Integrated disability management a slow sell
Pays off in savings on lost time, expert says
Though research and anecdotal evidence seem to show that integrating disability and health care programs for all injuries and illnesses — whether suffered on the job or off — can get employees back to work more quickly, prevent absences, and lower total benefit costs, most employers are slow to warm up to the idea.
"We’re probably 10 years into integrated disability management, and there still aren’t as many companies doing it as all of us on the delivery side think there should be," says Janet R. Douglas, managing director for Marsh Mercer Inc., a global risk and insurance services firm. "For the companies that are, the results have been extremely encouraging in terms of reducing medical costs and lost time by applying best practices across the board, regardless of whether it’s a work-related or nonwork-related injury."
Integrated disability management is a tool by which occupational and nonoccupational disabilities are approached consistently. Traditionally, injuries have been treated (with regard to benefits administration) differently, based on whether they occurred at work or at home.
"There have been huge variances in the amount of medical treatment and time lost from work, not based on the severity of the injury or illness, but based on the payment mechanism used," Douglas says. "Integrating your disability management takes a consistent protocol or approach to return to work; and applies it across the board, regardless of how or where the injury happened."
Evidence indicates benefits
A study released in 2004 by Philadelphia-based CIGNA employee benefits company examined claims from 60,000 employees in 156 companies, and compared return-to-work times for employees whose benefits were integrated against employees whose benefits were not. The study showed that short-term disability ended sooner and employees returned to full-time work more quickly when they had integrated disability and health care programs.
Integrated disability management had its genesis with three large employers — General Electric, Ameritech, and General Motors — that looked at costs, saw that they were doing all they could to manage workers’ comp and disability costs, and wondered why their health care costs continued to increase.
"They started working with industry thought leaders, and the question evolved: Why do we have this divide between occupational and non-occupational disability?’" Douglas says. "Why not take the best practices from both and combine them, get the best treatments that are cost-effective and timely and that get the doctor reimbursed, and get the employee back in workplace as timely as possible and as strong and healthy as possible?"
She says while employers can agree that the idea is good — according to her, no large employer who has integrated its disability programs has failed to realize savings — the effort and investment required to make the change from an established benefits system is daunting.
"It’s a huge effort," Douglas conceded. "It requires commitment and it requires investment and it requires someone high up enough to say, Let’s do what’s best for the company.’"
The larger the employer, the more likely it is to have an integrated disability management program. According to Watson Wyatt Worldwide, the number of employers in its annual survey that had integrated disability management programs increased from 26% in 1997 to 43% in 2001, and was almost 50% in 2004. The larger the company, Watson Wyatt reports, the more likely it is to have integrated disability management programs, also known as total absence management and health and productivity management.
According to Marsh Mercer’s annual survey of employers about their time off and disability programs, lots of companies are integrating at least some parts of their disability programs.
The 2004 survey report showed that 62% of the 485 companies that participated in the survey use consistent occupational and nonoccupational return to work programs (up from 32% in 2000); 51% have integrated short-term disability and long-term disability coverage with one third-party administrator or carrier (up from 39% in 2000); and 42% use a single, centralized occupational and nonoccupational claim intake approach (up from 32% in 2001). The Fourth Annual Marsh Mercer Survey of Employers’ Time-Off & Disability Programs is available on-line at www.marshriskconsulting.com.
Douglas says tighter controls on workers’ comp over the last 20 years, plus more scrutiny on Medicare, has led to elimination of costly tests and interventions that, in the long run, has resulted in longer recovery time and more lost work time. "There is an assumption on the part of some doctors that lost time doesn’t cost anything, which is erroneous, of course," she says.
Getting employers — even ones who agree that integrating disability programs is a good idea in theory — to consider actually putting it into use within their own companies "represents a huge paradigm shift," according to Douglas. "Employers and workers are used to return to work for workers’ comp, but not for short-term disability.
"They usually have workers’ comp and disability managed internally through different groups and reporting through different avenues: workers’ comp usually goes through risk management and finance, while disability goes to human resources."
When a changes as sweeping as integration of disability management programs is introduced, Douglas says she often sees a "push-back" from in-house medical departments.
"Any time you mess with someone’s reporting systems, there will be some resistance," she says.
To demonstrate how an integrated system could save time and effort on everyone’s part, and save money for the employer, Douglas suggests starting by measuring the number of lost work days — a huge cost to employers, but one that is not always well tracked.
"Measure workers’ comp and short-term disability costs," she says. "We find one of the biggest challenges is tracking short-term disability, so an employer doesn’t always know what they’re spending in the first place. So in that scenario, tracking that information helps employers know what they have spent so they can have that benchmark going forward."
Medical costs associated with workers’ compensation also should be examined.
"There’s a learning curve, and you’ll run into some issues around HIPAA [Health Insurance Portability and Accountabilty Act]," Douglas says. "People aren’t used to being asked questions about nonoccupational injuries, so you have to do a lot of caretaking, making sure people’s privacy is not invaded.
"People don’t always understand why there’s a difference in the way [disabilities] are reimbursed and why the paperwork involved is different. With integrated programs, there’s a big increase in efficiency in the administration of the program."
And success stories are beneficial learning tools, too, Douglas says. According to the Integrated Benefits Institute (IBI) in San Francisco, Pitney Bowes Inc. reduced lost time by 42% in the first two years after it integrated its benefits programs and reduced medical costs by 25%. The company reported "virtually zero impact" on employee deductibles, copays, or other costs, according to IBI.
Though research and anecdotal evidence seem to show that integrating disability and health care programs for all injuries and illnesses whether suffered on the job or off can get employees back to work more quickly, prevent absences, and lower total benefit costs, most employers are slow to warm up to the idea.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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