by Greg VanDam, senior vice president, Liberty Mutual
An employer’s group disability insurance carrier may be an overlooked ally in benefit managers’ efforts to control group medical and total absence costs, which have soared over the past five years.
Even though group disability benefit expenditures are significantly less than medical, when and how disability case management occurs during the employee care cycle can significantly affect an employer’s total benefit costs.
A 2007 study by HCMS Group suggested that 69% of annual employee medical costs come from just 9% of disabled employees. Another study conducted by Milliman Inc., for the nonprofit LIFE foundation and America’s Health Insurance Plans (AHIP) suggested health care expenditures for a person disabled for five years could be 175% to 200% higher than the expenditures for a healthy worker over the same period.
Benefit buyers can look to three areas to help find opportunities to fine-tune disability programs to manage those costs.
Disability Claims Management
A benefits manager might ask their group carrier how disability claims are managed. Is there consistent communication among all affected parties—employee, employer, attending physician, and specialists?
An active clinical approach leads to earlier engagement with the treating physician and earlier referral to specialists, who may offer treatment options that speed recovery.
Liberty Mutual’s medical directors have identified certain costly and difficult-to-manage conditions that benefit from early intervention. These conditions receive immediate attention from consulting physicians and nurse case managers. Analysis shows that this clinical model of active case management has resulted in reduced absence durations, fewer transitions from STD to LTD, and increased employee satisfaction.
Return-to-work Focus
The sooner an employee comes back to work, the better it is for that employee and the employer. This seemingly obvious statement is turned on its head by actual practices of employers. Reducing the impact of absence in the workplace was among the top three priorities of employers responding to a Mercer/Marsh survey in 2007. However, more than 40% of respondents didn’t have a formal return-to-work program, and of those who did, almost a quarter were only for occupational disability.
Most studies on return-to-work programs focus on workers’ compensation. But work-related disabling injuries are only 12% of the total, according to the National Safety Council.
The message is clear—proactive return-to-work programs offered to all employees have the potential to reduce costs, improve productivity, and increase employee satisfaction.
Among the tools offered Liberty Mutual customers are online training for supervisors and front-line managers on their role in return-to-work initiatives, presentations for employers to use internally to instill a positive approach to return to work, and even a toll-free hotline for managers to call with general questions about return-to-work issues.
Integrate Disability Management with Other Programs
Most employers rely on a number of vendors such as EAP, disease management, behavioral health, and wellness providers to help them manage their medical costs.
The goal of these programs is to help change, or promote, specific behaviors so that employees stay productive, healthy, and at work.
Collectively, health care, disability, and other programs amass huge amounts of data on the state of employees’ health and underlying risks that may not be readily apparent. Vendor data can be analyzed to identify trends and issues in an employer’s workforce.
Employers can direct vendors to work collaboratively to share data and uncover opportunities for engagement and intervention with at-risk employees. Such cooperation is increasingly viewed as standard by employers, who develop benchmarks for measuring inter-vendor collaboration and cross-referrals. Privacy concerns and preservation of confidentiality must be paramount in all such collaboration efforts.
Employers exploring ways to manage health and productivity may find that their disability provider can be an important ally in identifying opportunities. This is particularly true when employers look at the three areas where disability can affect the bottom line.
Greg VanDam, senior vice president and general manager, manages claims and technology for the area of Liberty Mutual that provides group disability and life insurance programs and leave services. Greg can be reached at gregory.vandam[at]libertymutual.com