Amid the ongoing health care debate, employers, providers and consumers alike agree that reducing the cost of health care should be a central goal of reform efforts. One of the most effective ways to reduce health care costs is to focus on early detection and prevention of disease.
To that end, a growing number of employers sponsor corporate wellness programs. These initiatives typically encourage exercise and healthy eating, provide resources to help employees improve their health, and include health risk assessments–surveys that assess workers’ risk for various illnesses and direct them to appropriate preventive care or screening.
Wellness programs have proved very effective in reducing the overall cost of health care for employees. Employee Wellness USA, a vendor that provides health risk assessments for Fortune 500 companies, estimates that employers save $2.30 to $10.10 for every $1 they spend on wellness initiatives, not to mention reduced absenteeism and enhanced goodwill with workers.
But interim final regulations issued by federal regulators in October to implement Title I of the Genetic Information Nondiscrimination Act of 2008 (GINA) may impede wellness programs and even make some of them illegal.
Title I of GINA bars group health plans from denying health insurance coverage or charging more for coverage based on a participant’s genetic information. Title I also prohibits insurers from collecting genetic information from plan participants prior to enrollment.
The new regulations, issued jointly by the Department of Labor, the Secretary of the Treasury and the Department of Health and Human Services, explain that a participant’s family medical history falls within the statutory definition of “genetic information” which health plans are barred from collecting before enrollment. The regulations also prohibit plans from offering employees any incentive for sharing genetic information after enrollment.
A very common component of employer wellness programs is a health questionnaire that assesses an individual’s risk for various diseases based on factors such as lifestyle and family history of medical conditions. For instance, if an individual’s parents both suffer from high blood pressure, that person has an increased risk for developing the same condition and could benefit from receiving information about prevention. Under the new regulations, health plans may still offer such questionnaires after enrollment, but an employee cannot be offered any incentive for completing it.
“Because health risk assessments (HRAs) are so effective, many plans offer a reward such as a reduction in premium or lower deductible for individuals who fill them out,” says Sara Tountas, an employee benefits attorney at Miller Johnson in Grand Rapids, Mich. “Now such an incentive violates GINA.”
Employers have two options to comply with the regulations–either remove all questions about family medical history or remove all incentives for completing such an assessment. Neither option is ideal.
“Health risk assessments are viewed as a very valuable tool, so most employers don’t want to take away the incentive,” Tountas says. “More are striking the genetic questions, but this dilutes their effectiveness.”
The regulations are strict about preventing even accidental collection of genetic data. An open-ended question that may elicit genetic information, such as whether you have had any laboratory tests in the past two years, for example, can violate the regulations.
The preamble to the new regulations explicitly addresses concerns that the prohibition on the collection of genetic information might reduce the effectiveness of employer wellness programs. The regulatory agencies that enforce GINA are seeking comment from employers and insurers regarding “ways in which participation in health risk assessments can be encouraged while complying with the statutory prohibition on using genetic information for underwriting purposes.” Some observers are hopeful that GINA may be revised to permit health risk assessments that evaluate genetic risks.
“Many experts believe that asking these questions has value to the assessment,” says Joseph Lazzarotti, a partner at Jackson Lewis. “If these regulations make a health risk assessment worthless, the agencies may revise them.”
But employers shouldn’t hold their breath. Lazzarotti points to the strong reaction to the Ensign-Carper amendment to the federal health reform bill as evidence that change may be hard to achieve. The Ensign-Carper amendment would have permitted insurers to offer plan participants a discount of up to 30 percent off premiums if they practice healthy behaviors–such as quitting smoking or lowering their cholesterol. The amendment faced vehement opposition from the American Cancer Society and other groups, which argued that the amendment would make health insurance prohibitively expensive for the people in greatest need of coverage.
“People have a visceral reaction to this,” Lazzarotti says. “Those that support GINA have the upper hand right now, even if there would be clear benefits to loosening the rules.”
Ounce of Prevention
Regulators gave companies very little time to comply with the changes. The new regulations apply to all group health plans with plan-years starting on or after Dec. 7, 2009, which means that many employers whose plans are on a calendar year were scrambling to change their health risk assessments during their open enrollment period. Companies that failed to change their policies in time are in violation of the law with regard to all new enrollees. The fact that most health risk assessments are conducted by outside vendors adds a layer of complexity to compliance efforts, as some companies may not be sure whether their vendors came into compliance in time.
The penalties for noncompliance could be crippling. “The penalties are per diem and per employee,” says Alden Bianchi, a partner at Mintz Levin in Boston. “If an employer doesn’t get the memo and continues with HRAs with family medical questions in exchange for a discount, it’s $110 a day times the number of people. It adds up astronomically.”
Employers also have to be wary of stepped-up enforcement efforts by regulators. GINA authorizes both the Department of Labor and the Department of Health and Human Services to enforce Title I and impose penalties on violators.
“For years there was not much HIPAA enforcement, but that’s changed with the current administration,” Bianchi points out. “Congress is pushing agencies into audit and enforcement mode.”