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Proposed Rules on ACA

David P. Lind BenchmarkJust two days before Thanksgiving, the Department of Health and Human Services released three newly proposed health care rules that are created by the Affordable Care Act (ACA). The regulations provided are not yet final – there is a 60-day comment period for the Wellness Program rules and a 30-day comment period for the other two rules. The comment period begins after date of publication in the Federal Register (November 26, 2012). The rules, combined with the turkey and the trimmings may have caused many to reach for the Tums!

The rules relate to the following:

  1. Health Insurance Market
  2. Essential Health Benefits, Actuarial Value, and Accreditation Standards
  3. Wellness Programs

Totaling over 330 pages, the three-part rules provide guidelines for online exchanges specifically prohibiting insurance companies from discriminating against individuals because of a pre-existing or chronic condition. Insurance companies are allowed to vary premiums within a limited basis on age, tobacco use, family size and geography. In addition, companies are prohibited from charging higher insurance premiums to certain enrolled persons because of their current or past health problems, gender, occupation, and small employer size or industry. The proposed rules also address fair health insurance premiums, risk pools and non-group market catastrophic plans.

The proposed rules also outline “essential health benefits” (EHB), a core set of benefits that will hopefully allow consumers to consistently compare health plans within the exchange for both individual and small group markets. EHBs must be included in all plans offered, which consists of 10 statutory benefit categories of coverage, such as hospitalization, maternity and newborn care, prescription drugs, and so on. Each plan offered through the exchange will be required to meet specific actuarial values (Bronze, Silver, Gold and Platinum).

Finally, rules have been established for wellness programs offered by employers, making sure that such plans do not discriminate against people with physical and mental conditions. Wellness programs must be reasonably designed to promote health or prevent disease – meaning programs must have a reasonable chance of improving health or preventing disease and not be overly burdensome for individuals. In addition, programs must be reasonably designed and be available to all similarly-situated individuals, which would allow for “reasonable alternative means of qualifying for the reward” to those individuals who have medical conditions that make it unreasonably difficult (or medically inadvisable) to meet the specified health-related standard. This proposed rule provides employers with sample notice language to give employees the opportunity to qualify for the same reward through other arrangements.

With wellness programs, the key word appears to be “reasonable”…which means employers must be very careful when devising and implementing wellness strategies.

Whew! With that, please pass the Tums!

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Wellness: Bending the Cost Curve

Wellness and Health Care Costs in IowaWill wellness programs stem the tide of rising health care costs?

That’s the million dollar question.

Health insurance rates in Iowa increased an average of 10.2% annually during the last five years, according to our Iowa Employer Benefits Study©. No wonder employers are looking for ways to bend the cost curve.

So are wellness programs going to provide the magic bullet? I have to say, “Possibly, however…”

There are at least two major forces—upstream and downstream—that adversely affect health care costs, and only one is affected by wellness programs.

  1. Upstream force: unhealthy lifestyle behaviors        
  2. Downstream force: a dysfunctional health care delivery system

Conventional wisdom suggests that if we identify and minimize or treat health risks upstream before they become major (and more expensive), we should eventually incur fewer costs downstream.

I admit there is truth to this. Decrease unhealthy behaviors that lead to the “lifestyle diseases” —heart disease, stroke, some cancers, type 2 diabetes, metabolic disorder and a few others—and you lower the need for expensive procedures.

But for most people, improving lifestyle behaviors leads to involvement with the health care delivery system – the downstream force – and this fragmented system is not geared to provide efficient, coordinated and recommended care. In fact, in 2003 the Rand Corporation released shocking results from the largest and most comprehensive analysis ever undertaken on health care quality in the U.S.

Adults in the U.S. fail to receive recommended health care nearly half the time!

Unbelievable, you say. We have the best health care system in the world, you say. Well, here are a few examples:

  • Less than a quarter of diabetics had their blood sugar levels checked regularly, putting them at risk for kidney failure, blindness and amputation.
  • Just 45% of heart attack patients received medications that would reduce risk of death by more than 20%.
  • Patients with high blood pressure received less than 65% of recommended care, putting them at increased risk for heart disease, stroke and death.

Just as staggering—according to the study, inappropriate care happens everywhere! While a study that came out in 2003 may seem dated, the reality on the ground has not improved. The Dartmouth Atlas of Health Care continues to support the Rand findings by documenting the variations of how health care is delivered in this country.

So by all means, implement a well-designed wellness program. But don’t expect miracles when it comes to bending the cost curve. Until we address our dysfunctional delivery system, your payoff may come in healthier and more productive employees.