Few employers question the importance of return-to-work initiatives. Unfortunately, despite much time and expense, even fewer achieve their programs' desired results. Indeed, after years of discussion and experimentation with 24-hour coverage models, success at true integrated disability management remains elusive. Melissa Davey and Betsy Robinson provide a functional approach to integrating disability management.
The success of any company's management of its lost-time experience is dependent, at the outset, on changes in the company's internal procedures for managing absence and return-to-work. Indeed, the first step for an employer is to analyze and re-engineer its internal philosophy for return-to-work and disability claims management.
The case for managed disability
Employers, keenly aware of the costs of lost time, recognize that all disability plans, whether occupational or non-occupational, must be managed in their entirety if they are to have positive impact on the costs associated with absence in the workplace.
It is estimated that as much as 20% of payroll is attributed to disability costs. This includes all productivity losses as well as workers' compensation, short and long-term disability and sick leave.
Employers who understand these disturbing statistics are concerned with the negative impact of these costs on bottom line company performance. Thus, they search for disability management programs that will effectively reduce lost time and ultimately improve financial performance within their company.
To this end, employers must regard disability in a seamless fashion without deference to cause or coverage. Employers who recognize the synergistic nature of occupational and non-occupational disability accept the associated costs as continuations of the same disability event, and clearly see the cost-benefit in integrating the management of all plans.
Although the onset and rules for managing STD/LTD claims may differ significantly from workers' compensation claims, it is universally understood that all lost time claims optimally resolve in the same manner: An employee returns to function and productive work. We believe that employers will ultimately profit by integrating their internal structures to ensure a consistent medical and return-to-work management approach.
Barriers to a solution
As employers have become increasingly aware of the issues associated with segregated disability management, they have looked to the insurance market to offer solutions to assist with their integration. While the marketplace has attempted to meet this need by building integrated claim administration for both occupational and non-occupational losses, it has failed, thus far, to build the mousetrap that fully exploits the integration opportunity.
A consistent active management strategy for all lost time cases must be in place in order for an employer to realize meaningful impact. Defining that consistent management strategy can be difficult given the legal differences (benefit plan vs statute) between and among the claims, along with the historical differences within companies for handling occupational and non-occupational work losses. The primary barrier to integrated disability management is the lack of integration in decision-making among the players within the employer's corporate structure (benefit and risk managers, front-line management) who can actually promote disability resolution.
Prevalent corporate structures promote separate return-to-work strategies for occupational and non-occupational losses. Employee benefit managers and risk managers within the same company rarely communicate and frequently take divergent, if not inconsistent approaches to claim resolution. Traditionally, employers have built separate management systems and functions for the management of occupational and non-occupational claims. In many cases, the employee benefits division, who may manage the non-occupational claims, and the risk management division, who oversees management of occupational claims, may never even speak to one another. They may be physically located in different buildings with separate chains of command. Breaking down these barriers often leads to threatened job security and reluctance to any structural change that would be necessary for the integrated management of all claims.
Compounding the problem, many employers have separate insurance programs and work with multiple carriers for their occupational and non-occupational coverages. Traditionally the funding for group health, workers' compensation and disability has been handled by different sources. Workers' compensation coverage has always been the most financially integrated of the various employee benefits. Medical, indemnity and life have all been funded by the same source. The single funding mechanism creates a clear incentive to minimize the total cost of claims.
On the non-occupational side, however, funding pools have traditionally been separate. A group health carrier or an HMO provided medical benefits. Another insurer provided disability, maybe even different companies for STD vs LTD. Life insurance may have been provided by yet another source. This situation produces conflicting incentives. The group health insurer has no incentive to minimize lost work time. Indeed, many industry studies have concluded that decisions that reduce medical costs tend to increase the duration of disability.
The typical employer has a difficult, if not impossible, task of attempting to co-ordinate these programs to prevent duplication of benefit payments and unnecessary delays in the timely delivery of these benefits to employees.
Historically, employers have struggled with tracking claim performance and costs within and across benefit programs. This inability to track critical data elements influences a company's willingness to invest in the re-engineering essential to the integration of benefit programs. Most chief financial officers, looking at the potential costs of integration, are reluctant to invest when they cannot allocate current spending, and consequently cannot anticipate potential savings. It seems that an employer's movement toward true benefit integration requires a degree of pure faith, prior to this major leap.
The ultimate success of any employer's plan is largely dependent upon a clear understanding of the current cost impact that lost time has on business as it is managed today. Only when employers are able to calculate current incidence and costs for workdays lost within their essentially unmanaged programs can they gauge the possible financial benefit from a managed disability initiative. You need a ruler to measure, and, without the benchmark of previous spending, employers cannot even guess the ultimate cost-benefit of any change.
While most employers affirm a fundamental belief that comprehensive disability management fosters both employee and company performance, many have resolved to wait until the metrics have been clearly defined by the insurance and/or business community prior to their individual leaps.
Recognise the inherent differences
The first requirement for a successful move to integrated disability management is for employers to understand the inherent differences between occupational and non-occupational claims.
Occupational claims are injury related, linked to a precipitating event on the job, while non-occupational claims are often the result of a debilitating illness or off-site injury. Statutory benefits paid for workers' compensation claims may encourage an entitlement mentality to employees injured at the worksite. To the contrary, non-occupational plans, such as short and long-term disability, are considered an employee benefit and may encourage a different and more positive mindset among beneficiaries than that experienced in occupational losses.
Early intervention is essential to all effective back to work programs. Occupational claims tend to happen suddenly, so that the appropriate administrative and service interventions can be triggered almost immediately. In contrast, non-occupational claims, driven more often by illness, may develop slowly, and interventions cannot be triggered until an actual claim takes place.
Compounding the inherent differences among the types of claims is each employer's sometimes conflicting return-to-work programs and efforts. An important element in successful back to work programs is a company's willingness to accommodate employees who can return-to-work by making some modifications to the job or environment. Traditional return-to-work programs have been structured specifically for workers' compensation claims. Employers today must be willing to invest in programs that will assist their non-occupational claimants to return-to-work.
Case management for success
The inherent differences between the claim types have promoted a segregated benefit management structure within most companies. Despite the clear diversity, what makes the concept of integration so attractive to employers? It is simple. Eventually, all disability cases need to exit the system in the same way, no matter how or where they got started. And, it is these common objectives that should, in our view, shape the heart of any integrated disability management strategy.
While total benefit, financial and service integration may seem intangible today; many employers are adopting well-developed internal case management programs to manage care and return people to work, regardless of the cause of disability. The case manager, positioned as a single point of entry, communicates with both external providers and internal corporate managers. This approach facilitates dialog between risk, employee benefits and human resources managers and helps to set clear and realistic expectations surrounding return-to-work dates.
The case management model focuses on service integration, rather than full administrative and/or financial integration. We believe it is the integration of services and decision making that will bring lower loss costs and improved work place productivity through a consistent management strategy for all types of lost time claims.
It is clear that the incidences of disability in the workplace, both occupational and non-occupational, are expected to rise as the working population ages. This fact, added to the already burgeoning population of disability claims, places employers in a precarious position. No longer able to ignore the appreciable costs associated with disability claims, employers have also begun to uncover the dramatic costs analogous with absence. In combination, we can argue that the percentage of payroll costs associated with disability events are on the rise. A common and frightening debacle for many employers. Inadequately served by conventional disability plan administration, many disabled employees remain on disability far longer than necessary. Employers are unable to manage productivity due to loss of employees and find themselves in a predicament demanding reconstruction of their internal systems in order to meet new demands.
By taking that first leap of faith to candidly review the fragmented systems currently in place, employers can begin the task of creating an internally integrated system that will improve productivity and overall company performance. Understanding their individual situation, employers are then better positioned to align with progressive insurers and service providers in the development of unique systems and functional approaches to integrate their disability management programs. For employers to fully exploit the integration opportunity, internal structures and strategies must be re-evaluated, and, in many cases, re-engineered.
Melissa Davey is vice president, managed disability, and Betsy Robinson is vice president, product management and development, at GENEX Services, Inc.
GENEX Services, Inc. is a national managed care provider of workers' compensation and integrated disability services. Services include utilization management, telephonic and field case management, social security representation, medical bill review, and provider networks.