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Wellness War Is Over; Wellness Lost

What if we told you that “pry, poke, prod and punish” wellness programs are bad for morale, damage corporate reputations and cost more money than they save?

You’d say: “Al, you, Tom Emerick and more recently Vik Khanna have been telling us that for years.” You might add: “And while your opinions are usually well-reasoned and based on good data, we’d have to hear the true believers’ side of the story.”

But what if we told you: “That is the true believers’ side of the story”?

Yep, the wellness industry’s leading luminaries – 39 of them, representing 27 vendors and one consulting firm (Mercer) — have all gotten together under the aegis of both their trade associations – Health Enhancement Research Organization (HERO) and Population Health Alliance (PHA) — and reached that “consensus.”

We don’t know if they simply didn’t read their own report before reaching this consensus, or whether they just all decided to tell the truth. Frankly, we’re fine either way. (This is also the second time in five months that a major wellness true believer admitted wellness doesn’t save money. The first time was a meta-analysis in the American Journal of Health Promotion that concluded that “randomized clinical trials show a negative ROI.” After we started quoting the analysis, the editor wrote a 2,000-word essay walking it back.)

Because our claim that we are laying out “the true believers’ side of the story” would otherwise require a certain suspension of disbelief, we are going to rely more heavily than usual on screenshots. We also recommend reading the report itself, or at a minimum our analyses of it. (Our analyses are going to be a 10-part cycle. Make sure to “follow” the website They Said What? to not miss a single episode.)

Page 10 of the report lists 12 elements of cost. The first element itself contains about 12 elements, making this a list of 23 elements of cost. (Add consulting fees, which were overlooked even though three Mercer consultants sat on the committee and even though page 14 calls for use of “consulting expertise,” and you get 24.)

You’ll see damage to employee morale and corporate reputations listed as “tangential costs.” But, as two people who run a company, we would call damage to those intangibles much more than tangential. Our company runs on morale. Pulling people away from their workstations to poke them with needles, weigh them, measure their waists and test to see if they are lying about their smoking habits couldn’t possibly be good for morale.

We are equally curious about the blithe dismissal of legal challenges as a tangential cost. No firm wants its name dragged across the wire services because it is being sued for its wellness program (just ask CVS and Honeywell). Getting dragged into the courts (and, hence, the media) for running a wellness program isn’t a tangential cost — and it’s an unforced error.

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On Page 15, as the report discusses how to measure the return on investment, the authors select only one of those 24 costs – vendor fees – as the basis for comparison. Omitting the other 23 costs, plus incentives, makes it easier to show an ROI. The fees are listed as “$1.50 per employee per month,” or $18 a year, even though the rule of thumb is that wellness programs cost many hundreds of dollars per employee per year.

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Further in, on page 23, the authors list the related savings: $0.99 per “potentially preventable hospitalization,” abbreviated as PPH. (The fact that we have to do the math on our own by comparing figures across pages suggests this admission of losses was a gaffe rather than deliberate honesty.)

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The savings figures are based on reductions in event rates that (1) are about twice what typically gets achieved; and (2) somehow overlook the natural decline of 3% to 5% a year in cardiac events even without a wellness program.

Even without adjusting for those two mistakes, savings fall $0.51 PMPM short of vendors fees alone.

And losing $0.51 per employee per month is the best-case scenario. The “savings” includes benefits from disease management (which is not covered by the $1.50 PMPM in vendors fees), and omits the offsetting costs of all the extra doctor visits that come from overdiagnosis and overtreatment.

So, here are the two conclusions:

  • According to proponents’ own consensus, wellness loses money.
  • Even worse, their savings are wildly overstated (yes, according to government data), and their costs, by their own admission on page 10, are wildly understated.

Don’t take our word for either of these. Write to us, and we will send you an ROI spreadsheet that you can use to do your own calculations.

One way or the other, what RAND’s Soeren Mattke called the wellness wars are over. Wellness has surrendered.

How Will the Wellness Industry Respond?

HERO and its assembled luminaries will probably ignore this gaffe, to prevent a news cycle that their customers might notice. However, if the problem gets covered broadly, they will respond. This was their modus operandi the last time they got “outed.” We had shown them in 2011 that one of their key slides, for which they even gave themselves an award, was made up. We presented our proof many times and even put it in both our books…but it wasn’t until Health Affairs shined a bright light on it that they acknowledged wrongdoing. They said that the slide “was unfortunately mislabeled” by an as-yet-unidentified culprit, but that no one noticed for four years. (Rather than relabeling the slide in a “more fortunate” way, they took the slide off the site.)

To clarify that their position is indefensible, we have offered a reward of $1 milliion for them to simply convince a panel of Harvard mathematicians that they have any idea what they are talking about beyond the fact of the gaffe itself.  Their refusal to claim this reward speaks volumes.

Implications for Brokers

The implications for brokers are profound. First, stop placing wellness programs — or at a minimum get a “release” from your clients saying that they’ve read this article but want to proceed anyway. The disclosure by the wellness industry’s own trade association that wellness loses money increases your liability because you “knew or should have known” that losses were to be expected. Second, you can probably offer your client the chance to abrogate vendor contracts, especially if the vendor was one of the 27 that reached this “consensus.” That might reduce your revenue in the short term but will cement your relationship. And you want your clients to find out about wellness’ problems from you, not from the media.

But whatever else you do, follow future installments here on Insurance Thought Leadership as we plow through this report and deconstruct more of not just their crowd-sourced math but also of their crowd-sourced alternative to reality, in which prying into employees’ personal lives, poking them with needles in blatant disregard for government guidelines, prodding them to get worthless checkups and punishing them when they don’t is all somehow going to save employers millions of dollars.

Are Your Separation Agreements Unlawful?

Employers entering into separation agreements (also called “settlement” or “severance” agreements) has become commonplace. By way of these agreements, employers generally provide a monetary benefit to outgoing employees, or employees who have asserted claims. In exchange, the employees waive certain legal rights to which they otherwise may have been entitled.

Some of the most common provisions that bind employees are:

  • confidentiality (prohibiting the employee from disclosing the amount of severance money received, and other terms)
  • non-disparagement (prohibiting the employee from making unfavorable comments about the employer)
  • releases (the employee forever agrees not to file claims against the employer)
  • cooperation (the employee agrees to notify the employer if she receives information about an investigation or claim against the employer).

In light of a recent complaint filed by the U.S. Equal Employment Opportunity Commission (EEOC), the legality and enforceability of existing signed separation agreements could be subject to challenge.

The EEOC recently filed a lawsuit against CVS, a national provider of prescriptions and health-related services, in a federal district court. The EEOC alleges that CVS entered into more than 650 unlawful separation agreements with employees. Specifically, the EEOC alleges that the separation agreements, which contained the common provisions described above, unlawfully made severance pay depend on:

  • prohibiting the employees from filing charges at the EEOC
  • interfering with the employees’ ability to cooperate with investigations by the EEOC and other federal agencies.

According to the EEOC’s complaint, the separation agreements violate Title VII of the Civil Rights Act of 1964.

The lawsuit is pending, and the federal district court has not issued any ruling on the merits. Nevertheless, in light of the EEOC’s complaint, employers should be mindful of existing and future separation agreements and should review such agreements with their employment counsel to ensure that they comply with the law.

Are Obamacare Wellness Programs Soon to Be Outlawed?

The Equal Employment Opportunity Commission (EEOC) filed suit Aug. 20 against a Wisconsin company, Orion Energy Systems, which severely penalized and then fired an employee who refused to participate in the type of wellness program now encouraged by the Affordable Care Act. The EEOC is arguing that there was “no business necessity” for this program and that the exam and other intrusive screening were “not job-related.”

If the EEOC were to prove that the standards it cites (part of the Americans with Disabilities Act) apply to wellness programs, this has strong implications for the Insurance Thought Leadership community. This could spell the end of workplace wellness generally, and specifically could expose your clients with penalty-based or mandatory medical wellness programs to similar lawsuits.

Although the White House is probably hoping the EEOC loses, winning this suit should be a layup. It can easily be shown that medical wellness programs are not job-related and have no business necessity. Quite the contrary, the three most basic provisions of “medicalizing” the workplace with wellness — health risk assessments (HRAs), biometric screens and enforced doctor visits — are more likely to harm employees than benefit them.

HRAs makes employees disclose things like whether they routinely examine their testicles (which men are not supposed to do) or whether women intend to become pregnant. These HRAs then also give feedback with no basis in medicine, such as recommending a prostate cancer test that the federal government strongly advises against and perpetuating the myth that all women under 50 should get regular mammograms.

Biometric screens pose an even greater risk to health than HRAs. Although medical societies are urging fewer screenings to avoid overdiagnosis and overtreatment, employer human resource departments can’t get enough of them, thanks to incentives created by Obamacare. The inevitable consequence: More people identified for “early intervention” to treat clinically insignificant conditions. For instance, an overzealous Nebraska colonoscopy screen caused the state’s vendor to trumpet that it saved the lives of 514 state employees who never had cancer in the first place. Yet instead of calling for an investigation, the state promoted this and other equally fallacious results successfully enough to win their program  the C. Everett Koop wellness award.

Biometric screens usually include weigh-ins and penalties for refusing to participate (or, sometimes, for not losing weight). Shaming people into losing weight is unhealthy and unproductive, and body image issues reinforced by workplace “biggest loser contests” affect 20 million women and can be fatal.  Meanwhile, weight has only a slight effect on health spending during the working years, and, if economic incentives could generate sustained weight loss, Oprah Winfrey would have kept her weight off instead of giving up her lucrative Optifast endorsement contract. Medical science has no clue what causes obesity. Some novel theories are being proposed, but, whatever the cause, Obamacare-inspired fines are not the cure.

Forcing employees to go to the doctor when they aren’t sick is perhaps the most curious and expensive wellness requirement. The clinical literature is quite clear about the futility of this custom, which may do more harm than good. Obviously checkups can’t save money if all they do is increase diagnoses and treatments with no offsetting benefit to actual health. Perhaps employee checkups are job-related in a few fields – public safety, airlines, sports, adventure travel – but otherwise it’s hard to see how worthless checkups improve an employee’s ability to answer the phone or do most other typical job-related tasks.

The ADA standard is “business necessity,” meaning these hazards and punishment might be acceptable if money was being saved or morale was being improved, but – as the book Surviving Workplace Wellness shows, quite the opposite is true. No wellness vendor has ever shown savings that weren’t obviously made up, and most won’t defend their own claims. Even Nebraska somehow “found” huge savings despite all these unnecessary cancer treatments and no meaningful change in employee health, savings claims that their vendor now refuses to defend. Further, the wellness industry’s own recently published analysis shows no savings.

Likewise, morale impacts are so negative that CVS and Penn State employees rose up in revolt against them. Increasing employee resistance also explains why employers have needed to almost triple fines since 2009 (now averaging $594) against employees who refuse to allow their companies to pry, poke and prod them.

Perhaps Orion Energy’s defense could be that trying to control employee health behaviors and fining employees who eat too many Twinkies is a “business necessity” because it shows employees who’s the boss. There is, after all, no provision in employment law that requires employers to be nice.

That defense might win the suit but also generate some headlines worthy of late-night talk shows.  Still it’s hard to imagine any other defense succeeding.

Insurance brokers and consultants need to follow developments closely. If the suit succeeds, you’ll need to caution your clients to scale back on “playing doctor” with employees, and certainly on penalties for non-compliance. Orion’s penalty was draconian – a few hundred dollars in fines is probably still OK. Focusing wellness efforts on less sexy issues like serving healthy food and getting employees to exercise more should also keep your clients out of trouble.

The worst development would be a flood of these lawsuits, but we at ITL will follow up with what you can do to avoid being one of the targets.

EEOC Suit Against CVS Raises Concerns

The Equal Employment Opportunity Commission has challenged the legality of provisions commonly included in severance, separation or other settlements with employees being terminated. These provisions state that settlement benefits are to be paid only if the employee doesn’t file charges or otherwise communicate with the EEOC.

Employers planning to use such provisions should note a lawsuit filed by the EEOC against the nation’s largest integrated provider of prescriptions and health-related services, CVS Pharmacy.

In Equal Employment Opportunity Commission v. CVS Pharmacy, Inc., CA no. 14-cv-863 (N.D. Ill., 2014), the EEOC charges that CVS unlawfully violated employees’ right to communicate with the EEOC and file discrimination charges. The EEOC says CVS committed the violation through an overly broad severance agreement that included five pages of small print.

The lawsuit claims CVS violated Section 707 of Title VII of the Civil Rights Act of 1964, which prohibits employer conduct that constitutes resistance to the rights protected by Title VII.

The lawsuit also is notable because it is not filed in response to an investigation of a discrimination charge. According to the EEOC, Section 707 permits the agency to seek immediate relief without the same pre-suit administrative process that is required under Section 706 of Title VII, and does not require that the agency’s suit arise from a discrimination charge.

“Charges and communication with employees play a critical role in the EEOC’s enforcement process because they inform the agency of employer practices that might violate the law,” according to the EEOC attorney leading the litigation, John C. Hendrickson. “For this reason, the right to communicate with the EEOC is a right that is protected by federal law. When an employer attempts to limit that communication, the employer effectively is attempting to buy employee silence about potential violations of the law. Put simply, that is a deal that employers cannot lawfully make.”

EEOC District Director Jack Rowe added, “The agency’s most recent strategic enforcement plan identified ‘preserving access to the legal system’ as one of the EEOC’s six strategic enforcement priorities. That was no accident. The importance of employees’ ability to participate in the agency’s process, free from fear of adverse consequences, cannot be overstated. It is always difficult for an employee to report employer discrimination to federal law enforcement officials. Anything that makes that communication harder increases the risk that discrimination will go unremedied.”

The litigation showcases the need for employers to use caution when attempting to prevent employees from reporting to or cooperating with regulators investigating suspected discrimination or other legal violations. The EEOC’s challenge in the CVS litigation is not unique. Challenges have arisen under a wide range of federal and state laws.

The Labor Department Wage and Hour Division has rules that say employers will receive no shield from investigations by the agency or from enforcement of wage and hour laws on settlements with terminated employees that didn’t involve the division. The Justice Department and other government enforcement agencies often view confidentiality provisions as prohibited obstruction or retaliation. In addition, government investigators often view the existence of gag rules as evidence that an organization does not maintain the required culture of compliance.

The CVS litigation also cautions businesses against taking for granted the appropriateness of their current agreements with employees. The EEOC challenge is just one of several developments that can affect the design and use of severance, separation and other settlement agreements with employees intended to resolve employment discrimination claims. While many employers may assume they can safely use agreements used in connection with previous terminations, the CVS litigation highlights the potential advisability of seeking the advice of qualified legal counsel, even if the employer benefited from the advice of legal counsel in drafting the previous agreement.