Employers, insurers integrate benefits

By Rebecca A. Clay

A manager notices an employee?s productivity is slipping and refers her to the company?s employee-assistance program (EAP). After a session or two, the EAP counselor suspects depression is at the root of the employee?s low productivity. Because the EAP?s role is limited to assessment, referral and follow-up, the counselor refers the employee to the company?s health plan for treatment.

After another assessment, the health plan grants the employee the half-dozen or so treatment sessions allowed under its utilization rules. With her depression still basically untreated, the employee eventually makes a mistake on the job and receives an injury so severe she ends up out on disability.

'You?ve got three different vendors managing this person?s problem,' says Ron Finch, EdD, director of the Health and Welfare Division of Coopers & Lybrand LLP in Atlanta. 'The employee gets caught in the middle, and it?s a mess.'

But such lack of coordination among EAPs, health plans and disability-management programs may disappear. As disability costs skyrocket, employers and insurers are thinking of ways to integrate their disability, health and EAP benefits.

The financial services corporation First Chicago NBD (FCNBD), for example, has already created an innovative program in which EAP staff and health-care providers work together to manage the care of employees who are temporarily disabled by mental illnesses or substance abuse. UNUM, the nation?s largest private disability insurance carrier, is using what it calls 'psychological ergonomics' to reduce disability costs among its own employees. Their success has far-reaching implications for the way corporations handle disability, say experts.

Soaring costs

A quick look at the numbers shows why corporations are changing the way they handle short-term disabilities.

According to UNUM, the average business spends more than 8 percent of its payroll on disability costs. Depression alone costs employers $24 billion a year in lost work time and productivity, one researcher has found. And the numbers are going up. UNUM has seen its mental health claims more than double in the last seven years, for example.

Several factors are driving that increase, says Finch: The stigma of mental illness is fading; corporate downsizings, mergers and other trends have increased workers? stress levels; and managed care may be using treatment limits to 'cost-shift' disabled employees to employers? disability programs.

Few corporations are aware of the true costs of disability, however. In most corporations, says Finch, health data are scattered across various departments intent on protecting their own turf. According to the management consulting firm Watson Wyatt Worldwide, fewer than 2 percent of corporations even collect data on their disability costs.

Integration in action

FCNBD is one that does. The corporation established a centralized health data warehouse in 1984.

'As a result of measuring both direct and indirect health costs, we realized we needed to do something about our ever-increasing disability costs,' says psychologist Daniel J. Conti, PhD, vice president and EAP director at FCNBD.

In 1989, the corporation shifted its EAP to the Medical Services Unit responsible for the company?s health plan and gave Conti full responsibility for short-term disability management.

The FCNBD model allows EAP staff to work directly with service providers to get disabled employees back to work as soon as possible. The EAP?s first task is to ensure disabled employees receive appropriate care. The second is to collaborate with health-care providers on transitioning employees back to work.

Together they may work out accommodations such as allowing an employee to start work two hours later as she gets used to medication or to avoid a particularly stressful task for a few weeks. The final step is supportive follow-up through counseling and the monitoring of adherence to treatment regimens.

'In the old days, a disabled employee would often simply sit at home waiting to get back to the mythical 100 percent before returning to work,' says Conti. 'Now the internal EAP staff and external providers bring the person back as soon as possible, using work in a therapeutic way.'

As a result, the corporation has been able to stabilize both the duration of disability episodes and recidivism rates. Conti believes that FCNBD and corporations like it could do an even better job if they used their corporate muscle to improve managed-care policies.

It?s no longer enough for managed-care companies to point to a reduction in health-care costs, says Conti. Instead, corporations should insist that their health-maintenance organizations (HMOs) show they?re boosting employees? productivity, he says. That might mean developing new options, such as partial hospitalization programs or intensive outpatient programs, for employees with serious mental illnesses.

'We need to hold HMOs not only to reducing direct costs, but also enjoin them to become partners in reducing indirect costs, ' says Conti. 'That?s the only way managed-care companies are going to be forced to give good service.'

Psychological ergonomics

Other corporations are using psychologists to help employees with physical disease modify their lifestyles, comply with treatment regimens and deal with emotional issues, says Coopers & Lybrand?s Finch.

UNUM created a Human Factors Committee to assess the company?s psychological ergonomics. At the heart of the committee?s work is the belief that a poor psychological fit between employees and their jobs can lead to physical injuries.

A review of the company?s data-entry unit revealed that 90 percent of those complaining of hand or arm pain had no significant medical problems. Instead of changing physical factors like the unit?s keyboards, the corporation worked to improve the work environment. Simple changes in performance measures and scheduling helped reduce the number of complaints and actual injuries. They also boosted productivity and accuracy.

Intrigued by these examples, APA is currently seeking out demonstration projects to prove that integrating departments devoted to employees? mental and physical well-being can rein in disability costs. Russ Newman, PhD, JD, executive director for professional practice at APA, is already convinced. He believes employers will be more receptive to the message than to arguments about medical cost-offsets.

For years, Newman explains, APA has argued that integrating psychological services into health-care benefits would lower employers? medical costs. Employers have been reluctant to put that research into practice, however. The problem is the long lag between investing in psychological services and seeing a pay-off in savings, says Newman. According to the research, it takes two to three years of having a good mental health plan in place before employers start seeing reductions in their overall health costs.

'If the average worker only stays 18 months to two years at a place of employment, the employer says, ?Why should I spend more money now so that my competitor can benefit from this employee?s decreased health-care costs??' says Newman. 'The delay on the return of the investment makes that a difficult argument.'

The potential cost-offsets associated with integrating psychological services into disability benefits offer a much easier argument, Newman adds. If a psychological intervention today can help an employee return to work tomorrow, for example, the employer starts saving on disability costs right away. 'That immediate cost-offset ought to be a very appealing way for employers to address the problem,' he says.

Rebecca A. Clay is a writer in Washington, D.C.