The Impact Of The Affordable Health Care Act On Fitness Facilities


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The Affordable Health Care Act Will Create Opportunities For Fitness Facilities To Deliver Services To Employers. Learn How In This Presentation Prepared By Graham Melstrand of ACE and Bryan O'Rourke of the Fitness Industry Technology Council.

Published in: Business, Health & Medicine
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  • I'm excited for this. Most of my clients (health clubs) offer a corporate incentive program and I'd like to see them do more with it - a good time to revisit and revise for a new age of wellness.
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The Impact Of The Affordable Health Care Act On Fitness Facilities

  1. 1. The Affordable Care Act Implications for Fitness Facilities A New Era Of Primary Prevention Brings With It Opportunities & Risks. Are You Prepared ? June 2013 Prepared by: Graham Melstrand & Bryan K. O’Rourke
  2. 2. 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.
  3. 3. 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
  4. 4. 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.
  5. 5. 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)
  6. 6. 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
  7. 7. ... 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.
  8. 8. 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 Assessment 3. Incentive for Biometric Screening 4. “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
  9. 9. Types Of Employee Wellness Programs ACA Now Has 2 Categories Of Incentives For Participatory Wellness Participatory Wellness Programs Health Contingent Programs (2 Catagories) 1. Activity only program 2. Outcome based wellness program
  10. 10. Conditions for health-contingent wellness programs: 1. Program must provide opportunity to qualify for reward at least once per year 2. 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 individuals 4. Program must be reasonable designed to promote health or prevent disease 5. 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
  11. 11. Two Types of Health-Contingent Wellness Program Offerings Activity-only wellness programs:* Meet with “health coach” Take a health and fitness course Participate in smoking cessation or PA program *Does not require individual to ATTAIN or MAINTAIN a specific health outcome Outcome-based wellness programs:* Measurement/test + program that targets individuals that don’t meet standard Provides reward to those that meet standard OR participate in remediation
  12. 12. 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.
  13. 13. 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
  14. 14. 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 plans and Medicaid state plans starting in January 2014. 5. Ambulatory patient services 4. Emergency services 2. Hospitalization 7. Maternity & newborn care 1. Prescription drugs 8. Mental health/ substance abuse treatment services 9. Rehabilitative & habilitative services and devices 3. Laboratory services 6. Pediatric services 10. Preventive & wellness services and chronic disease management They are:
  15. 15. 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
  16. 16. 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.
  17. 17. 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
  18. 18. 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 ...
  19. 19. 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
  20. 20. Technology Standards Are Going To Become More Critical As We Move Into Wellness. Join the Council. Contact GeoffHampton to join us today. @fittechcouncil Thank You & Please Join