Viewing posts from: April 2015

Webinar: Differences and Impact of Reference Based Pricing “RBP” Plans and Value Based Purchasing “VBP” Plans

Posted April 21, 2015 by Megan DiMartino

Join our industry expert panel and moderator Patrick Haynes, AP Benefit Advisors Senior Counsel, as they review the differences and impact of Reference Based Pricing “RBP” plans and Value Based Purchasing “ VBP” plans. These plans are currently a hot topic for Medicare, Medicaid, larger employers and leading carriers. Innovative RBP plans let employers pay a set amount for a medical service, asking workers who select costlier care to pay the difference. Value-based purchasing is a demand side strategy to measure, report, and reward excellence in health care delivery. Value-based purchasing involves the actions of coalitions, employer purchasers, public sector purchasers, health plans, and individual consumers in making decisions that take into consideration access, price, quality, efficiency, and alignment of incentives. Effective health care services and high performing health care providers are rewarded with improved reputations through public reporting, enhanced payments through differential reimbursements and increased market share. Some experts say these plans offer the potential to save billions of healthcare dollars, and our expert panel will discuss this and the following topics:

  • Differences between RBP and VBP
  • Transparency Tools
  • PPACA compliance with RBP/VBP plans
  • How do ACO’s relate to these plans

Open to all HR professionals – but not brokers, TPAs, consultants and agents

Date & Time: Thu, Apr 30, 2015 12:00 PM – 12:45 PM EDT
Open to all HR professionals – but not brokers, TPAs, consultants and agents

Space is limited – reserve yours here.

EBSA Wellness Study Released

Posted April 17, 2015 by Megan DiMartino

This Research Report was sponsored by the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor. The goal of this report was to leverage existing data to explore patterns of wellness program availability, employers’ use of incentives, and program participation and utilization among employees. This report will be of interest to national and state policymakers, employers and wellness program vendors, employer and employee advocacy
organizations, health researchers, and others with responsibilities related to designing, implementing, participating in, and monitoring workplace wellness programs.

The report covers employee survey analysis, wellness program data analysis, and results Q&A. To view the report, click on the PDF below.

workplace wellness pdf border

The DOL's New Wellness FAQs – PPACA FAQ #25

Posted April 16, 2015 by PHaynes

Wellness Update.  Affordable Care Act/FAQ #25s

dept-of-laborSet out below are additional Frequently Asked Questions (FAQs) regarding implementation of the Affordable Care Act. These FAQs have been prepared jointly by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments). Like previously issued FAQs (available at and, these FAQs answer questions from stakeholders to help people understand the law and benefit from it, as intended.

See, also, the DOL’s Workplace Wellness Programs, a 159-page report on the Services Offered, Participation, and Incentives.

  • The report concludes that four-fifths (4/5) of all US employers with more than 1,000 employees offer such programs.
  • Of those employers, their offerings cover a range of screening activities, interventions to encourage healthy lifestyles, and support for employees with manifest chronic conditions.
  • In spite of widespread access, the actual use of wellness programs by eligible employees and/or dependents remains limited. Our analysis of data from the large employer shows that only 20% to 40% of eligible individuals participate in a program in any given year.
  • Participation rates as reported in our survey suggest a median rate of 40%.

Wellness Programs

Under Public Health Service Act (PHS Act) section 2705 (FN1)), Employee Retirement Income Security Act (ERISA) section 702, and Internal Revenue Code (the Code) section 9802 and the Departments’ implementing regulations, group health plans and health insurance issuers in the group and individual market are generally prohibited from discriminating against participants, beneficiaries, and individuals in eligibility, benefits, or premiums based on a health factor. (FN2) An exception to this general prohibition allows premium discounts, rebates, or modification of otherwise applicable cost sharing (including copayments, deductibles, or coinsurance) in return for adherence to certain programs of health promotion and disease prevention, commonly referred to as wellness programs. The wellness program exception applies to group health coverage, but not individual market coverage.  (FN3)

On June 3, 2013, the Departments issued final regulations (FN4) under PHS Act section 2705 and the related provisions of ERISA and the Code that address the requirements for wellness programs provided in connection with group health coverage. Among other things, these regulations set the maximum permissible reward under a health-contingent wellness program that is part of a group health plan (and any related health insurance coverage) at 30 percent of the cost of coverage (or 50 percent for wellness programs designed to prevent or reduce tobacco use).  (FN5)  The wellness program regulations also address the reasonable design of health-contingent wellness programs and the reasonable alternatives that must be offered in order to avoid prohibited discrimination. In the preamble to the wellness program regulations, the Departments stated that they anticipated issuing future subregulatory guidance as necessary. The following FAQs address several issues that have been raised since the publication of the wellness program regulations.

Q1: What does it mean that a health-contingent wellness program must be “reasonably designed”?

Under section 2705 of the PHS Act and the wellness program regulations, a health-contingent wellness program must be reasonably designed to promote health or prevent disease. A program complies with this requirement if it:

  1. has a reasonable chance of improving the health of, or preventing disease in, participating individuals;
  2. is not overly burdensome;
  3. is not a subterfuge for discrimination based on a health factor; and
  4. is not highly suspect in the method chosen to promote health or prevent disease.  (FN6).

The determination of whether a health-contingent wellness program is reasonably designed is based on all the relevant facts and circumstances. The wellness program regulations are intended to allow experimentation in diverse and innovative ways for promoting wellness.  While programs are not required to be accredited or based on particular evidence-based clinical standards, practices such as those found in the Guide to Community Preventive Services or the  United States Preventive Services Task Force’s Guide to Clinical Preventive Services, may increase the likelihood of wellness program success and are encouraged.  (FN7).

Wellness programs designed to dissuade or discourage enrollment in the plan or program by individuals who are sick or potentially have high claims experience will not be considered reasonably designed under the Departments’ wellness program regulations. A program that collects a substantial level of sensitive personal health information without assisting individuals to make behavioral changes such as stopping smoking, managing diabetes, or losing weight, may fail to meet the requirement that the wellness program must have a reasonable chance of improving the health of, or preventing disease in, participating individuals. Programs that require unreasonable time commitments or travel may be considered overly burdensome. Such programs will be scrutinized and may be subject to enforcement action by the Departments.

The wellness program regulations also state that, in order to be reasonably designed, an outcome-based wellness program must provide a reasonable alternative standard to qualify for the reward, for all individuals who do not meet the initial standard that is related to a health factor. This approach is intended to ensure that outcome-based wellness programs are more than mere rewards in return for results in biometric screenings or responses to a health risk assessment, and are instead part of a larger wellness program designed to promote health and prevent disease, ensuring the program is not a subterfuge for discrimination or underwriting based on a health factor.

Q2: Is compliance with the Departments’ wellness program regulations determinative of compliance with other laws?

No. The fact that a wellness program that complies with the Departments’ wellness program regulations does not necessarily mean it complies with any other provision of the PHS Act, the Code, ERISA, (including the COBRA continuation provisions), or any other State or Federal law, such as the Americans with Disabilities Act or the privacy and security obligations of the Health Insurance Portability and Accountability Act of 1996, where applicable. Satisfying the rules for wellness programs also does not determine the tax treatment of rewards provided by the wellness program. The Federal tax treatment is governed by the Code. For example, reimbursement for fitness center fees is generally considered an expense for general good health. Thus payment of the fee by the employer is not excluded from income as the reimbursement of a medical expense and should generally be added to the employee wages reported on the Form W-2, Wage and Tax Statement. In addition, although the Departments’ wellness program regulations generally do not impose new disclosure obligations on plans and issuers, compliance with the wellness program regulations is not determinative of compliance with any other disclosure laws, including those that require accurate disclosures and prohibit intentional misrepresentation.  (FN8).

4/16 Update, 3:EEOC01 p.m.: Here’s the Text of the EEOC’s Proposed Regulations on Wellness Programs and the Americans with Disabilities Act

The proposed rule explains what an employee health program is, what it means for an employee health program to be voluntary, what incentives employers may offer as part of a voluntary employee health program, and what requirements apply concerning notice and confidentiality of medical information obtained as part of voluntary employee health programs. In addition, the proposed rule explains that compliance with rules concerning voluntary employee health programs does not ensure compliance with all the antidiscrimination laws EEOC enforces….

The proposed rule clarifies that an employer may offer limited incentives up to a maximum of 30% of the total cost of employee-only coverage, whether in the form of a reward or penalty, to promote an employee’s participation in a wellness program that includes disability-related inquiries or medical examinations as long as participation is voluntary…. Voluntary means that a covered entity:

  1. does not require employees to participate;
  2. does not deny coverage under any of its group health plans or particular benefits packages within a group health plan for non-participation or limit the extent of such coverage (except pursuant to allowed incentives); and
  3. does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees within the meaning of Section 503 of the ADA …

Further, to ensure that participation in a wellness program that includes disability-related inquiries and/or medical examinations, and that is part of a group health plan, is truly voluntary, an employer must provide a notice that clearly explains:

  • what medical information will be obtained,
  • who will receive the medical information,
  • how the medical information will be used,
  • the restrictions on its disclosure, and
  • the methods the covered entity will employ to prevent improper disclosure of the medical information.

Finally, the proposed rule allows the disclosure of medical information obtained by wellness programs to employers only in aggregate form, except as needed to administer the health plan[.]”

A full copy of the 44 page proposed rule may be found here:

How the proposed ADA rules are different from the current wellness program incentive rules under PPACA

There are several differences between the proposed ADA rules and the current PPACA rules. Importantly, the ADA rules do not change the current PPACA rules. However, a wellness program will need to satisfy the new ADA rules, when final, in order to be considered ADA compliant.

  • The 30% maximum would apply to the total wellness program, regardless of whether it is participatory, health-contingent, or both. Currently, the 30% maximum applies only to health-contingent programs. Rewards for participatory programs would be included in the 30% maximum if the participatory program asks a participant to provide medical information, such as completing a Health Risk Assessment. (Please see the information below regarding the 50% maximum for some tobacco-related programs.)
  • The proposed regulations do not address family member participation in wellness incentives. Currently the 30% maximum can be applied to the family premium when an employee’s family members also participate in the wellness program and are enrolled in the group health plan. This will need to be clarified in the final regulations.
  • The 50% maximum incentive that currently applies to tobacco cessation programs would only apply to programs that ask employees if they use tobacco. A biometric screening that tests for the presence of nicotine or tobacco would be considered a medical examination and the 30% maximum would apply.



  1. Section 1201 of the Affordable Care Act amended and moved the nondiscrimination and wellness provisions of the PHS Act from section 2702 to section 2705, and extended the nondiscrimination provisions to the individual market. The Affordable Care Act also added section 715(a)(1) to ERISA and section 9815(a)(1) to the Code to incorporate the provisions of part A of title XXVII of the PHS Act, including PHS Act section 2705, into ERISA and the Code and make them applicable to group health plans and group health insurance issuers.
  2. The statute and its implementing regulations set forth eight health status-related factors, which the 2006 regulations refer to as “health factors” for simplicity. Under the statute and the regulations, the eight health factors are health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), and disability. 71 FR 75014 (Dec. 13, 2006). In the Departments’ view, “[t]hese terms are largely overlapping and, in combination, include any factor related to an individual’s health.” 66 FR 1379 (Jan. 8, 2001).
  3. Note, however, that “it is HHS’s belief that participatory wellness programs in the individual market do not violate the nondiscrimination provisions provided that such programs are consistent with State law and available to all similarly situated individuals enrolled in the individual health insurance coverage.” 78 FR 33167 (Jun. 3, 2013).
  4. See 78 FR 33158 (Jun. 3, 2013). These regulations update earlier regulations implementing the nondiscrimination and wellness program provisions established under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (the 2006 regulations). 71 FR 75014 (Dec. 13, 2006). The Affordable Care Act amended the statutory nondiscrimination and wellness provisions to in large part reflect the 2006 regulations regarding wellness programs.
  5. The cost of coverage is determined based on the total amount of employer and employee contributions towards the cost of coverage for the benefit package under which the employee is (or the employee and any dependents are) receiving coverage. 26 CFR 54.9802-1(f)(3)(ii) and (f)(4)(ii), 29 CFR 2590.702-1(f)(3)(ii) and (f)(4)(ii), and 45 CFR 146.121(f)(3)(ii) and (f)(4)(ii).
  6. See PHS Act 2705(j)(3)(B). See also 26 CFR 54.9802-1(f)(3)(iii) and (f)(4)(iii), 29 CFR 2590.702(f)(3)(iii) and (f)(4)(iii), and 45 CFR 146.121(f)(3)(iii) and (f)(4)(iii).
  7. See and
  8. See 26 CFR 54.9802-1(h), 29 CFR 2590.702(h), and 45 CFR 146.121(h).

CMS Issues 2016 Medicare Part D Benefit Parameters

Posted April 14, 2015 by Megan DiMartino

from EBIA

Announcement of Calendar Year (CY) 2016 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter (Apr. 6, 2015)

Under Medicare Part D regulations, most group health plan sponsors offering prescription drug coverage to Part D eligible individuals (including active or disabled employees, retirees, COBRA participants, and beneficiaries) must disclose to Part D eligible individuals and to CMS whether the plan coverage is creditable or non-creditable. For coverage to be creditable, its actuarial value must equal or exceed the actuarial value of defined standard Medicare Part D coverage under CMS guidelines. In simple terms, the actuarial equivalence determination measures whether the employer’s coverage is, on average, at least as good as standard Medicare prescription drug coverage; if it is, the employer’s coverage is creditable.

CMS has released the following 2016 parameters for the defined standard Medicare Part D prescription drug benefit:

  • CMS-logoDeductible: $360 (a $40 increase from 2015);
  • Initial coverage limit: $3,310 (a $350 increase from 2015);
  • Out-of-pocket threshold: $4,850 (a $150 increase from 2015);
  • Total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are not eligible for the coverage gap discount program: $7,062.50 (a $382.50 increase from 2015);
  • Estimated total covered Part D spending at the out-of-pocket expense threshold for beneficiaries who are eligible for the coverage gap discount program: $7,515.22 (a $453.46 increase from 2015); and
  • Minimum cost-sharing under the catastrophic coverage portion of the benefit: $2.95 for generic/preferred multi-source drugs (a $.30 increase from 2015), and $7.40 for all other drugs (a $.80 increase from 2015).

EBIA Comment: These parameters will be used by group health plan sponsors to determine whether their plans’ prescription drug coverage is creditable for 2016. The information is needed for required disclosures to Part D eligible individuals and to CMS. In addition to the annual participant disclosure notice requirement, which may be satisfied by providing a single notice at the same time each year, disclosure notices may also be required at other times (for example, prior to an individual’s Medicare Part D initial enrollment period or upon request from a Medicare Part D eligible individual).

Contributing Editors: EBIA Staff.

No Liability for Late COBRA Election Notice Accompanied by Request for Lump Sum Premium for Retroactive Coverage

Posted April 10, 2015 by Megan DiMartino

from EBIA

A terminated employee sued her former employer and its health plan’s TPA for failing to provide her with a timely COBRA notice. She had received a COBRA election notice a few weeks late, after allegedly making repeated requests for it and being told that she was ineligible. The notice was accompanied by a request for payment of three months of premiums for retroactive coverage. The employee completed the COBRA election form and returned it to the TPA, but she did not pay any premiums. Two months later, the TPA notified the employee that her coverage had been terminated as of her last day of employment because she failed to pay the initial COBRA premium.

The court dismissed the employee’s claim against the TPA for failure to provide the COBRA notice because the employer was the designated plan administrator and, thus, was responsible for providing the notice. The court also rejected a breach of fiduciary duty claim against the employer based on its alleged statements that the employee was not eligible for COBRA, because her coverage was not actually denied. And the court rejected her claim against the employer for failure to provide COBRA, since it was eventually offered and she failed to pay the initial premium.

AP Benefit Advisors Benefits Newsletter and Webinar Series

Posted April 2, 2015 by Megan DiMartino

PPACA2Over 35 years ago, Reagan Crawford envisioned a benefits consulting and brokerage business that focused on the specific and unique needs of middle market and large companies in response to the uniform, impersonal approach to benefits and consulting services provided by larger, national firms.

Today, AP Benefit Advisors is one of the leading benefits-only brokerage and consulting firms in the United States.  With an experienced and highly trained staff, a consultative style supported by a disciplined process, a unique financial perspective, and extensive market access to meet client’s needs, AP Benefit Advisors invests extensively in its associates and technologies to bring superior services, products and advice to clients.

AP Benefit Advisors produces substantive educational blogs, webinars, newsletters, and more, to keep current and potential clients in the loop on the wide variety of important benefits-related issues facing today’s businesses. Can your business afford to face the next wave of legislative benefits provisions unprepared and uninformed?

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