Transcript Michael Framberger - Gaston Regional Chamber

The Rewards of Wellness
Gaston Regional Chamber
October 3, 2008
Wellness questions to start with…
 How do you define Wellness?
 Do you believe Wellness works?
 Do you believe Wellness works for:

Large employers

Small Group
Wellness questions to start with…
 Who pays for Sickness, in the absence of
Wellness?
 What are the obstacles?
 Do you believe that Wellness can be effective?
What Does This Chart Tell Us?
Average Cost Per Employee
vs. Consumer Price Index
20%
15%
10%
Heath-benefit
Costs
5%
CPI
0%
-5%
'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03
SOURCE: [Add source here]
Traditional Drivers
 The skyrocketing price of health benefits:
Medical costs for employers have outpaced
inflation in all but four of the past 20 years.
 Among the culprits: expensive technology,
less stringent HMO cost management, and
rapidly rising drug costs.
SOURCE: Mercer National Survey Of Employer-sponsored Health Plans 2003; Bureau Of Labor Statistics
What Are the Real Culprits?
 Unhealthy Lifestyles
 Demographics
 Lack of Personal Responsibility
Sick to Healthy
Health Care Spending
Sick to Healthy
3/4 of spending is due to
diseases caused by
unhealthy lifestyles
Health Care Spending
Unhealthy Lifestyles
Smoking
Blood
Pressure
Overweight
Exercise
Diet
1 out of 4
1 out of 3
2 out of 3
3 out of 4
4 out of 5
adults smoke
has high blood
pressure
are overweight
or obese
lack proper
exercise
have poor diets
SOURCE: [Add source here]
Unhealthy Lifestyles
Smoking
Blood
Pressure
Overweight
Exercise
Diet
STRESS
1 out of 4
1 out of 3
2 out of 3
3 out of 4
4 out of 5
adults smoke
has high blood
pressure
are overweight
or obese
lack proper
exercise
have poor diets
SOURCE: [Add source here]
Personal Responsibility
% of Selected Chronic Diseases That Are
Likely Lifestyle Related and Avoidable
100%
91%
82%
80%
71%
70%
Cancer
Stroke
60%
40%
20%
0%
Heart
Disease
Diabetes
SOURCE: “The Culprit & The Cure, Why lifestyle is the culprit behind America’s poor health.” Steven G. Aldana, PH.D
Cost per Risk Factor
Annual Medical Cost
$1,800
$1,500
$1,462
$1,500
Smoking
Obesity
$1,350
$1,240
$1,250
High Blood
Pressure
Sedentary
Lifestyles
$1,200
$900
$600
$300
$0
Stress
SOURCE: Employee Benefit News; May 1997
The Chronic Impact
 Average number of lost annual work days per
person/condition

Depression – 25.6 days

Allergies – 8.2 days

Cancer – 16.9 days

Heart Disease – 6.8 days

Arthritis – 5.9 days

Diabetes – 2 days

Hypertension – 1 day

Respiratory Disorders –
14.7 days

Asthma – 12 days

Migraines – 10.7 days
Chronic disease has $1 TRILLION impact on
U.S. lost productivity each year.
Prevention
 Preventable illness makes up approximately
80% percent of the burden of illness and
90% of all healthcare costs
 Is “Prevention” the Solution?
 Prevention vs. Wellness

www.preventdisease.com
What is Wellness?
 Wellness is a process involving the
integration of many dimensions – social,
physical, emotional, environmental, spiritual,
vocational, intellectual – that enhance the
health and well-being of any individual. The
process is designed to help a person make
choices that result in positive lifestyle changes;
thus, improving individual and community
health and well-being.
DEFINITION: Ball Brothers Foundation.)
What is a Wellness Program?
 Corporate, or workplace Wellness can be
defined as…
“An organized program in the worksite that is
intended to assist employees and their family
members in making voluntary behavior
changes that reduce their health and injury
risks, improve their health consumer skills and
enhance their individual productivity and wellbeing.”
Does Wellness Really Work?
 A meta-review of 42 published studies of worksite
health promotion programs shows:
 Average 28% reduction in sick leave absenteeism
 Average 26% reduction in health costs
 Average 30% reduction in workers’ compensation and
disability management claims costs
 Average $5.93-to-$1 savings-to-cost ratio
The High Cost of Smoking
Employers
Employees
A smoker
A 40-year-old who quits
and puts the savings
into a 401(k) could
costs $3,856
a year in added healthcare
costs and lost productivity to
their employer
SOURCE: National Business Group on Health
save $220,000
by age 70
What Does Smoking
Cost Your Company?
Calculating the Cost of Smoking:
Number of employees x 0.25
Tobacco use is about 25% of the total population.
x $3,856 per year
Companies spend $3,856 per smoker per year
in direct medical costs and lost productivity.
= Estimated cost per year
in excess medical expenditures
and lost productivity
What Does Smoking
Cost Your Company?
Example:
100 employees x 0.25
(25 employees who use tobacco)
x $3,856 per year
= $96,625 cost per year
in business-borne costs
associated with smoking
A 112% Increase in Stress Rx
 In 2005, 357 million new prescriptions were
written for psychotherapeutic drugs such as
Ativan, Klonipin, Paxil, Prozac, Serzone, Zoloft,
Xanax and Wellbutrin
 Now the most commonly prescribed
medications
Dementia
 Those who most often are anxious or
depressed were 40 times more likely to
develop mild cognitive impairment, a form of
memory loss that is often a transitional stage
between normal aging and dementia.
 The latest research suggests that chronic
stress may harm parts of the brain responsible
for responding to stress.
Overweight & Obesity
Rates 1999-2004
 67% of adults – 71% of Men
 Stabilized for women- 62%.
Still higher obesity overall
 33% of teens overweight
 17% of teens obese, up from 15%
 BMI is no longer best indicator – waist size
is more accurate for disease
SOURCE: UC Berkeley Wellness newsletter
Obesity Trends* Among U.S. Adults -- 19931
*BMI ≥30, or ~ 30 lbs overweight for 5’4” person
No Data
<10%
10%–14%
15%–19%
Obesity Trends* Among U.S. Adults -- 20052
*BMI ≥30, or ~ 30 lbs overweight for 5’ 4” person
No Data
<10%
10%–14%
15%–19%
20%–24%
25%–29%
≥30%
Unhealthy Demographics
% of Americans That Are Overweight or Obese
80%
67%
68%
62%
61%
60%
45%
40%
37%
20%
0%
18-24
25-34
35-44
45-54
55-64
65+
SOURCE: “The Culprit & The Cure, Why lifestyle is the culprit behind America’s poor health.” Steven G. Aldana, PH.D
Health Risks
Type-2
Diabetes
High
Cholesterol
300%
200%
Increased Risk
Increased Risk
Heart
Disease
Joint
Arthritis
High Blood
Pressure
200%
200%
200%
Increased Risk
Increased Risk
Increased Risk
Obesity Increases Risk for Disease in
Virtually Every Organ System



Cardiovascular

Gastrointestinal

CVD

Gastric reflux

Hypertension

Gallbladder disease

Congestive

Nonalcoholic fatty liver

Heart Failure

Pulmonary

Sleep apnea

Asthma
Endocrine

Type 2 diabetes

Metabolic Syndrome

Cholesterol disorders

Infertility

Increased pressure in the brain

Headache, ear or vision problems
(not due to tumor)
Musculoskeletal

Osteoarthritis

Gout

DVT & Pulmonary Embolus

Certain cancers


Breast

Prostate

Colon
Macular Degeneration
SOURCE: A. McDermott, Cal Poly, San Luis Obispo
A Weighty Issue
A Duke University Medical Center analysis
found that obese workers filed:
2x 7x 13
workers'
compensation
claims
higher medical
costs from those
claims
more days of
work lost from
work injury or
work illness
(than non-obese
workers)
Epidemic
 But far more dramatic was the increase of
spending on diabetes drugs, which jumped
14.5 percent during the year.
 Diabetes-related spending is projected to rise
between 60 and 80 percent by 2009.
 “The potential future incidence of diabetes
based on obesity statistics is staggering,” the
report stated.
Definition of Obesity
 What is it?
 How do Obese people define it?
 How do Obese people view themselves?
 Morbid Obesity
 We need new terms
The Cost of Obesity
Obesity Surgeries
RYGB Patients
200%
600%
RYGB Surgeries
160,000
140,600
450%
600%
Increase
150%
120,000
200%
Increase
82,600
300%
100%
80, 000
150%
50%
40, 000
0%
0%
0
1998
2002
Hospitalization
SOURCE: WebMD
2002
36%
Increase
2004
Number of Bariatric Surgeries in the US
200,000
150,000
100,000
50,000
0
'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07
SOURCE: American Society for Metabolic and Bariatric Surgery
The Cost of Obesity
Complications
After Surgery
Healthcare
Services
Medications
20%
40%
80%
15%
30%
60%
10%
20% of
patients
return to
hospital
36%
Higher
20%
40%
5%
10%
20%
0%
0%
0%
Hospitalization
Normal
Obese
77%
Higher
Normal
SOURCE: Surgeon General, Obesity in America, national health Policy Forum, July 2003
Obese
1/3 of US Adults
Diabetic or Pre-Diabetic
 Average American has very high risk of
diabetes
 Jun 16 (Reuters Health) - Body mass index
(BMI), the ratio of body weight to height, is
tightly linked to lifetime risk of diabetes mellitus,
researchers reported at the Scientific Sessions
of the American Diabetes Association. "On
average, every American has a very high risk
of diabetes," CDC investigators told conference
participants.
Rx for Exercise
 Moderate physical activity can
decrease the risks for heart
disease (by 18% to 84%)
 Stroke (by 21% to 34%)
 Diabetes (by 16% to 50%)
 Colon malignancies
(by 30% to 40%)
 Dementia
(by 15% to 50%)
Accountability for Health
Employers
Employees
74%
4%
feel that employees
should be held
accountable
of employees feel
they should be held
accountable
If Personal Responsibility Fails
 Law Firm Predicts Workplace Wellness
Programs Will Become Mandatory
 Legal Fallout
 Protect yourself – HIPAA, ADA, ERISA rules all
have impact
Move to Wellness-based System
 Why do we wait for someone to become
diseased and then spend huge sums of money
to manage their disease?
 Millions of Dollars spent on developing drugs
that could be spent on prevention and avoiding
disease.
 Qualified Wellness coaches plus MD’s
Core Topics & Programs – 1999
 Back Care and Injury Prevention
 Physical Exercise
 Stress Management
 Tobacco Use
 Substance Abuse Prevention
Additions to the Big 5
 Weight Management
 Medical Self-Care
 Consumer Health Education
 Cholesterol Reduction
 Nutritional Interventions
 Selected Biometrics Testing
 Hypertension Management
Quick-start Wellness
Personal Health Profiles
Employers
Employees
Real Solutions
 Foster Personal Responsibility for
Individual Health
 Motivation, tools, incentives, and rewards
to stay well and reduce Healthcare costs
 Workplace is the ideal environment
 Companies must develop a Culture of
Health and Wellness
Elements of a Successful
Wellness Program
 Support from ALL levels of management
 Buy-in from Employees
 Heath Risk Assessments and Appraisals
 Establish Wellness Team/Coordinator
 Develop program based on interest, needs, appropriate
interventions
 Effective use of Incentives
 Measure results and effectiveness
Required Elements of Compliant Wellness Plan
1
The value of the reward must not exceed 20% of the total premium
for an individual employee’s health coverage (may be available to
dependents)
2
The program must be reasonably designed to promote good health
or prevent disease
3
The program must allow employees to qualify at least once per year
4
The reward must be available to all similarly situated individuals
and a reasonable alternative standard must be offered if the
general standard cannot be met due to a medical condition
5
Plan materials must offer and clearly disclose the alternative
standards
What’s a Wellness Program?
 *Disclosure of Alternative Standard sample pre-
approved verbiage8…

“If it is unreasonably difficult due to a medical condition for you to
achieve the standards for the reward under this program, or if it is
medically inadvisable for you to attempt to achieve the standards
for the reward under this program, contact us at (INSERT PHONE
NUMBER) and we will work with you to develop another way to
qualify for the reward.”

“If it is unreasonably difficult due to a medical condition for you to
achieve a cholesterol count under 200, or if it is medically
inadvisable for you to achieve a cholesterol count under 200, call
us at the number below and we will work with you to develop
another way to get the discount.”
Is it Compliant or Not?
• The total annual premium (employer and employee) for a single
•
•
•
•
coverage under an employer’s plan is $2,500 per year
A wellness program offers a reward that waives the annual $250
deductible for the next plan year for participants who have a BMI of
between 20 and 27
The BMI is determined shortly before the beginning of the calendar
year and tested at the end of each plan year
Materials state that participants who have medical conditions and for
whom it would be unreasonable to attain the BMI standard will be
given the same discount if the participants each walk for 20 minutes
three days a week
If a member cannot follow the walking schedule, he or she will be
given the same discount if he or she implements a dietary regimen
Example Is Compliant Because …
• It limits the reward; $250 deductible falls below the
regulatory max (20%)
• It is reasonably designed to promote good health
• The reward is available to all similarly situated
participants
• Reasonable alternatives are available to obtain the
reward
• The plan describes the terms of the program
An Example of Noncompliance
Same facts as previous example except …

Plan does not offer an alternative standard to employees
who cannot meet the BMI requirement
Not a compliant program
Americans with Disabilities Act (ADA)
 ADA prohibits employment discrimination against
individuals with a disability or those perceived as
having a disability and limits the circumstances in
which an employer may require physical exams or
medical inquiries.

Wellness program participation should be voluntary

Any medical information gathered in connection with
the wellness program should be kept confidential
and separate from the employee’s personnel
records and not used to discriminate against the
employee.
An Example of a Potential ADA Compliance
Issue
 Employer's group health plan requires
employee to complete a health risk assessment
(i.e., health risk questionnaire, associated
biometrics and results counseling) in order to
be eligible to participate in employer's group
health plan for the next plan year.

The employee is not asked to meet any standard
based on a health status factor.

However, if the employee fails or refuses to
complete the health risk assessment, the employee
will not have access to group health coverage for
the following plan year.
ERISA Considerations

Is the wellness program an ERISA "group health plan"?

ERISA definition of "group health plan:"
An employee welfare benefit plan to the extent that the plan
provides medical care, including items and services paid for as
medical care, to employees or their dependents (as defined
under the terms of the plan) directly or through insurance,
reimbursement, or otherwise.

ERISA and Internal Revenue Code definition of "medical care:"
The diagnosis, cure, mitigation, treatment, or prevention of
disease, or amounts paid for the purpose of affecting any
structure or function of the body.
ERISA Considerations
 If the wellness program is an ERISA "group health
plan," then the plan sponsor faces the following issues:

Form 5500 filing

Plan document and SPD requirements

Prohibited transactions and incentive/rewards
 In addition, an ERISA "group health plan" automatically
faces compliance issues under HIPAA privacy and
security rules and COBRA.

Note: Unless the plan sponsor oversteps its involvement, a
health savings account ("HSA") is not an ERISA group health
plan and is not subject to COBRA.
HIPAA Privacy and Security Rules
 Privacy

Disclosure of PHI to the plan sponsor is limited to:

Summary health information for limited purposes such as





Premium bides
Modifying, amending or terminating a plan
Enrollment and disenrollment
As provided by plan amendment, for plan administration
only or pursuant to an authorization
Use of PHI within a health plan is permitted
 Security

Electronic PHI triggers security requirements
Other Legal Considerations
 Federal and state tax laws

Some wellness benefits, incentives and rewards
offered to employees may be taxable, which
requires income tax withholding, the assessment of
FICA and FUTA taxes and W-2 reporting.
 ADEA

May prohibit age based distinctions and/or rewards
in a wellness program
Other Legal Considerations
 State lifestyle and smoker nondiscrimination
laws

State laws may prohibit programs that make
distinctions and/or reward based on lawful
activities…




Some prohibit actions based on any lawful off duty activity
Some prohibit actions based on use of lawful consumable
products
Some prohibit actions based on any lawful recreational
activity
Some specifically prohibit actions based on the use of
tobacco products
The Result is Happier, Healthier,
More Productive Employees
Who Benefits?
Who Reaps the
Rewards of
Wellness?
Rewards of Workplace Wellness
Employers
Community
Employees
You!
What Are YOU Going To Do?
 Based on what you learned today…

What message will you take back
to your clients?

How will you change the Healthcare
delivery system?

How will you promote Personal
Responsibility?
Questions & Follow-up