CHICAGO – Jim Pshock has been arguing the case for wellness programs a while now, though his job got somewhat harder this year after regulators issued a set of guidelines that unleashed a torrent of questions from skeptical employers.
Were these programs really worth the time and investment? Why should a company, whether fully or self-insured, even bother?
Presenting Wednesday at the annual meeting of the Self-Insured Institute of America, Pshock, the CEO and founder of Cleveland-based Bravo Wellness, laid it out for his audience, trotting out one statistic after the next that even the most hardboiled chief financial officer would find tough to ignore.
Chronic diseases related to lifestyle account for 75 percent of national medical costs, he said.
Over the last five years, employers have seen a 34 percent increase in health care spending, while employees saw a 40 percent increase in health care contributions.
Yes, Pshock acknowledged, the Patient Protection and Affordable Care Act will no doubt mean higher employer costs, 2 percent by some estimates and 10 percent or even 15 percent by others.
Still, he said, “it would be crazy” to say wellness programs don’t work and, more to the point, there’s no doubt they help reduce health care claims and, consequently, spending.
In one of the more dramatic cases, one client saw a 15 percent drop in claims costs, he said. That’s not universal, of course. Regardless, for many, the savings can offset the expense of PPACA fairly quickly, he said.
Earlier this month, the Department of Labor clarified and finalized the regulations regarding wellness programs, which go into effect Jan. 1. Although they largely mirror earlier versions of the rules, the government now categorizes wellness programs in different ways: participatory, activity-only and outcome-based.
Participatory programs are not tied to any expectation that employees change their behavior, only that they, for example, attend a class on nutrition.
Activity-only programs require a certain activity but come with no particular strings attached. In other words, going on a diet or taking part in a walking program are all that’s needed, not actual weight loss.
Outcome-based programs, on the other hand, are where the rubber meets the road, requiring employees to cut their cholesterol level, lower their body-mass index and so on.
Under PPACA, activity-based and outcome-based programs allow employers to reward their workers with up to 30 percent of the total cost of their healthcare coverage. There’s another 20 percent available for those who successfully quit smoking.
There are additional conditions that regulators have imposed, and more guidance is expected from the government before Jan. 1.
Regardless, the opportunity for companies to save dollars through their wellness programs is well-established, Pshock said.
One of his slides included figures showing that obese employees can cost employers almost $1,100 more in health care-related expenses annually.
“Thoughtful designs typically save employers $100 to $120 per employee per year,” another slide said.
“These regulations are a commonsense approach,” Pshock said. “None of my large-employer clients has disbanded their wellness programs,” despite the confusion and questions that cropped up earlier this year.