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Sunday, 08 November 2015 21:50

State legislation would streamline process for health plans to use wellness incentives

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Advocates say legislation pending in Lansing would make it easier for health plans to craft new products that incorporate wellness incentives into policies to encourage people to take better care of their health.

Specifically allowing incentives for so-called “healthy lifestyle” benefits is the major change proposed in a three-bill package working its way through the Legislature to update the portion of Michigan’s insurance code that covers health benefits. The present version of the law dates back to the early 1970s.

The change would give health plans greater flexibility in crafting new products and ease the regulatory process for bringing them to market, backers say.

“The HMO in 1972 is very different from the HMO of today, and many of our employer groups want to see some innovation and see some different types of products available to them but still within the basic HMO concept,” said Judith Hooyenga, a Spring Lake attorney who specializes in health care law and serves as a consultant with the Michigan Association of Health Plans.

“Currently, the incentives are very limited in what we can offer and this would open that up a little bit,” she said.

As employers increasingly adopt wellness programs and use incentives to encourage employee participation, existing regulations often slow the process of bringing new products to market to meet that demand, said Dominick Pallone, deputy director of the Michigan Association of Health Plans that represents 17 health plans and HMOs in the state.

That’s because the present insurance code does not expressly allow for the use of wellness incentives in HMO benefits packages, which in turn prolongs the regulatory review process when health plans file for approval of new products, Pallone said. Getting new products approved and to market “just took forever” in a rapidly evolving marketplace, Pallone said.

“It was like pulling teeth to get these products approved. It would be this long process to finally get a ‘yes.’ We want to try to change that paradigm so that they can say ‘yes,’” Pallone said. “The code has been prohibitive in companies getting new products out there that can offer different types of incentives. The code needs to evolve.”

Under the present insurance code, health insurers “can’t be as flexible as they want to be,” he said.

One of the three bills proposed defines a healthy lifestyle program as one that’s designed to “enhance health, educate enrollees on health-related matters, or reduce risk of disease” and specifically states that such programs are not subject to the approval of state regulators.

The House Insurance Committee passed the bills Oct. 29 on a unanimous 17-0 vote. The legislation modernizes the code by clarifying language, assuring state regulations confirm with the federal Affordable Care Act, and streamlining the regulatory review process for health plans.

Pallone cites instances in the past where health insurers threatened litigation when they were going through a prolonged review process because the insurance code did not specifically allow for what they proposed. Updating the insurance code should alleviate that possibility in the future.

“I don’t think any insurance company, as an individual company, wants to have that type of a relationship with their regulator, and I don’t think the regulator wants to have that type of relationship with its client, which is the insurance company,” Pallone said. “We think it will be a much, much easier pathway to get products approved.”

The legislation also would specifically permit HMOs to form an administrative services organization to manage benefits for self-funded employers, which is presently allowed through a separate business unit, Hooyenga said. By adding the language to the insurance code, HMOs can better accommodate larger employers who want to shift to a self-funded plan without any disruption, she said.

“It just makes things a lot easier to be able to have the same legal entity providing that service,” Hooyenga told state lawmakers during a recent hearing on the bills.

The MAHP worked with Rep. Tom Leonard, a Republican from DeWitt who chairs the House Insurance Committee, and the Michigan Department of Insurance and Financial Services to draft the legislation, which received no opposition at the committee level.

The use of wellness by employers and incentives to drive employee participation and lifestyle changes to improve their health has been growing steadily for years.

In the 2015 survey on health care costs by The Employers’ Association in Grand Rapids, 42 percent of respondents said they now offer some form of a workplace wellness program, versus 33 percent in 2010.

Read 3171 times Last modified on Sunday, 22 November 2015 19:44

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