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MISHRM 2014 Annual Conference HR Amplified: Driven to be…

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1 MISHRM 2014 Annual Conference HR Amplified: Driven to be…

2 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM TAKING WELL-PLACED STEPS TO AVOID HEALTH CARE PLAN COSTS Cindy Pavella, FLMI Wellness Programs Director, Cornerstone Municipal Advisory Group, LLC

3 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Today’s Session Why Do Health Care Plans Cost So Much? What Can We Do About the Cost? Worksite Wellness Programs Employer-Sponsored Health & Wellness Centers Steps to Establish and Maintain a Worksite Wellness Program

4 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Why Do Health Care Plans Cost So Much? Advances are constantly being made –Medical procedures and equipment –Pharmaceuticals (particularly specialty drugs) –Delivery of care, therapies We are living longer and require more care. True retirement – a permanent end to work – will be delayed until very late in life. An elderly work force may have a different impact on health care costs. The population has “grown” in more ways than one Affordable Care Act (ACA) aka health care reform –Expanded benefits and eligibility –Taxes, fees, and more taxes, fees

5 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Why Do Health Care Plans Cost So Much? Approximately $750 billion squandered every year (roughly 30 cents of every dollar) by: –Excess Administrative Costs –Inefficient Delivery/Payment Models –Unnecessary Services –Inflated Prices –Prevention Failures –Fraud

6 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM So now what do we do? (without changing/dropping benefits or charging employees more) Financially reward quality of care (outcomes) instead of number of procedures Improve and encourage coordination and collaboration between health care service providers Leverage technology Educate patients (Member population) via health plan/insurer and/or through Worksite Wellness Programs Consider alternative care and payment models such as Employer-Sponsored Health & Wellness Centers

7 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Healthy Workforce Act HR 3717 and SB 1753 The workplace is the most cost-effective setting to improve people’s health because people spend so much of their waking time at work, economies of scale and quality controls can be achieved, and employers will pay most of the program costs. Research has shown that well-designed health promotion programs not only improve health and reduce chronic disease, they often pay for themselves through medical care costs savings that exceed program costs.

8 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Worksite Wellness Programs – 3 types –Provide information and resources to help employees learn about healthy lifestyle choices –Emphasize education and awareness, not actual activity or behavior –Tends to be most appealing to already health-conscious individuals, so generally ineffective for reducing health care costs Source: 2006 Wellness Council of America Quality of Life Program or Awareness Oriented Primary Goal Improve morale Program Components - Health Fair - Lunch & Learn sessions - Wellness events - Massage - Free Food & Potlucks - Wellness Materials in employee newsletter - Healthy Meeting policies - Healthy/Supportive/Non-Smoking internal and external company/campus settings - Weight scales, BP readers - Healthy Cafeteria/Vending - Employee Assistance Program (EAP) Budget $10-$45 /employee Expected ROI < 1:1.5

9 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Worksite Wellness Programs – 3 types –Combine awareness with participation in healthy activities Walking Programs Weight-loss Challenges Discounted/free gym memberships –Generally offers some type of participation incentive –Usually leads to some health care savings, but could take three or more years to break even or realize a positive return on investment Source: 2006 Wellness Council of America Traditional Program or Activity Oriented Primary Goal Improve health Program Components - Health Risk Assessment - Biometric testing - Fitness Center or dedicated onsite exercise room - Memberships – Fitness Facility - Weight Management Program - Web-based health information - Healthy Cafeteria/Vending options - Self-care book - Preventive Medical Benefit coverage - Wellness Newsletter - Short-term Incentive Programs - Sponsorship or Participation in Walk/Run events - Blood Drive - Health/Lifestyle Coaching - Recreation Leagues, Activity Clubs, Tournaments, Field Day Budget $46-$150 /employee without staffing costs Expected ROI 1:1.5 to 1:3.5

10 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Worksite Wellness Programs – 3 types –Focus on measurable outcomes and behavior changes achieved through the program –Also includes components of Awareness and Activity- Oriented programs –HIPAA’s nondiscrimination rules apply –If paired with strong incentives, this type has the ability to produce significant return on investment through Lower health care costs Decreased absenteeism Fewer workers’ compensation incidents Source: 2006 Wellness Council of America Health & Productivity Management Program or Results Oriented Primary Goal Proactive offering of highly structured and substantial interventions designed to provide an infrastructure of health management activities offered to a large portion of employees and dependents. Strong incentives are used to drive high participation Program Components - Health Risk Assessment - Risk Stratification & Interventions - Telephonic Coaching - Medical Self Care and Consumer Workshop - Injury Prevention - Benefit-Linked Incentive - Wellness Achievement Incentives - Resiliency Initiative for Productivity - Dependents are included - Integrated Programming - Uses Population Health Management Model Budget $151-$450 /employee includes dedicated staff and/or vendor Expected ROI 1:6.0

11 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Incentives – Carrots & Sticks If/Whichever you choose, determine if your: Wellness objectives are clear so that everyone understands and can get behind them Incentives directly support your wellness objectives Management strongly supports the wellness program and incentives – including budget especially with premium reductions, extra pay, or paid days/time off work Incentive plan has a method to handle exceptions Incentive plan accepts self-reported and/or imported data Baseline measurement is clear for outcomes, comparison analysis and reporting Incentive plan is compliant with ACA regulations

12 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM ACA encourages wellness programs May 29, 2013 – final regulations released Implements ACA’s nondiscrimination requirements/rules for health-contingent wellness programs Intended to ensure that every individual participating in a wellness program can receive the full amount of any reward or incentive, regardless of any health factor. Divides health-contingent wellness programs into two categories In 2014, increases the permissible reward for meeting a health- related standard to 30% of the total cost of employee-only coverage (up from 20%) or 50% if designed to prevent or reduce tobacco use Applies to grandfathered and non-grandfathered group health plans and group coverage for plan years beginning on or after January 1, 2014.

13 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM ACA categories of wellness programs Participatory Program (Awareness) –No requirement for an individual to meet a health-related standard to obtain a reward, or does not offer a reward at all. Examples: Fitness center reimbursement program Health Assessment, Biometric Screening, Diagnostic testing program that does not base any reward on outcomes Program that reimburses employees for smoking cessation program costs, regardless of whether or not the employee quits smoking Program that provides rewards for attending a free health education seminar –Complies with nondiscrimination requirements without having to satisfy any additional standards, as long as participation in the program is made available to all similarly-situated individuals, regardless of health status. –No limit on financial incentives

14 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM ACA categories of wellness programs Health Contingent Wellness Programs –Requires an individual to meet a health-related standard to obtain a reward. –To protect against unfair practices – required to follow certain nondiscrimination standards, including a maximum reward limit standard –Two types: Activity-only. Examples: walking, diet, or exercise programs. Does not require an individual to attain or maintain a specific health outcome Outcome-based. Requires an individual to attain or maintain a specific health outcome such as not smoking, attaining certain results on biometric screenings or meeting exercise targets. –Measurement, test, or screening as part of an initial standard –Larger program that targets individuals who do not meet the initial standard with wellness activities (i.e., those with high cholesterol for participation in cholesterol reduction programs) rather than the entire population, with the reward based on health outcomes or participation in reasonable alternatives.

15 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Nondiscrimination rules for Health Contingent Wellness Programs The total reward for all the plan’s wellness programs that require satisfaction of a standard related to a health factor is limited – generally, it must not exceed 30 percent of the cost of employee-only coverage under the plan. If dependents (such as spouses and/or dependent children) may participate in the wellness program, the reward must not exceed 30 percent of the cost of the coverage in which an employee and any dependents are enrolled. 50% maximum permissible reward to prevent or reduce tobacco use. The program must be reasonably designed to promote health and prevent disease. The program must give individuals eligible to participate the opportunity to qualify for the reward at least once per year. The full reward must be available to all similarly situated individuals. The program must allow a reasonable alternative standard (or waiver of initial standard) for obtaining the reward to any individual for whom it is unreasonably difficult due to a medical condition, or medically inadvisable, to satisfy the initial standard. The plan must disclose in all materials describing the terms of the program the availability of a reasonable alternative standard (or the possibility of a waiver of the initial standard).

16 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Sample Language (notice) for Health Contingent Wellness Programs Your health plan is committed to helping you achieve your best health. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at [insert contact information] and we will work with you (and, if you wish, your doctor) to find a wellness program with the same reward that is right for you in light of your health status.

17 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Federal laws to consider (look at state, too)  Health Insurance and Portability and Accountability Act (HIPAA) requires employers to keep medical records and information private and limits how that information may be used. HIPAA also requires equal opportunities for wellness program incentives – for example, discounts to workers who don’t smoke so long as workers who do smoke are eligible for the same discount if they participate in a stop-smoking program.  Age Discrimination in Employment Act (ADEA) bars employment discrimination based on age. Applies to workers 40 years and over. It could be that any wellness program requiring workers to hit a certain level or score – such as blood pressure or cholesterol – must make allowances for difference in age and health conditions of older employees.  Title VII of the Civil Rights Act’s prohibitions on race, sex and national-origin discrimination.

18 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Federal laws to consider (look at state, too)  Genetic Information Non-Discrimination Act (GINA) makes it unlawful for employers to request, require employee to disclose, or purchase/collect employee genetic information – including family medical histories – in connection with  Enrollment or eligibility in a health plan or wellness program or  Giving lower insurance premiums, lower deductibles or cash- payouts as reward or incentives under the wellness program EEOC states GINA allows an employer to use genetic information voluntarily provided by an employee (in writing) to “guide that individual into appropriate disease management program.” Employer may offer financial inducements for completion of a health risk assessment that includes questions about family medical history or other genetic information, provided that the assessment clearly states that the inducement is available whether or not the individual answers the questions regarding genetic information.

19 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Federal laws to consider (look at state, too)  Americans with Disabilities Act (ADA) makes it illegal for employers to ask employees and potential employees disability- related questions unless the questions are job-related.  If a wellness program involves a health risk assessment containing such questions, employees must agree to complete it voluntarily, and they can’t be punished or penalized for not doing so.  Title I of the ADA allows employers to conduct voluntary medical examinations and activities, including obtaining information from voluntary medical histories, as part of an employee wellness program as long as any medical information acquired as part of the program is kept confidential and separate from personnel records. See EEOC Enforcement Guidance on Disability-Related Inquiries and Medical Examinations Under the Americans with Disabilities Act (ADA) at Q&A 22 (July 27, 2000),http://www.eeoc.gov/policy/docs/guidance-inquiries.html.http://www.eeoc.gov/policy/docs/guidance-inquiries.html

20 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Federal laws to consider (look at state, too) Fair Labor Standards Act (FLSA) If participation in the wellness program is mandatory or required, the time employees spend in lectures, meetings, trainings, and any other activity associated with the program may be considered compensable time and may be subject to employee overtime wage pay requirements. Wellness program is voluntary if: –Attendance to program activities is outside of the employee’s regular working hours; –Attendance to program activities is not required by the employer; –Program activities are not related to the employee job descriptions or responsibilities; and –Employees do not perform any productive work while they participate in program activities.

21 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Federal laws to consider (look at state, too) Taxation. When the incentive is a health benefit, such as a premium reduction or a payment into a health FSA, HRA or HSA, the incentive may be excluded from taxation under Code Sec When the incentive is cash or a cash equivalent, such as a gift certificate, gift card, coupon or cash bonus, the incentive will be included in income and will be taxable. The value of any property or services provided to an employee that has so little value (de minimis) that accounting for it would be unreasonable or administratively impracticable, is not included in employee compensation and is not taxable. In addition to the value of the benefit, frequency must also be considered in determining if a benefit is de minimis. Examples include: providing an occasional movie or sports event ticket, water bottles, T-shirts, healthy snacks, and offering health seminars and classes at the worksite. Code section 132(e); Treas. Reg. section

22 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Federal laws to consider (look at state, too) Incentives paid through a Voluntary Employees Beneficiary Association (VEBA). VEBA's tax-free status may be jeopardized, even though the incentive is tied to a permissible benefit (the health plan and wellness program). VEBAs must generally provide only certain permissible benefits (e.g., health care). VEBAs may provide some level of other (e.g., impermissible) benefits, but the level of such impermissible benefits must be de minimis when compared to other benefits offered under the VEBA. Employers must (1) report taxable wellness incentives amounts on each employee’s Form W-2 and (2) withhold payroll taxes on these amounts, even if a third party (i.e., a group health plan insurer or health care provider) provides the actual benefits. If an employer does not charge a COBRA premium for continuation coverage under the wellness program (or the employer is not subject to COBRA), the cost of coverage is not required to be reported on W2 for employer-sponsored health care coverage.

23 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Small Business Employer Wellness Grants ACA created $200 million program for implementing comprehensive workplace wellness initiatives in To be eligible for a grant, the program must –Be available to all employees; –Include criteria related to health awareness including health education; preventive screenings and health risk assessments; –Describe efforts to maximize employee engagements; –Provide initiatives to change unhealthy behaviors and lifestyle choices; and –Provide a supportive environment at the workplace including workplace policies to promote healthy eating, increased physical activity, and improved mental health.

24 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Small Business Employer Wellness Grants Eligible Employers: Small Businesses that –employ <100 employees –who work 25 + hours/week and –did not have a workplace wellness program as of March 23, 2010 (when ACA was enacted) HHS is responsible to develop specific criteria for the grant program and application process. Guidance has yet to be issued.

25 Jenny Longthorne, HR Director Tamica Brooks, Police Records Coordinator August 26, 2013 City Council Presentation Weight Watchers at Work: The City of Ferndale’s Success Story

26 Our Journey – Beginning and Ending Approx. 30 participants since Sept Our team has lost a total of pounds! This is equivalent to 7 grown adults. 2 participants achieved Lifetime Membership through Weight Watchers. They are now awarded free access to the program for life!

27 Our Journey – The Facts Cardiovascular disease is the leading cause of death in the U.S. Average cost of a heart attack is between $50,000 - $90,000, with an additional $38,000 of costs within the first 90 days following the heart attack (total $88,000 - $128,000)

28 Our Journey – Results 63% of participants reported no longer taking medication relating to high blood pressure, cholesterol, or diabetes or eliminated the need for the medication 88% of respondents say their families have benefited from their participation in WW 88% of respondents have increased their exercise habits since joining WW decreasing the risk for obesity and other heart-related conditions.

29 Our Journey – Results Conditions/Medications Average Annual Cost Avoided Per Person:  Cholesterol – $11,992  Diabetes – $28,  Blood Pressure – $23,  Oxygen (COPD Meds) – $14,730  Pain Medication – $3,672

30 Our Journey – The Financial Impact Based upon the conditions/medications that participants reported they either eliminated or avoided, and the respective costs associated with the conditions/medications, the City, due to participants’ success with Weight Watchers, has saved/avoided approximately: $130,796.68

31 Our Journey – The Indirect Impact Improved morale – employees have developed cross- departmental relationships not there prior to the program. Even employees who knew each other for years had not socially interacted together. Participation from the Police Department, who historically had not joined in City sponsored functions, has greatly improved. Increased productivity – when employees physically feel better, research suggests that they are more productive while at work. Decreased absenteeism – improved health leads to less days needed to be off sick and or injured

32 Out of the Mouths of Success! My knee joint pain has disappeared Increased closeness with my husband “we’re in this together!” This summer I went horseback riding, zip lining, climbed a 40-foot rock wall, a 130 step lighthouse without getting winded; all things I couldn’t do before because I weighed too much Learned that anything is possible!

33 Out of the Mouths of Success! I went down 4 sizes in clothing! I can see my feet again! My outlook on life has vastly improved I can keep up with my grandchildren (for a couple of hours)! General health and fitness have improved It has helped having support at work

34 Cecile & Bob Thompson BeforeAfter

35 April Lynch BeforeAfter

36 Cherilynn Brown BeforeAfter

37 Tamica Brooks BeforeAfter

38 John Thull BeforeAfter

39 Steve LaRowe BeforeAfter

40 William Lucas (Luke) BeforeAfter

41 Thank You! On behalf of our City staff and Weight Watchers participants, thank you for your continued support of our wellness initiatives!

42 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM The Employer-Sponsored Health & Wellness (H&W) Center model Convenient, exclusive health care center for eligible Members (employees, in-area non-Medicare retirees, dependents) Incorporates wellness programs and activities Alternative source for Occupational Health and minor Workers Comp, on the job Health and Safety care/services Co-exists with current insurance plans

43 Employer Sponsored Health and Wellness Center Medical Services – Preventive Care (exams, immunizations) – Primary/Acute/Episodic Care – Case and Disease Management – Generic Pharmaceutical Services – Provider Recruitment & Management Technology & Health Portal – Proprietary Electronic Medical Records System – 24/7 Nurse Line – Data Analytics & Reporting – ROI Analysis – Online Appointment Scheduling System Wellness – Health Risk Assessment and Biometric Screening – 185 Wellness Programs – Wellness Coaches – Online Wellness Tracking Application Occupational Health and Workers’ Compensation – Pre-Employment Exams, Fit for Duty Exams – On-Site Physical Therapy – Drug Screenings – Case Management On and Off-Site Patient H&W Center

44 Employer Added benefit for employees – an alternative to the current medical/Rx plan. Center is operated by professional medical management company – Employer is not involved in patient care. No Access to employee/dependent Personal Health Information. Reduction in absenteeism, lost time from work, disability claims, FML occurrences. Increased employee presenteeism. Control over costs – total transparency. Flexible schedule of operations and services (set by Employer). Value Proposition- Employer Sponsored H&W Centers

45 Employee Save money on out-of pocket expenses with small or no office visit and generic Rx copays (also reduces H S A withdrawals and F S A funding). On-line setting of 20 minute appointments. Save time - Virtual Waiting Room Leave with your filled prescription! Reduced time away from work – save your vacation/paid time off days. Additional benefit – an alternative to the current medical/Rx plan Wellness programs and tools. Access to your numbers and data. Form a trusting relationship with the on- site medical providers to get well and stay well. Value Proposition- Employer Sponsored H&W Centers

46 Health Care Provider Practice medicine as a salaried employee of a medical management company. Eliminate time, stress, and cost spent running a business. Develop relationship with the patient (employee/dependent) while educating and providing treatment. Improved work/personal life balance. Be a health advocate for the patient and direct the patient to the best plan of treatment. Care-Coordination with Specialist/Health Coaches/Outside Primary Care Physician. Value Proposition- Employer Sponsored H&W Centers

47 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Establish a “Culture of Health” In a culture of health, employee well-being and organizational success are inextricably linked. It aligns leadership, benefits, policies, incentives, programs and environmental supports to reduce barriers to active engagement and sustainability of healthy lifestyles cross the healthcare continuum. William Baun, President National Wellness Institute

48 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Best Practices Worksite Wellness Program  Meet the various communication styles, education levels, and learning styles of employees  Group or individual/self-administered  Visual, auditory, traditional class, on-line learning  Keep it fresh, varied  Ensure all employees (and dependents if allowed) have access to the programs (i.e., night shift employees)  Promote and participate from the “top”  Explore “free” services and products; utilize community facilities and programs  Celebrate successes, achievements, milestones

49 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM 6 Steps to Establish and Maintain Worksite Wellness Program Step 1 Get the support of organization leaders to get company’s commitment to healthy living over the long term.  Employers need to define up front the ROI they are seeking. This may be cultural, financial or somewhere in between. Cultural programs do not necessarily produce financial results.  Conversely, financially driven programs do not necessarily improve culture.  A healthy balance can be struck and it is best for have a clear 3-5 year plan for program and its ROI before implementing.

50 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM 6 Steps to Establish and Maintain Worksite Wellness Program Step 2 Establish a Worksite Wellness Committee. Team which represents employees from all organizational levels, shifts, departments. Advocates for worksite policies that improve employee health. Plan on minimum 3-6 months prep time before program launch Step 3 Collect Data such as Employee Interest Survey, Policy and Environment/Cultural Survey, Benefit plan costs and claim information, Health Risk Appraisal report

51 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM 6 Steps to Establish and Maintain Worksite Wellness Program Step 4 Develop a Plan –Establish the basics (type, name/logo, launch date) –Create program goals (continual or end date, pre or post testing measurements, measurable objectives, strategies) –Incentives (yes or no? Earned time off, gift certificates, recognition, premium reductions, etc.) –Determine budget –Create a communication plan Step 5 Launch the Program (with fanfare!)

52 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM 6 Steps to Establish and Maintain Worksite Wellness Program Step 6 Continually evaluate, refine, and adapt to keep employees interested and to spark interest in those who have not yet participated –Year 1 Document participation in various activities; identify health advocates; budget review for future planning; assess environmental changes to support wellness; conduct HRA/screening (voluntary or mandatory?) –Year 2 Conduct satisfaction survey of Year 1. Carry-forward items from Year 1. Offer new activities based on HRA/screening results in Year 1 and satisfaction survey results from Year 1. Assess changes in health risks from Year 1 to Year 2

53 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM 6 Steps to Establish and Maintain Worksite Wellness Program Step 6 Continually evaluate, refine, and adapt to keep employees interested and to spark interest in those who have not yet –Year 3 Measure program participation and satisfaction. Evaluate and continue appropriate programs from Year 1 and Year 2. Budget review. Identify new health advocates. Measure difference in medical claim costs and absenteeism rates. Change appropriate corporate policy/environment. –Year 4 Enhance programs offered to employees based on evaluation of Year 3 programs. Budget review. Identify new health advocates. Measure difference in medical claim costs and absenteeism rates. Change appropriate corporate policy/environment.

54 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM 6 Steps to Establish and Maintain Worksite Wellness Program Step 6 Continually evaluate, refine, and adapt to keep employees interested and to spark interest in those who have not yet –Year 5 Make Program modification/enhancements. Budget review. Employee satisfaction survey. Return on investment (medical claims, absenteeism, retention). Analyze changes in the image of the company.

55 MISHRM P.O. Box Troy, Michigan (844) 4-MISHRM Questions and Discussion Cindy Pavella, FLMI Wellness Programs Director


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