When it comes to obtaining and using employees’ health info, your firm’s plan has more power than you may think.

Under HIPAA, your plan is allowed to obtain health info for the purpose of controlling your health costs. And there are a host of legal uses of that info for that one purpose.

Questions you can answer

Your plan is entitled to obtain and review a sampling of people’s personal health info to answer all of the following plan cost-related questions:

• Are employees getting the right treatment for their health conditions?
• Which network doctors aren’t communicating treatments with each other, wasting resources?
• Are employees compliant with their prescription drugs?

In short, you’re allowed to use the info to more accurately predict upcoming claims and costs in the short-term future. What you can’t do with the info is make any employment-related decisions with it.

Experts debate if the prohibition includes charging smokers or other at-risk populations higher premiums. But you can always use it when shopping the cost-effectiveness of different health plans or for making your wellness program even stronger.

Wellness program implications

Under HIPAA and ERISA, you’re allowed to use health data as the starting point for having employees contacted regarding their health issues. Based on the info you obtain, you can hand-pick people for educational mailings about specific health issues.

Your wellness program manager is allowed to find out if an employee has a certain health problem (such as asthma or diabetes) and hasn’t sought a program to treat that issue.

Reminder: If you offer financial incentives as part of your wellness program, be aware that HIPAA’s non discrimination rules require you to wipe the slate clean each plan year.

Legally, it’s still the safest policy to stay hands-off personal health info when it doesn’t relate to certifying FMLA or accommodating ADA. But it’s good to know HIPAA’s privacy rule is usually on your side in the battle to control health costs.

Generally when we hear about racial and ethnic profiling, it’s in a negative light. But what about when it comes to wellness programs?

When used for the specific purpose of starting – or reviewing – a wellness or disease management program, profiling isn’t just legal. It’s also encouraged.

Affects health risks

Different racial and ethnic groups tend to be more at risk – for genetic and/or cultural reasons – of certain health problems. Examples:

• African-American, Latino, Native American and Pacific Islanders are
  at higher risk of diabetes than Caucasian employees
• Chinese women are statistically twice as likely to get cervical cancer
• Caucasians have disproportionately high rates of obesity and high blood pressure, and
• Latinos have higher rates of asthma and chronic obstructive pulmonary disease than other groups. 

Bottom line: By reviewing the ethnic breakdown of your employee population, you can set disease management program priorities with greater confidence and accuracy.

Healthcare quality an issue

Several studies also show there’s an unfortunate relationship between ethnicity and quality of health care. Many times, minority employees receive inferior treatment and health education at the same facilities where others receive top-notch care.

This usually happens for innocent reasons. A common scenario: a lack of Spanish-speaking doctors in the network for your Latino employees. But the result is usually higher health costs for you and, often, greater reluctance among minority employees to seek needed treatments.

By profiling employees against the doctors in the network, you ultimately help employees get the care they need and the company to better control long-term costs.

No shocker here: Smokers and obese employees are the highest risk group for developing the sorts of chronic health problems that send costs through the roof.

A small, but rapidly growing number of employers are taking desperate measures to avoid the costs associated with these employees. The step can be broken down into three levels of aggressiveness and potential risk/reward.

Level one: The employer installs a wellness program in which non-smoking employees and those who commit to maintaining a healthy weight receive financial incentives that lower their share of monthly insurance premiums.

Level two: The employer disqualifies job candidates who smoke or are significantly overweight from hiring consideration. Alternatively, some firms require new hires to undergo a health risk assessment as a condition of being hired.

Level three: The employer docks pay or fires employees who fail to control their lifestyle-related health risks. Example: A company called Clarian Health has sent notifications to employees that starting in 2009, workers who smoke or chew tobacco will be charged $5 per paycheck.

Are these strategies legal? At level one, the answer is a qualified yes. HIPAAs non-discrimination rules permit such incentives under several conditions.

Wellness incentives walk a fine line in terms of HIPAAs non-discrimination rules. It is legal to reward employees for wellness participation but its illegal to punish those who fail to improve their health.

Example: If an employee follows a weight-loss program in good faith but fails to lose weight, you can’t withhold the incentive. Likewise, if an employee fails repeated tries to quit smoking, you’re still legally obligated to give them another shot next year.

Also keep in mind that, by law, the size of the reward or penalty under your wellness program cant exceed 20% of the total cost of coverage.

The other two are still largely uncharted waters in the courts. Employers considering these policies should proceed with extreme caution.  Keep in mind that the question of “can you do it” (i.e., is it legal?) is different from “should you do it?” (i.e., is it good business?).