ABA Health eSource
May 2010 Volume 6 Number 9

An Ounce of Prevention Saves A Pound of Cure: A Summary of PPACA’s Wellness and Prevention Reforms

By Mercedes Varasteh Dordeski, Frank, Haron, Weiner & Navarro, Troy, MI

AuthorTo spend less on health care, Americans must pay more attention to health.

This theory is behind the many wellness and prevention provisions in the new Patient Protection and Affordable Health Care Act (“PPACA”) 1 , as amended by the Health Care and Education Reform Act. 2 Some of these measures encourage proactive medical care, such as new mandates requiring health plans to cover recommended screenings and preventative care/vaccines without charging co-pays. Others, such as a provision allowing employers to give further reductions in premiums to employees who practice healthy behavior, aim at reducing “behavioral waste,” a term that refers to the costs of treating preventable illnesses, such as those caused by obesity and smoking.

While combating behavioral waste may not receive the attention reserved for other perceived cost-cutting measures like tort reform or fraud reduction, it is a serious and costly problem. For example, a 2008 PricewatershouseCoopers’ Health Research Institute survey disclosed that approximately $303 billion to $493 billion annually is spent on treating preventable illnesses, such as those due to obesity, smoking, failure to follow medical directives, and alcohol abuse. 3 (The survey further notes that the costs to the economy as a whole in terms of lost productivity, absenteeism or presenteeism – i.e., sick employees who come to work – can be three to four times higher.) 4

This article will provide an overview of the major wellness and prevention initiatives in PPACA. Health care attorneys should take care to familiarize themselves with PPACA mandates and be ready to advise both health care clients and general business clients on the impact the requirements will have on patients, employee health plans, Medicare/Medicaid reimbursements, and their overall business.

Elimination of Co-Payments for Screenings and Preventative Care

Starting in September of 2010, employer-sponsored (and other) group health plans and health insurance issuers are prohibited from requiring co-pays for all preventative services recommended by an independent expert panel, the United States Preventative Services Task Force. 5 Co-pays are also eliminated for certain recommended immunizations, breast cancer screenings, and other preventative care/screenings for women and children. 6 However, this requirement does not apply to “grandfathered” health plans, which are defined in PPACA as any plan in which at least one individual was enrolled in as March 23, 2010. 7

Starting in March of 2011, co-pays are also eliminated for certain preventative services provided to Medicare and Medicaid recipients. 8 All Medicare beneficiaries are also entitled to receive annual wellness visits, where a physician will review a patient’s condition and design a “personalized prevention plan” by creating a custom-tailored screening schedule for subsequent years. 9

Employee Wellness Discounts

Previously, a provision in the 1996 Health Insurance Portability and Accountability Act (“HIPAA”) 10 permitted employers to reduce the cost of health insurance premiums for employees practicing healthy behaviors. The provision, which provided for a reduction of up to 20 percent of the employees’ regular premium cost, allowed employers to reward workers who met certain criteria “reasonably designed to promote health and prevent disease”. 11 This typically includes employees who refrain from smoking, maintain a healthy weight, and keep blood pressure and cholesterol levels low.

Starting January 1, 2014, PPACA enhances such wellness discounts by permitting group health plans to give reductions of up to 30 percent of the cost of premiums to employees who participate in such wellness programs. 12 This may be expanded to 50 percent subject to the discretion of the Secretary of Health and Human Services (“HHS”). 13

Importantly, employers offering wellness discounts must ensure that such programs are voluntary, are not employed in a discriminatory manner – i.e., the program cannot be “a subterfuge for discriminating based on a health status factor,” and give eligible individuals the opportunity to qualify for the discount at least once a year. Additionally, there must be reasonable alternative standards for obtaining the reward (i.e., so that an employee who suffers from obesity due to a non-treatable thyroid condition can still meet other wellness benchmarks to qualify.) Certain “eligible employers” 14 will be eligible for federal grant monies to help launch such wellness programs starting in 2011. 15

Notably, employers implementing wellness discounts have reported success; for example, last year the CEO of supermarket chain Safeway reported that a wellness discount program had kept the company’s per-capita health care costs flat during a four-year period, while most American companies’ costs increased 38 percent during the same time frame. 16 Additionally, studies have shown that companies that invest in efficient comprehensive wellness programs also benefit from reduced workers’ compensation claims and increased productivity. 17

However, while the applicable language in PPACA largely mirrors that found in HIPAA, under the current legislation the wellness discount increase does not apply to grandfathered health plans. Given PPACA’s heavy endorsement of wellness and prevention measures – which includes a 2014 pilot program testing wellness discounts in ten states’ individual insurance markets 18 – this omission appears to be unintentional and may be corrected in the future.

Break Time for Nursing Mothers

PPACA also provides that, effective immediately, employers covered by the Fair Labor Standards Act 19 must provide reasonable break time and a private space – other than a restroom – for a nursing mother to pump breast milk for up to one year after the birth of a child. 20 Employers are not required to compensate employees during such break times. Additionally, employers with less than 50 employees may qualify for exceptions if it can be proven that the requirement would impose an undue hardship on the employer.

Posting of Nutritional Requirements

By March of 2011, the Secretary of HHS must publish regulations requiring all chain restaurants (defined as any establishment that has 20 or more locations operating under the same name) to disclose the nutritional content of all menu items. 21 Specifically, the number of calories for each item must be disclosed on menus, menu boards, and drive through menu boards, and such menus must also feature “a succinct statement concerning suggested daily caloric intake.” 22 This requirement also extends to buffet items, and vending machines maintained by companies that operate 20 or more machines.

Government Funding for Wellness Programs

In addition to the specific provisions outlined above, PPACA also creates a “Prevention and Public Health Fund” which will be administered through HHS and will support prevention and public health programs. 23 Beginning with the fiscal year 2010, $500 million will be appropriated to various programs within HHS, with the amount of appropriations increasing each year to $2 billion in the fiscal year 2015 and each year thereafter. Under PPACA, the funds are to be used for activities such as prevention research and health screenings, the Community Transformation grant program (designed to fund state and municipal wellness programs by creating walking paths, nutrition awareness programs, etc.), Education and Outreach Campaign for Preventative Benefits (a planned public-private partnership to raise awareness on preventative care), and immunization programs. 24

Additionally, school-based health centers (facilities that provide primary health care to students on school campuses) will receive $50 million per year in grant funding through 2013. 25 These grants monies are to be used only for expenditures on facilities and equipment, not for hiring personnel.

Effective immediately, PPACA also established the National Prevention, Health Promotion and Public Health Council (“Council”) which will be composed of the Secretaries and Chairs from the executive departments and chaired by the Surgeon General. 26 The Council will be charged with coordinating prevention, wellness and health promotion practices at the federal level and among all federal departments and agencies. The Council will also be required to issue recommendations to the President and Congress with respect to what they consider the most pressing obstacles to reducing smoking, sedentary lifestyles, and poor nutrition.

Conclusion

While not all of PPACA’s wellness initiatives are discussed above, and while the devil is in the details and regulations, the enactment of PPACA signifies a heightened emphasis on personal accountability for health and wellness. While the expansion of health care screenings, vaccinations and preventative care is argued to initially result in an increase in health care costs, 27 it is hoped that preventing illnesses and diseases – before they become difficult and costly to treat – will ultimately reduce spending and create a healthier America.


1 Patient Protection and Affordable Care Act, Pub. L. No. 111-148 (2010).
2 Health Care and Education Reform Act of 2010, Pub. L. No. 111-152 (2010).
3 PricewaterhouseCoopers’ Health Research Institute, Identifying Waste In Healthcare Spending (2008). Available online at http://www.pwc.com/us/en/healthcare/publications/the-price-of-excess.jhtml (last accessed April 22, 2010).
4 Id. at 7.
5 Pub. L. No. 111-148, Sec. 2713.
6 Id.
7 Id. at Sec. 1251.
8 Id. at Sec. 4104-4108.
9 Id. at Sec. 4103
10 Pub. L. No. 104-191, Section 262, codified at 42 U.S.C. §1320d-1329d-8.
11 See 29 C.F.R. §2590.702(f)
12 Pub. L. No. 111-148, Sec. 2705
13 Id.
14 Defined as employers who employ less than 100 employees who work 25 hours or more per week, and who do not have a wellness program as of March of 2010. See Pub. L. No. 111-48, Sec. 10408.
15 Specifically, $200 million in wellness program grant funding is to be distributed for fiscal years 2011 to 2015. Id.
16 Steven A. Burd, Editorial, How Safeway Is Cutting Health Care Costs, W ALL S T. J., June 12, 2009.
17 Roni Caryn Rabin, Could Health Overhaul Incentives Hurt Some?, N.Y. T IMES, April 12, 2010 (hereafter cited as Rabin).
18 Pub. L. No. 111-148, Sec. 2703.
19 Pub. L. No. 75-718, ch. 676, 52 Stat. 1060 (codified at 29 U.S.C. 206 et seq.)
20 Pub. L. No. 111-148, Sec. 4207.
21 Id. at 4205.
22 Id.
23 Id. at 4002
24 Both the Community Transformation Grant program and Education and Outreach Campaign for Competitive Benefits were created by PPACA.
25 Id. at 4101
26 Id. at 4001.
27 See, e.g., Rabin, supra n.17.

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