Healthcare Reform And Wellness “Making sense of it all in 50 minutes” Mike Demman Chief Executive Officer SimplyWell LLC

Agenda Overview of final wellness regulations under Affordable Care Act

Disclaimer The information contained herein should not be construed as legal advice, and readers should not act upon such information without the advice of counsel. The author makes no representations, nor guarantees regarding the contents of the information contained herein.

How did we get here? 1996 HIPAA Enacted 2006 HIPAA amended to include Non Discrimination Wellness provisions Mar. 2010 Patient Protection and Affordable Care Act (ACA) enacted with proposed effective date of January 1, 2014 Nov. 2012 Federal register published a notice of rules as it relates to nondiscriminatory wellness programs June 3, 2013 Final Regulations Published as it relates to nondiscriminatory wellness programs

TWO OPTIONS

Consistent with the 2006 Regulations, the final regulations continue to divide wellness programs into two categories: Participatory Wellness Programs Health Contingent Wellness Programs

Participatory Wellness Programs Participatory wellness programs are programs that either do not provide a reward or do not include any conditions for obtaining a reward that are based on an individual satisfying a standard related to a health factor. Consistent with the 2006 rules, participatory wellness programs are NOT required to meet the requirements applicable to health contingent wellness programs.

Health Contingent Wellness Programs Health contingent wellness programs are programs that provide a reward or require conditions for obtaining a reward (premium incentive or surcharge) on an individual satisfying a standard related to a health factor.

NEW! Health Contingent Wellness Programs have now been subcategorized into: 1. Activity-Based Wellness Programs 2. Outcomes-Based Wellness Programs

Health Contingent Activity-Based Wellness Programs Type of health contingent program that requires an individual to perform or complete an activity related to a health factor in order to obtain a reward but DOES NOT require an individual to attain a specific outcome. Example If a participant does not meet a health factor (i.e. BMI), then the participant must participate in a walking program in order to receive the incentive.

Health Contingent Outcomes-Based Wellness Programs Type of health contingent program that requires an individual to attain or maintain a specific health outcome in order to obtain a reward. Example If a participant does not meet a health factor (i.e. BMI), then the participant must show improvement over a reasonable period of time in order to receive the incentive.

Five Requirements for Health Contingent Wellness Programs Effective January 1, 2014 Program is reasonably designed to promote health or prevent disease Program gives individuals an opportunity to qualify for the reward at least once per year The size of the reward does not exceed 30% of the employee only coverage and can be increased an additional 20% (for a total of 50%) to the extent the additional percentage is attributed to tobacco use prevention or reduction* Uniform availability and reasonable alternative standards* Appropriate plan disclosures* *Changes from 2006 regulations

Requirement 1 Program is reasonably designed to promote health or prevent disease Same for Activity-Based and Outcomes-Based Health Contingent Wellness Programs

Requirement 2 The program gives individuals an opportunity to qualify for the reward at least once per year Same for Activity-Based and Outcomes-Based Health Contingent Wellness Programs

Requirement 3 The size of the reward does not exceed 30% of the employee only coverage and can be increased an additional 20% (for a total of 50%) to the extent the additional percentage is attributed to tobacco use prevention or reduction Same for Activity-Based and Outcomes-Based Health Contingent Wellness Programs

Requirement 4 Reasonable Alternative Standard NEW! Reasonable Alternative Standard must be provided to ALL individuals who do not meet the initial standard Differs for Activity-Based and Outcomes-Based Health Contingent Wellness Programs

Activity-Based Programs Reasonable Alternative Standard Factors Time commitment If an educational program, plan must provide assistance in identifying it If a diet program, plan must pay for cost of program, but not food If an individual’s physician states that a plan standard is not medically appropriate the plan must provide a reasonable alternative standard that is consistent with physician recommendations NEW RULE Permissible to seek physician verification that a health factor makes it unreasonably difficult or medically inadvisable for the participant to attempt to satisfy the program

Outcomes-Based Programs When the Reasonable Alternative Standard is improvement in a health factor Factors to Consider Length of time to make change Must allow individual to request that alternative will be to comply with individual physician’s recommendations NEW RULE Impermissible to request individual to seek physician verification that a health factor makes it unreasonably difficult or medically inadvisable for the participant to attempt to satisfy the program

Notice of Reasonable Alternative Standard Must disclose the availability of the reasonable alternative standard in plan materials Department offered updated sample language NEW RULE Must provide contact information and statement that physician recommendations will be accommodated For outcomes based programs, must include in any disclosure to individual that he/she did not satisfy the outcomes-based standard

Putting It All Together Does the Wellness Program require individual to meet target health factor or offer incentive for participation? If Yes If No HIPAA Non-Discrimination Rules Apply HIPAA Non-Discrimination Rules Do Not Apply

Is Wellness Program a Health Contingent Program? If Yes HIPAA Non-Discrimination Rules Apply Must give individuals opportunity to qualify once a year Must disclose contact and alternative standards available Limit on Reward is 30%/50% if additional 20% is for tobacco cessation Reasonably designed to promote health or prevent disease

Is Health Contingent Program Activity-Based or Outcomes-Based? Reasonable Alternative Standard Factors Time to complete the activity Medical Exclusion is Permissible Plan must make programs available to all – (plan pays include cost of program)

Is Health Contingent Program Activity-Based or Outcomes-Based? Reasonable Alternative Standard Factors Time to achieve outcome Allow individual to request that physician “joins in” Plan must make available to all Medical Exclusion is Impermissible

SCENARIOS

Activity-Based Wellness Program Participant DOES NOT Qualify For Incentive – RAS Incentive HS 85 or better 5 pt improvement Incentive begins January 2014 New Regulations Effective Jan 1, 2014 John Doe attends a screening and receives a Health Score of 75 John Doe attends a screening and receives a Health Score of 77.5 Secondary Reasonable Alternative Standard: Medical Exclusion October October 2012 2013 2014 2015 Reasonable Alternative Standard Receives incentive for 2014 Earn 10,000 wellness points Participate in a program Attend a Lunch & Learn

Outcomes-Based Wellness Program Incentive HS 85 or better 5 pt improvement Incentive begins January 2014 Participant DOES NOT Qualify For Incentive – RAS New Regulations Effective Jan 1, 2014 John Doe attends a screening and receives a Health Score of 75 John Doe attends a screening and receives a Health Score of 77.5 John Doe attends a screening and receives a Health Score of 80 Submit lab upload form by April 2014 OR October October April 2012 2013 2014 2015 Does not qualify for 2014 incentive 5 point improvement from 2013 – 2014 THEREFORE Incentive retrobacks to January 2014

Outcomes-Based Wellness Program Incentive HS 85 or better 5 pt improvement Incentive begins January 2014 Participant DOES NOT Qualify For Incentive – RAS New Regulations Effective Jan 1, 2014 John Doe attends a screening and receives a Health Score of 75 John Doe attends a screening and receives a Health Score of 77.5 John Doe attends a screening and receives a Health Score of 77.5 Submit lab upload form by April 2014 OR October October April 2012 2013 2014 2015 Does not qualify for 2014 incentive Only Qualifies for 2014 incentive with Secondary RAS: Physician Engagement Incentive retrobacks to January 2014

YMCA Rules Apply “The intention of the Departments in these final regulations is that, regardless of the type of wellness program, every individual participating in the program should be able to receive the full amount of any reward or incentive, regardless of any health factor” - Department of the Treasury

APPENDIX

Example 1 Facts Employer sponsors a group health plan. The annual premium for employee-only coverage is $6,000 (employer pays $4,500 + employee contributes $1,500). Example 1 Plan offers an incentive of $600 that is tied to a health outcome. Conclusion Program meets the requirement since the incentive does not exceed 30% of total annual employee only coverage, $1,800 (30% x $6000). Source: Final regulations, Affordable Care Act

Example 2 Facts Employer sponsors a group health plan. The annual premium for employee-only coverage is $6,000 (employer pays $4,500 + employee contributes $1,500). Example 2 Plan imposes a $1,000 surcharge on employees who used tobacco in last 12 months and are not enrolled in a tobacco cessation program. Conclusion Program meets the requirements because the total amount of the incentive (absence of $1,000 surcharge) does not exceed 50% of total annual employee only coverage ($3000) (50% x $6000) Source: Final regulations, Affordable Care Act

Example 3 Facts Employer sponsors a group health plan. The annual premium for employee-only coverage is $6,000 (employer pays $4,500 + employee contributes $1,500). Example 3 Plan offers an incentive of $600 that is tied to a health outcome, PLUS plan imposes a $2,000 surcharge on employees who used tobacco in last 12 months and are not enrolled in a tobacco cessation program. Conclusion Program meets the requirements because the total amount of the incentive ($2,600) does not exceed 50% of total annual employee only coverage ($3000) (50% x $6000) and the health outcomes incentive, $600 does not exceed the 30% requirement, $1800. Source: Final regulations, Affordable Care Act

Example 4 Facts Employer sponsors a group health plan. The annual premium for employee-only coverage is $5,000 (including employer + employee contributes). Example 4 Plan offers an incentive of $250 for completing an HRA and screening and a $1,500 incentive that is tied to a health outcome. Conclusion Program meets the requirements even though the total amount of the incentive ($1,750) exceeds the 30% threshold ($1,500). Only the amount that is tied to an outcomes based incentive is factored into the 30% threshold. In this case, $1,500 is within the limits of the 30% threshold. Source: Final regulations, Affordable Care Act

Chief Executive Officer QUESTIONS? Mike Demman Chief Executive Officer SimplyWell LLC (402) 559-2879 mdemman@nebraskamed.com www.simplywell.com