The Impact Of The Affordable Health Care Act On Fitness Facilities

The Affordable Care Act

Implications for Fitness Facilities

A New Era Of Primary PreventionBrings With It Opportunities &

Risks. Are You Prepared ?

June 2013Prepared by:

Graham Melstrand &Bryan K. O’Rourke

The Federal Affordable Care Act (ACA)Contains Provisions That Will Directly Impact Fitness Facilities.

The U.S. Dept. of Health & Human Services has announced upcoming changes to the ACA that could mean opportunities for fitness facilities as well as a few potential pitfalls.

The changes to the ACA take effect for plan years beginning on or after Jan. 1, 2014.

Fitness facilities should familiarize themselves with them now, to prepare for what’s coming.

The changes to the ACA that will impact fitness facilities the most

are centered around wellness programs.

Group health plans that offer incentives for employees and beneficiaries to participate in health and wellness programs provide more opportunities for fitness facilities.

Wellness programs may be offered either by the plan or the employer but certain programs must be covered by

the insurance plans

This significantly increases their health care costs.

About 86% of full-time employees in the U.S. are overweight, obese, or have at least one chronic (but usually preventable) health condition.

Source: Gallup Strategic Consulting, Oct. 2011

These employees miss an estimated 450 million additional days of work each year compared with healthy workers.

The absenteeism of unhealthy workers costs more than $153 billion in lost productivity annually.

Employee premiums have risen by 113% in the last decade alone.Source: Gallup Strategic Consulting, Oct. 2011

Source: Kaiser Family Foundation/ HRET 2012

Illness Costs Money

Transportation costs associated with obesity alone could be as much as $2.7B/year in additional fuel cost (Jacobson and King)

Seventy-four percent of U.S. employers offer some type of employee wellness programs,

but they have had only a modest effect so far …

because not enough employees are participating.

The recent changes to the ACA aim to increase

participation by everyone.

Source: Forbes, 12/07/2012

Increase Participation

... Declare that fitness and wellness programs are valuable,and should be supported by other federal agencies ... another PLUS.

The recent changes to the ACA

... Clarify existing requirements to wellness programs.

This is a PLUS, as it is designed to encourage more employers to offer these incentives.

... Expand rewards to employees for participating in these programs …

yet another PLUS.

Types Of Employee Wellness Programs

Participatory Programs

Offer incentives to employees; in particular, a discount on their contribution to their premiums.

Have been lightly regulated, as no particular outcome is expected.

1. Fitness Center Reimbursement 2. Incentive for Health Risk Assessment3. Incentive for Biometric Screening4. “Quit Smoking” Program Reimbursement 5. Waiver of Co-Pay for Prenatal/ Well-Baby Visits

Examples

Participatory programs may include a discount on premiums, but are more often gift cards,

discount programs or other incentives

Types Of Employee Wellness Programs

ACA Now Has2 Categories Of Incentives For Participatory Wellness

Participatory Wellness ProgramsHealth Contingent Programs (2 Catagories)1. Activity only program2. Outcome based wellness program

Conditions for health-contingent wellness programs:1. Program must provide opportunity to qualify for reward at least

once per year2. Reward for health-contingent wellness program, together with the

reward for other health-contingent wellness programs must not exceed 30% of the total cost of employee-only coverage (50% for tobacco use)

3. Reward must be available to all similarly situated individuals4. Program must be reasonable designed to promote health or

prevent disease5. Plan must disclose in all plan materials the terms of the program

the availability of other means of qualifying for the reward or the possibility of waiver of the otherwise applicable standard

Two Types of Health-Contingent Wellness Program OfferingsActivity-only wellness programs:*Meet with “health coach”Take a health and fitness courseParticipate in smoking cessation or PA program*Does not require individual to ATTAIN or MAINTAIN a specific health outcomeOutcome-based wellness programs:*Measurement/test + program that targets individuals that don’t meet standardProvides reward to those that meet standard OR participate in remediation

New Regulations for “Health-Contingent” Plans

The federal government has issued new rules

for “health-contingent” wellness programsto

ensure they do not discriminate against the

unhealthy.

The new rules lay out alternative standards of

participation, so that all individuals could potentially

qualify for rewards.

New Regulations for “Health-Contingent” Plans

Raise the maximum discount

to 50% on employees who

participate in “stop smoking” programs

Raise the maximum discount

on participants’ health premiums

to 30% - 50%

Allow participation among employees

who could not reasonably meet

previous standards

ability to waive requirement

Affordable Care Act Opportunities For Fitness Facilities

The ACA has defined 10 “Essential Health Benefits” —the benefits that must be included in individual and small group plansand Medicaid state plansstarting in January 2014.

5. Ambulatory patient services4. Emergency services

2. Hospitalization

7. Maternity & newborn care

1. Prescription drugs

8. Mental health/ substance abuse treatment services9. Rehabilitative & habilitative services and devices

3. Laboratory services

6. Pediatric services

10. Preventive & wellness services and chronic disease management

They are:

Preventive & Wellness/ Chronic Disease Management Services

This includes-weight loss programs- work with “health coach”-supervised exercise programs-nutrition programs-educational programs on fitness, wellness, and disease management

Source: Forbes 12/07/2012

For every $1 spent on a wellness program, medical costs fall by about $3.27, and absenteeism costs fall by $2.73.

Source: Katherine Baicker, Professor of Health Economics, Harvard School of Public Health

Studies show that at-risk employees who participate in such programs showed a sharp drop in emergency room, pharmacy, and hospital claims.

Opportunities for Fitness Facilities

Fulfillment of preventive and

wellness programs

Development of programs to ease

demand on healthcare

practitioners

Potential for integration into essential health

services

Development of educational and

condition-specific

programs

Potential Risks for Fitness Facilities

... alternative providers may be engaged to

provide services that already fit the mission and vision of fitness

facilities

No significant market mover

to serve as early adopter

Current membership-based model will not be effective.

Fitness facilities may have to re-engineer their business model for charging fees.

Low confidence in health and fitness industry ...

DEFINE OPPORTUNITIES TO

PURSUE. Identify what your facility can provide, and carve out your

niche.

IDENTIFY OPPORTUNITIES TO

EDUCATE. Position yourself in your market as an expert in

the health and wellness field.

ESTABLISH YOUR TIMELINE.

Plan a clear course to identify and pursue opportunities and minimize pitfalls.

NEXT STEPS

Technology Standards Are Going To Become More Critical AsWe Move Into Wellness. Join the Council. Contact

GeoffHampton [email protected] to join us today.www.fit-c.org @fittechcouncil

Thank You & Please Join