06 Jun When Life (or Obamacare) Hands You Lemons … Make Lemonade!

Seize the Opportunity to Solve Problems Using the Affordable Care Act

Love it or hate it, the Affordable Care Act is here to stay. While some expend their time, energy, and financial resources trying to make it disappear and resisting the waves of change, others have fallen into line. Beyond those two categories, the true entrepreneurial optimists have grabbed a surfboard and decided to enjoy the ride, as if they planned it all along.

Take the recently released wellness regulations, for example. While some are bemoaning the addition of new layers of complexity and the removal of some of the “teeth” previously available to employers who embrace personal accountability more than program compliance, others are seizing the opportunity to solve problems and make a difference.

Granted, if I were asked to author the regulations, I would have limited the number of “reasonable alternatives” an employer had to provide to a person who may have no real intention of giving up their cigarettes or losing some weight. With that being said, the flexibility that remains in designing health-contingent programs is significant, and the return is well worth the investment. At Bravo Wellness, we have already seen an increase in positive momentum due to the fact that we have new clarity in what employers can and cannot do. The clearly stated boundaries have reduced legal and compliance risk for employers afraid of becoming the “poster-child” for what not to do under the previous regulations.

In my opinion, the best and most significant detail in the final regulations is that the alternative standard that employers may provide to employees who fail to achieve a desired outcome can be “progress-based,” also known as an “improvement goal.” Other articles I’ve read about the final regulations seem to have completely missed this point and instead assumed that outcome-based incentives were now worthless because individuals who failed merely had to sign up for a program in order to pass. While employers may choose to make the alternative this simple, they are not required to reward “sign-up.” They can absolutely tie rewards to meaningful progress as long as the goal is medically sound and not “overly burdensome.”

A great example of how these rules empower employers and health plans to still reward the right
behaviors would be an incentive to reduce obesity. If an employer had an incentive such as 30% of
Employee-Only premium ($90 per month on a $300 per month plan) tied to having a body mass index
under 28, any individual who failed to achieve the goal would have the right to request an alternative
standard or a waiver. For example, if they proved that the excess body mass was due to excess muscle or pregnancy, a waiver would be in order. If a waiver didn’t apply, the plan administrator could establish
a medically sound improvement goal, such as 10% weight loss in six months.

If an individual had a medical reason that the improvement goal was unreasonably difficult or medically inadvisable, they could submit documentation from their own physician. The administrator could then grant a waiver or revise the alternative goal to something the individual’s physician felt was achievable. Essentially, this is the same way it worked under the HIPAA regulations.

Although a bit more complex, I can tell you that this approach is tremendously well received by
employees. Having administered hundreds of unique incentive designs over the past five years, we have
had the benefit of seeing which designs merely shift cost and which designs motivate improvement.
Giving everyone an incremental goal that is challenging but within their reach if they apply focused
energy is truly a win/win. And honestly, even participants who don’t particularly care for incentives tied
to results are not crying “foul” when the goals are realistic.

We continue to accumulate significant data and experience to know where the magical “tipping points”
are and we stand ready to help you adjust your outcomes-based wellness incentive plan design to not
only comply, but to thrive. Just act like you planned it all along!