Prevention

• Preventable illness makes up approximately 80
  percent of the burden of illness and 90 of all
  healthcare costs
• Is Prevention the Solution?
• Prevention vs. Wellness
  
  
• www.preventdisease.com

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What is Wellness?

• Wellness is a process involving the integration
  of many dimensions social, physical, emotional,
  environmental, spiritual, vocational,
  intellectual that enhance the health and
  well-being of any individual. The process is
  designed to help a person make choices that
  result in positive lifestyle changes thus,
  improving individual and community health and
  well-being.

DEFINITION Ball Brothers Foundation.)
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What is a Wellness Program?

• Corporate, or workplace Wellness can be defined
  as
• An organized program in the worksite that is
  intended to assist employees and their family
  members in making voluntary behavior changes that
  reduce their health and injury risks, improve
  their health consumer skills and enhance their
  individual productivity and well-being.

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Does Wellness Really Work?

• A meta-review of 42 published studies of worksite
  health promotion programs shows
• Average 28 reduction in sick leave absenteeism
• Average 26 reduction in health costs
• Average 30 reduction in workers compensation
  and disability management claims costs
• Average 5.93-to-1 savings-to-cost ratio

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The High Cost of Smoking

• A 40-year-old who quits and puts the savings
  into a 401(k) could save 220,000 by age 70

• A smoker costs 3,856 a year in added
  healthcare costs and lost productivity to their
  employer

SOURCE National Business Group on Health
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What Does Smoking Cost Your Company?
Calculating the Cost of Smoking

• Number of employees x 0.25
• Tobacco use is about 25 of the total population.
• x 3,856 per year
• Companies spend 3,856 per smoker per year in
  direct medical costs and lost productivity.
• Estimated cost per year in excess medical
  expenditures and lost productivity

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What Does Smoking Cost Your Company?
Example

• 100 employees x 0.25
• (25 employees who use tobacco)
• x 3,856 per year
• 96,625 cost per year in business-borne costs
  associated with smoking

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A 112 Increase in Stress Rx

• In 2005, 357 million new prescriptions were
  written for psychotherapeutic drugs such as
  Ativan, Klonipin, Paxil, Prozac, Serzone, Zoloft,
  Xanax and Wellbutrin
• Now the most commonly prescribed medications

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Dementia

• Those who most often are anxious or depressed
  were 40 times more likely to develop mild
  cognitive impairment, a form of memory loss that
  is often a transitional stage between normal
  aging and dementia.
• The latest research suggests that chronic stress
  may harm parts of the brain responsible for
  responding to stress.

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Overweight Obesity Rates 1999-2004

• 67 of adults 71 of Men
• Stabilized for women- 62. Still higher obesity
  overall
• 33 of teens overweight
• 17 of teens obese, up from 15
• BMI is no longer best indicator waist size is
  more accurate for disease

SOURCE UC Berkeley Wellness newsletter
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Obesity Trends Among U.S. Adults -- 19931
BMI 30, or 30 lbs overweight for 54 person
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Obesity Trends Among U.S. Adults -- 20052
BMI 30, or 30 lbs overweight for 5 4 person
No Data 1519 2024 2529
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Unhealthy Demographics
of Americans That Are Overweight or Obese
SOURCE The Culprit The Cure, Why lifestyle is
the culprit behind Americas poor health.
Steven G. Aldana, PH.D
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Health Risks
Type-2 Diabetes 300Increased Risk
High Cholesterol 200Increased Risk
Heart Disease 200Increased Risk
JointArthritis 200Increased Risk
High Blood Pressure 200Increased Risk
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Obesity Increases Risk for Disease in Virtually
Every Organ System

• Cardiovascular
• CVD
• Hypertension
• Congestive
• Heart Failure
• Pulmonary
• Sleep apnea
• Asthma
• Endocrine
• Type 2 diabetes
• Metabolic Syndrome
• Cholesterol disorders
• Infertility
• Increased pressure in the brain
• Headache, ear or vision problems (not due to
  tumor)

• Gastrointestinal
• Gastric reflux
• Gallbladder disease
• Nonalcoholic fatty liver
• Musculoskeletal
• Osteoarthritis
• Gout
• DVT Pulmonary Embolus
• Certain cancers
• Breast
• Prostate
• Colon
• Macular Degeneration

SOURCE A. McDermott, Cal Poly, San Luis Obispo
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A Weighty Issue

• A Duke University Medical Center analysis found
  that obese workers filed

2xworkers' compensation claims
7xhigher medical costs from those claims
13more days of work lost from work injury or
work illness (than non-obese workers)
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Epidemic

• But far more dramatic was the increase of
  spending on diabetes drugs, which jumped 14.5
  percent during the year.
• Diabetes-related spending is projected to rise
  between 60 and 80 percent by 2009.
• The potential future incidence of diabetes based
  on obesity statistics is staggering, the report
  stated.

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Definition of Obesity

• What is it?
• How do Obese people define it?
• How do Obese people view themselves?
• Morbid Obesity
• We need new terms

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The Cost of Obesity
RYGB Patients
Obesity Surgeries
RYGB Surgeries
600 Increase
200 Increase
36 Increase
Hospitalization
SOURCE WebMD
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Number of Bariatric Surgeries in the US
SOURCE American Society for Metabolic and
Bariatric Surgery
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The Cost of Obesity
HealthcareServices
Complications After Surgery
Medications
20 of patients return to hospital
36 Higher
77 Higher
Hospitalization
SOURCE Surgeon General, Obesity in America,
national health Policy Forum, July 2003
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1/3 of US Adults Diabetic or Pre-Diabetic

• Average American has very high risk of diabetes
• Jun 16 (Reuters Health) - Body mass index (BMI),
  the ratio of body weight to height, is tightly
  linked to lifetime risk of diabetes mellitus,
  researchers reported at the Scientific Sessions
  of the American Diabetes Association. "On
  average, every American has a very high risk of
  diabetes," CDC investigators told conference
  participants.

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Rx for Exercise

• Moderate physical activity can decrease the risks
  for heart disease (by 18 to 84)
• Stroke (by 21 to 34)
• Diabetes (by 16 to 50)
• Colon malignancies (by 30 to 40)
• Dementia (by 15 to 50)

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Accountability for Health
74 feel that employees should be
held accountable
4 of employees feel they should be held
accountable
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If Personal Responsibility Fails

• Law Firm Predicts Workplace Wellness Programs
  Will Become Mandatory
• Legal Fallout
• Protect yourself HIPAA, ADA, ERISA rules all
  have impact

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Move to Wellness-based System

• Why do we wait for someone to become diseased and
  then spend huge sums of money to manage their
  disease?
• Millions of Dollars spent on developing drugs
  that could be spent on prevention and avoiding
  disease.
• Qualified Wellness coaches plus MDs

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Core Topics Programs 1999

• Back Care and Injury Prevention
• Physical Exercise
• Stress Management
• Tobacco Use
• Substance Abuse Prevention

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Additions to the Big 5

• Weight Management
• Medical Self-Care
• Consumer Health Education
• Cholesterol Reduction
• Nutritional Interventions
• Selected Biometrics Testing
• Hypertension Management

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Quick-start Wellness
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Personal Health Profiles
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Real Solutions

• Foster Personal Responsibility for Individual
  Health
• Motivation, tools, incentives, and rewards to
  stay well and reduce Healthcare costs
• Workplace is the ideal environment
• Companies must develop a Culture of Health and
  Wellness

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Elements of a Successful Wellness Program

• Support from ALL levels of management
• Buy-in from Employees
• Heath Risk Assessments and Appraisals
• Establish Wellness Team/Coordinator
• Develop program based on interest, needs,
  appropriate interventions
• Effective use of Incentives
• Measure results and effectiveness

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Required Elements of Compliant Wellness Plan
The value of the reward must not exceed 20 of
the total premium for an individual employees
health coverage (may be available to
dependents)
1
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The program must be reasonably designed to
promote good health or prevent disease
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The program must allow employees to qualify at
least once per year
The reward must be available to all similarly
situated individuals and a reasonable
alternative standard must be offered if the
general standard cannot be met due to a medical
condition
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5
Plan materials must offer and clearly disclose
the alternative standards
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Whats a Wellness Program?

• Disclosure of Alternative Standard sample
  pre-approved verbiage8
• If it is unreasonably difficult due to a medical
  condition for you to achieve the standards for
  the reward under this program, or if it is
  medically inadvisable for you to attempt to
  achieve the standards for the reward under this
  program, contact us at (INSERT PHONE NUMBER) and
  we will work with you to develop another way to
  qualify for the reward.
• If it is unreasonably difficult due to a medical
  condition for you to achieve a cholesterol count
  under 200, or if it is medically inadvisable for
  you to achieve a cholesterol count under 200,
  call us at the number below and we will work with
  you to develop another way to get the discount.

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Is it Compliant or Not?

• The total annual premium (employer and employee)
  for a single coverage under an employers plan is
  2,500 per year
• A wellness program offers a reward that waives
  the annual 250 deductible for the next plan year
  for participants who have a BMI of between 20 and
  27
• The BMI is determined shortly before the
  beginning of the calendar year and tested at the
  end of each plan year
• Materials state that participants who have
  medical conditions and for whom it would be
  unreasonable to attain the BMI standard will be
  given the same discount if the participants each
  walk for 20 minutes three days a week
• If a member cannot follow the walking schedule,
  he or she will be given the same discount if he
  or she implements a dietary regimen

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Example Is Compliant Because

• It limits the reward 250 deductible falls below
  the regulatory max (20)
• It is reasonably designed to promote good health
• The reward is available to all similarly situated
  participants
• Reasonable alternatives are available to obtain
  the reward
• The plan describes the terms of the program

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An Example of Noncompliance

• Same facts as previous example except
• Plan does not offer an alternative standard to
  employees who cannot meet the BMI requirement
• Not a compliant program

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Americans with Disabilities Act (ADA)

• ADA prohibits employment discrimination against
  individuals with a disability or those perceived
  as having a disability and limits the
  circumstances in which an employer may require
  physical exams or medical inquiries.
• Wellness program participation should be
  voluntary
• Any medical information gathered in connection
  with the wellness program should be kept
  confidential and separate from the employees
  personnel records and not used to discriminate
  against the employee.

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An Example of a Potential ADA Compliance Issue

• Employer's group health plan requires employee to
  complete a health risk assessment (i.e., health
  risk questionnaire, associated biometrics and
  results counseling) in order to be eligible to
  participate in employer's group health plan for
  the next plan year.
• The employee is not asked to meet any standard
  based on a health status factor.
• However, if the employee fails or refuses to
  complete the health risk assessment, the employee
  will not have access to group health coverage for
  the following plan year.

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ERISA Considerations

• Is the wellness program an ERISA "group health
  plan"?
• ERISA definition of "group health plan"
• An employee welfare benefit plan to the extent
  that the plan provides medical care, including
  items and services paid for as medical care, to
  employees or their dependents (as defined under
  the terms of the plan) directly or through
  insurance, reimbursement, or otherwise.
• ERISA and Internal Revenue Code definition of
  "medical care"
• The diagnosis, cure, mitigation, treatment, or
  prevention of disease, or amounts paid for the
  purpose of affecting any structure or function of
  the body.

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ERISA Considerations

• If the wellness program is an ERISA "group health
  plan," then the plan sponsor faces the following
  issues
• Form 5500 filing
• Plan document and SPD requirements
• Prohibited transactions and incentive/rewards
• In addition, an ERISA "group health plan"
  automatically faces compliance issues under HIPAA
  privacy and security rules and COBRA.
• Note Unless the plan sponsor oversteps its
  involvement, a health savings account ("HSA") is
  not an ERISA group health plan and is not subject
  to COBRA.

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HIPAA Privacy and Security Rules

• Privacy
• Disclosure of PHI to the plan sponsor is limited
  to
• Summary health information for limited purposes
  such as
• Premium bides
• Modifying, amending or terminating a plan
• Enrollment and disenrollment
• As provided by plan amendment, for plan
  administration only or pursuant to an
  authorization
• Use of PHI within a health plan is permitted
• Security
• Electronic PHI triggers security requirements

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Other Legal Considerations

• Federal and state tax laws
• Some wellness benefits, incentives and rewards
  offered to employees may be taxable, which
  requires income tax withholding, the assessment
  of FICA and FUTA taxes and W-2 reporting.
• ADEA
• May prohibit age based distinctions and/or
  rewards in a wellness program

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Other Legal Considerations

• State lifestyle and smoker nondiscrimination laws
• State laws may prohibit programs that make
  distinctions and/or reward based on lawful
  activities
• Some prohibit actions based on any lawful off
  duty activity
• Some prohibit actions based on use of lawful
  consumable products
• Some prohibit actions based on any lawful
  recreational activity
• Some specifically prohibit actions based on the
  use of tobacco products

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The Result is Happier, Healthier, More
Productive Employees
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Who Benefits?
Who Reaps the Rewards of Wellness?
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Rewards of Workplace Wellness
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What Are YOU Going To Do?

• Based on what you learned today
• What message will you take back to your clients?
• How will you change the Healthcare delivery
  system?
• How will you promote Personal Responsibility?

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Questions Follow-up