The truth behind the CVS wellness program
The media has been buzzing recently with the news that CVS CareMark Corp. is requiring employees to disclose their weight and other health information or pay a fine of $600. While this is technically true, the media has cast a negative light on this program, leading to inaccurate assumptions about corporate wellness programs.
CVS CareMark has embarked on a wellness initiative which asks employees to undergo a screening with their physician to measure weight, body fat and glucose levels. The employer picks up the cost of this screening, and if employees do not complete this screening by May 1st, they will have to pay $600 more per year for health insurance. Despite the fact that this wellness initiative is clearly optional for employees, unfortunately the media has focused on headlines like, “CVS CareMark demands workers disclose weight, health info!” from the LA Times, a statement which is simply untrue. In fact, there are several aspects of the CVS wellness program that are not addressed properly in the media; the issues of (1) privacy, (2) penalty cost and (3) why employers are adopting these types of wellness plans.
PRIVACY. Well, is this even legal? Absolutely! Employers are allowed to incent employees to complete a wellness screening, with a $600 premium differential, because the employer never actually sees any individual health information. The results of the CVS screening are provided to WebMD Health Services Group and are available to the employer on an aggregate basis. For example, the employer may see that 25% of the employees who have completed the screening have elevated glucose levels and may be at risk for diabetes, but they are not given the identity of these individuals.
The Boston Herald quotes Patient Privacy Rights founder Dr. Deborah Peel on the issue. Peel incorrectly states, “Now, we’re all in this terrible situation where employers are desperate to get rid of workers who have costly health conditions, like obesity and diabetes.” When, in fact, no corporate wellness program exists to allow employers to terminate employees based on their personal health information. Corporate Wellness Programs, instead, are designed to allow employers to manage the health risks present in their population and assist employees in working toward correcting them. Under the Health Insurance Portability and Accountability Act (HIPAA), it is illegal for an employer to improperly utilize an employee’s personal health information.
Opponents of the CVS wellness program have also implied that the program may be in violation of the Americans with Disabilities Act and MA Chapter 151B. A voluntary wellness program that measures glucose and weight/body fat, like the CVS program, is not a violation of either statute. WGA has been advised by outside legal counsel that if an employer takes an adverse employment action against an (individual) employee based on the results of the wellness testing (such as an increase in benefit costs) and IF those results reveal the existence of a disability under the ADA or 151B, then there could be a cognizable claim for disability discrimination. However, as stated earlier, CVS will not have access to the individual results of the screenings so the risk of an ADA violation is eliminated.
COST. CVS CareMark will charge employees an additional $50 per month for health insurance if the employee does not complete the screening. Again, this is perfectly legal, if not encouraged by current regulations and emerging legislation under PPACA. The current regulations allow employers to charge up to 20% more to employees that do not complete the wellness program. The 20% is based on the cost of individual coverage under the employer’s health plan. For example, if the monthly premium for an individual on the plan is $500, the differential can be up to $100. If employees who complete the wellness requirements contribute $100 per month, the employer can charge those employees who do not up to $200 per month. While the individual premium cost for CVS’s health plan has not been disclosed, I think we can safely say that CVS could be charging more than the current penalty.
Further, under PPACA, the 20% differential maximum will increase 30% in 2014 and up to as much as 50% for tobacco use.
WHY WELLNESS? The motivation behind health screenings of this nature is twofold:
- First, employers know that a healthy and strong workforce is more productive. The first step is to educate employees about their own health and encourage them to improve these numbers, if necessary. This is often coined as a “Know Your Numbers” campaign.
- Second, employers want access to the aggregate reports which outline the health of their population. Employers use this information to create a wellness program that is targeted to address the needs of their specific population. For example, depending on the aggregate results of a health screening, an employer might want to offer a seminar series on healthy eating, reduce stress, or incorporate exercise into a daily routine.
The truth is that CVS CareMark is not the first employer to implement a health screening requirement for lower insurance premiums. In fact, for the past two years WGA has required employees to complete a Health Risk Assessment (HRA) questionnaire and undergo a health screening in order to receive “engaged” status which gives an employee access to lower health insurance rates. WGA’s motto has been, “if we are going to talk the talk, we have to walk the walk.” And the results have been outstanding. William Gallagher Associates was recently named a finalist for the “Healthiest Employers” by the Boston Business Journal, an award honoring the most outstanding health and wellness programs.
Corporate wellness programs are becoming a much more standard practice for employers who care about their employees. A well-crafted wellness program offers effective opportunities for employees to improve their health while also lowering healthcare costs for employers. With the ever rising cost of health care and major PPACA provisions beginning in 2014, we can expect to see more and more employers implementing wellness programs in the workplace.
About the Author
Kate O’Sullivan is a Client Service Manager at William Gallagher Associates (WGA) in the Employee Benefits Group. She is responsible for servicing a number of small, mid-size and large accounts, and works on the WGA Health Care Reform Advisotry Team.