Wellness programs face legal action for being discriminatory

Today is a fitting day for this story. The discriminatory aspects of employer wellness programs have caught the eye of the Department of Labor and lawyers. Last month, the Department of Labor issued a Field Assistance Bulletin directed to company wellness programs. It closed a loophole which would have allowed employers to discriminate against employees based on their health indices and lifestyles. The Department of Labor said it may bring enforcement actions against companies that attempt to reward employees based on their health status.

As the Wall Street Journal reported:

Wellness Programs May Face Legal Tests

When it comes to health plans that penalize unhealthy workers, the Department of Labor has drawn a line in the sand. Regulatory guidelines recently issued by the department are likely to curtail the ability of employers to motivate workers to kick unhealthy habits. In effect, the guidelines close a legal loophole that could have allowed employers to make health insurance more expensive for unhealthy workers than for their colleagues.

The journalist incorrectly used the term ‘unhealthy workers.’ The Final Rules of the Nondiscrimination and Wellness Programs in Health Coverage in the Group Market, Health Insurance Portability and Accountability Act (HIPAA), regulations issued last July specifically state these programs cannot be “a subterfuge for discriminating based on a health factor.” Yet these wellness programs reward and penalize workers based on arbitrary health indices — BMI, cholesterol, blood pressure, etc. — that are not accurate measures of health or of future health problems. Nor are they measures of ‘healthy’ lifestyles.

As the medical science shows, these health indices are primarily measures of genetics and aging, and social stresses, and despite popular beliefs, no amount of healthy lifestyle behaviors will safely enable older, fatter or genetically predisposed people to achieve the new ‘ideal’ numbers. The ruling also states that wellness programs must be “designed to promote health or prevent disease,” yet the medical science [reviewed here] shows that these programs have no sound evidence to support effectiveness in preventing disease, while they do impose health risks on employees and jeopardize the well-being of many.

As examined here, attorneys across the country are advising their clients not to touch these employer wellness programs because of discrimination concerns that could violate employees' rights.

The WSJ goes on to report:

In December, the department's Employee Benefits Security Administration issued guidelines to its national and regional offices on “supplemental coverage," a form of health insurance covering co-pays and deductibles in regular insurance...But in recent years, some employers have incorporated a form of supplemental insurance into their wellness programs. Under such programs, workers.. can offset the deductible by earning “wellness credits" for meeting certain health benchmarks — such as for cholesterol count — issued under a separate supplemental policy....

But lawyers and consultants have voiced concerns that such programs could hurt employees with health problems. In some instances, unhealthy employees could face insurance deductibles more than $1,000 higher than healthier co-workers'. While uncommon, such incentive programs are gaining traction among smaller employers, who are the most at risk from rising health costs....

Here, the term health costs is confused with health insurance premiums imposed on small employers by insurers trying to incentivize employers to mandate these programs and get employees to complete ‘health risk’ assessments and comply with insurer’s health management. This issue was examined here. Nor are these intrusive programs as popular with consumers and employers, or actually save employers money, as is being marketed. But they do make money for insurers.

The WSJ goes on to explain that under federal law, HIPAA, all workers covered under the same employer-sponsored plan must pay the same premiums regardless of their health. The 20% cost exemptions for wellness programs marketed as supplemental coverage seemed to give employers the red light to discriminate against employees who were older and had genetic predispositions for certain health indices. Not so fast, noted the December 7th ruling issued by the Department of Labor. As the WSJ said:

“The kicker" for wellness programs, say lawyers and consultants, is a requirement that a supplemental policy that is group health-insurance coverage “must not differentiate among individuals in eligibility, benefits or premiums based on any health factor of an individual." Health status, medical conditions and genetic information are considered health factors.

The Department of Labor said it may bring “enforcement actions" against rule breakers... “The DOL's release ensures that supplemental health coverage can't or won't become an end run around the HIPAA wellness rules," says Andy Anderson, of counsel with law firm Morgan Lewis & Bockius and an expert in work-based health benefits...

Vital Measures is one wellness program where credits are issued under a supplemental policy. Launched in July by UnitedHealthcare, a unit of UnitedHealth Group Inc., and BeniComp Group of Fort Wayne, Ind... Typically, employees sign up for a health plan with a $2,500 deductible and can then participate in a “free”, “confidential” health screening for body-mass index, cholesterol, blood pressure and non-nicotine use. For each test workers pass, they earn a $500 credit toward their deductible, issued under a supplemental plan, BeniComp Advantage. So far, three employers have signed up.

Supplemental insurance under the HIPAA exception was initially meant to apply to supplemental coverages, such as Medicare Supplement insurance and coverage supplemental to TRICARE. As the Department of Labor ruling notes, a supplemental coverage must be significantly less than the primary coverage, not the primary health coverage, and cannot exceed 15% of the cost of the primary coverage.

A memorandum issued to clients by the Groom Law Firm based in Washington, DC, said the nondiscrimination provision may preclude an insurer or plan from differentiating based on a health factor even as part of a wellness program:

[T]he nondiscrimination requirement, on its face, appears to be more stringent than HIPAA's general nondiscrimination rule. The HIPAA rule includes a specific exception for coverage that meets the HIPAA wellness program requirements. In contrast, the 4th prong of the safe harbor sets out a flat prohibition against discrimination, with no reference to the wellness program exception. This would mean that a supplemental plan could not differentiate at all based on a health factor, even under a HIPAA-compliant wellness program.

Do you think that wellness programs is a nonissue for you because your employer doesn’t offer one?

Not so.

Lobbyists want your money to be used to subsidize these wellness programs and are working to make them increasingly more compulsory by the government.

Legislators across the country — from New York to New Mexico — have been working to legislate that taxpayer dollars help fund employer wellness programs and give tax incentives for businesses. NM Senate Bill 148, for example, would enact a “wellness program tax” credit for businesses for every employee who qualifies and is enrolled in a government-qualified program. A qualified program would include health screenings; health information targeted to employee's “health risks;” tracking of employee participation; behavioral change components to encourage lifestyle changes through counseling and other interventions; vending machines and workplace cafeteria offerings; encourage workplace fitness; and would address tobacco use, obesity, physical fitness, nutrition, mental health, healthy lifestyles, etc.

State legislatures have intensely been working on legislation for wellness programs and healthy lifestyle initiatives, despite the lack of evidence for them and the latest discrimination ruling. And they are being sought not just for workplaces, but for schools, government workers, communities, and government benefit recipients.

Funding and resources behind these lobbying efforts have come from Robert Wood Johnson Foundation, which has given legislators and staff with the National Conference of State Legislatures (NCSL), for example, nearly $3 million (February 2000 - March 2006) to enact RWJF’s Active Living initiatives. The NCSL has a leadership role in “proactive policy-making.” The national “Active Living” programs financed by RWJF were explored some here and here. The other organizations that are part of the leadership of RWJF’s Active Living initiative includes:

American Association of School Administrators

Council of State Governments

International City/County Management Association

Local Government Commission

National Association of Counties

National Association of Latino Elected and Appointed Officials Educational Fund

National Governors Association Center for Best Practices

National League of Cities

U.S. Conference of Mayors

It is yet to be seen whether science and human rights and liberties will overcome special interests and power. Discrimination and oppression throughout history has often masqueraded as being what someone else believes they know to be best for someone else. “For your health” very often isn’t.