Integrated Benefits/Absence Management

1. Integrated Benefits/Absence Management Bringing Total Absence Management Into the Workplace CAS/SOA: Enterprise Risk Management Symposium July 30, 2003 Washington, D.C. Stephanie Ramsey, B.S.N., M.P.H.

2. Employer Motivation for Integrated Disability Management • Number 1: Escalating costs of employee absences due to illness/injury – from 3.9% of payroll in 1999 to 4.6% in 2002 • Number 2: Heightened awareness of inherent cost structures of total costs of disability • Direct (Claim costs, wage replacement, premiums) • Indirect (Administrative expense, replacement employees, disability FICA taxes, decreased productivity)

3. 53% 23% 47% 27% 14% 15% 24% 7% Employers’ Time-off and Disability Programs (76%) 15% Current Practice Planning/Considering Consistent return-to-work policy One STD/LTD carrier/TPA Common occupational and non-occupational intake Linked occupational and non-occupational claims data One STD/LTD/WC carrier/TPA Source: Marsh Mercer Study: Survey of Employers’ Time Off and Disability Programs 2002 (39%) 18%

4. Employer Responses • Return to Work/Stay at Work Programs • Early identification/absence tracking • Medical case management • Job modifications/accommodations • Employee Health Promotion • Benefit Plan Integration • Plan design • Plan Administration • Information Management

5. Return to Work/Stay at Work Programs • Identification of all absence episodes • Identifying absence episode according to type • Incentives for return to work • Medical case management • Health Promotion

6. Benefit Plan Integration • Internal: • Benefit Plan language • “Human Capital Manager” • “Big picture” view of costs • External: • Single carrier or TPA • “One-stop shop” for claim service and statutory requirements • Summary reporting

7. Information Management • Predictive Modeling • Identification of “cost drivers” • Identification of “risk populations” • Management Decision Support Applications • What are the steps that need to be taken to achieve the desired results?

8. EE Demographics Absence Occurrence Management Decision Support Application Med Claim $ Information ICD – 9 Causes of Illness/Injury • Health & Productivity Management • Staffing & Budgeting • Management Practice • Environmental Control • Vendor Management STD Claim $ Information Med Provider LTD Claim $ Information Return to Work Rates Pharmacy Management Programs FML Utilization Information Management and a Management Decision Support System

9. Total Absence Management “Supply-Side”Vendor Response • 62 Suppliers of Integrated Programs (Source: Integrated Benefits Institute) • Poorly Defined Product Requirements • “Customized” Character of Product • Separation of Product Process Features From Demonstrable Results • Data Management Challenges

10. The New Client/Vendor Relationship • Not “Plug-and-Play” • Collaboration • Program + Metrics + Methodology = Actionable Results

11. Information Management What are the Operational Risk Management Measures that will translate these employer initiatives into the financial terms that support effective control measures? • Predictive Modeling • Identification of “Cost Drivers” • Identification of “Risk Populations” • Management Decision Support Applications • What are the steps that need to be taken to achieve the desired results?