Wellness programs operate in a variety of ways, and are usually implemented by employers to motivate employees, and sometimes the employee’s dependents, to get or stay healthy while at the same time reducing employer-sponsored health coverage costs. This motivation comes in the form of rewards to those who participate or penalties on those who do not. Both rewards and penalties are referred to as “incentives” and possibly include cash, cash equivalents (i.e., gift cards), or a reduction in employer-sponsored health plans premiums.
However, providers implementing wellness programs should be aware of looming legal and ethical challenges. We spoke with Keelin Curran and Melanie Curtice from Stoel Rives LLP to discuss legal and ethical concerns related to wellness programs and helpful tips for providers implementing them.
What are some common incentive-based wellness programs? What are some controversial incentive-based wellness programs, and what makes them controversial?
Common incentive-based wellness programs are either participatory or health-contingent programs (either activity or outcome-based). Examples of participatory incentive-based programs include those that offer lower health coverage premiums for employees who participate in health risk assessment, blood pressure or cholesterol screening, or a disease management program. An example of an activity-based program would be one with a reward for completion of activity regardless of whether an outcome is accomplished (i.e., a walking program where it does not matter if employees lose weight). An outcome-based program would offer a reward for reaching a health goal, such as quitting smoking.
Controversial programs include those with significant (not just nominal) incentives (either payment for success/participation or surcharge for non-participation) in exchange for requiring employees to achieve a certain outcome (outcome-based programs must have reasonable alternatives for those who can't achieve the outcome). Other controversial programs might seek survey information that employees consider intrusive (e.g., information about the employee's sex life) as well as those that seek information or participation for spouses and other family members.
Are there any provisions in the Affordable Care Act (ACA) or other legislations that pertain to incentive-based wellness programs? If so, what do these provisions say?
The ACA supports such programs by increasing reward limits to 30% of costs of health coverage and 50% for smoking cessation. The ACA requires that wellness programs be available to all similarly situated individuals, and that reasonable alternatives and adequate notice of those alternatives be provided for qualifying for a reward.
What are some legal concerns that providers should be aware of as they develop wellness programs?
The ACA clearly supports rewards for participation in wellness programs and also sanctions surcharges for failure to participate. As previously mentioned, incentive programs must be available to similarly situated individuals and reasonable alternatives for obtaining the reward/avoiding the surcharge have to be available.
The Equal Employment Opportunity Commission (EEOC) has shown hostility to wellness programs in recent lawsuits, such as its suit against Honeywell, in which it argues that biomedical testing in wellness programs, such as blood draws, violate the Americans with Disabilities Act of 1990 (ADA) due to being a medical exam that is not job related. The EEOC further alleges that making medical inquiries of family members such as spouses violates the Genetic Information Nondiscrimination Act of 2008.
What are some ethical concerns that providers should be aware of as they develop wellness programs?
The reward and the punishment (surcharges) come down to the same thing: favorable treatment of some individuals over others, who may have medical limitations. The laws attempt to balance this by requiring reasonable alternatives. Employers have a legal duty to provide such alternatives, but also an ethical duty to do so.
Other ethical concerns to be aware of is whether health information in surveys and testing are being collected for reasons that will actually assist employers in limiting health costs and/or improve health outcomes.
What advice do you both have for providers as they develop incentive-based wellness programs?
Here are some helpful tips for providers:
- Take a conservative approach in light of the uncertain legal landscape with regard to biomedical testing and health inquiries of employees' relatives. Follow developments at the EEOC in this regard;
- Include wellness program as part of health plan in order to qualify for the ADA safe harbor for health plans;
- Provide reasonable alternatives to achieve incentives and provide adequate notice of those alternatives; and
- Monitor data regarding results of your wellness plan to determine whether it is achieving cost savings and health benefits, and adjust programs as necessary.
What are the negative consequences of deploying a non-compliant or unethical incentive-based wellness program?
Penalties can be financial, and in some instances penalties can be as severe as termination of employment. Providers may face financial penalties under the ACA because the ACA does not allow discrimination based on health status. The ACA imposes a $100 a day penalty with minimums and maximums for wellness program violations.
Corporate culture could be negatively impacted if employees feel that fairness is not maintained, that information is being sought beyond what is necessary for stated goals of program, that individuals are forced to participate, or some employees with health issues are being ostracized. As a result, providers’ bottom lines could be negatively impacted by this loss of morale.