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.

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

3. 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.

4. 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

5. 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.

6. 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)

7. 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

8. ... 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.

9. 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

10. 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

11. 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

12. 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

13. 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.

14. 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

15. 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:

16. 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

17. 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.

18. 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

19. 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 ...

20. 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

21. Technology Standards Are Going To Become More Critical As
We Move Into Wellness. Join the Council. Contact
GeoffHampton geoff@geoffhampton.org to join us today.
www.fit-c.org @fittechcouncil
Thank You & Please Join