Post on 22-Dec-2015
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Casualty Actuarial SocietyDisability ManagementDisability Management
Strategies:Strategies:
Lessons Learned from Workers Compensation and Lessons Learned from Workers Compensation and Managed Health CareManaged Health CareJeffery P. Jordt, J.D., L.L.M.
2002 Risk & Capital Management Seminar
July 8-9, 2002
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AgendaAgenda
I. Exploring Disability Management - Why?
II. Historical Perspective- Workers Compensation- Health Care
- Group Disability
III. Application of Lessons Learned to Integrated Disability Management
IV. How to Implement a Successful Integrated Disability Management Program
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Disability ManagementDisability Management
Definition:
The prevention of disability, the minimization of its impact on and cost to employers and employees, and the encouragement of rehabilitation and return to work for employees with disabilities.
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Incidence of DisabilityIncidence of Disability During the course of your career, you are 3 1/2 times more likely
to be injured and need disability income benefits than die and need life insurance (Source: Public Opinion Strategies)
Risk of long-term disability vs. risk of death Age 30 4.1 times more likely
Age 40 2.9 times more likely
Age 50 2.2 times more likely(Source: Field Guide 1998)
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Incidence of DisabilityIncidence of Disability
Probability of Disability* Occurring Prior to Age 65
AgeTo Any
One Person
One PersonOut of
Any Two Persons
30 .467 .716
40 .430 .675
50 .360 .590
*Disability defined as long term (at least 90 days).
(Source: Field Guide 1998)
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Employee Financial ConsequencesEmployee Financial Consequences
Most people have savings to cover less than six months of expenses. One’s savings could be depleted before Social Security Disability income begins to pay (Source: Business Almanac)
48% of all home foreclosures are the result of disability, while only 3% of all foreclosures result from death (Source: Housing and Home Finance Agency of the U. S. Government)
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Employer Financial ConsequencesEmployer Financial Consequences
Average Direct Costs of Disability
6.3%
0.06%
1.5%
1.7%
2.5%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%
Workers' Compensation
Sick Pay
STD
LTD
Total
Source: Watson Wyatt, Staying@Work 1999/2000
Percentage of Payroll
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Employer Financial ConsequencesEmployer Financial Consequences
Average Indirect Costs of Disability
7.9%
1.0%
3.8%
3.1%
0.0% 1.5% 3.0% 4.5% 6.0% 7.5% 9.0%
Overtime Costs
Replacement Employees
Workstattion/JobAccomodation
Total
Source: Watson Wyatt, Staying@Work 1999/2000
Percentage of Payroll
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A Historical PerspectiveA Historical Perspective
Workers Compensation
Health Care
Group Disability Insurance
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Workers CompensationWorkers Compensation
Industrial Revolution and social policy
Employers’ Liability Statutes
Workers compensation statutes
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Workers CompensationWorkers Compensation
Provide lost wages and medical care
Work related injuries and illnesses
Negligence and fault are not at issue
Employees surrender the right to sue employer
Cost passed on to the consumer
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Group Disability InsuranceGroup Disability Insurance
Presumptive Disability Plans
Key Executive Plans
All Employee Plans Short Term Disability: Removes an employee from the workforce for
six months or less.
Long Term Disability: Removes an employee from the workforce for at least six months, until recovery, normal retirement age or death.
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Long Term DisabilityLong Term Disability
External Factors
Moral hazard
Subjective diagnoses
Shift in employment paradigm
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Long Term DisabilityLong Term Disability
External Factors
Moral Hazard - When the insured has a compensable disability and chooses not to work and receive a disability benefit.
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Long Term DisabilityLong Term Disability
28% 28%
105%
273%
0
50
100
150
200
250
300
Subs.Abuse
Psych.Disord.
CarpelTunnelSynd.
ChronicFatigueSynd.
Increase in Subjective Diagnoses*
*1987 to 1993.(Source: Peter A. Carroll, Implementing an Effective Disability Management Strategy, Compensation & Benefit Management Autumn 1995)
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Long Term DisabilityLong Term Disability
External Factors
Shift in Employment ParadigmLack of job security
• Reduction in force
• Downsizing
• Rightsizing
• Outsourcing
Lack of career path
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Integrated Disability ManagementIntegrated Disability Management
Most Promising Models Include:
Disability prevention strategies
Single point of entry into the program
Aggressive case management
Early intervention
Return to work strategies
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Integrated Disability Management ModelIntegrated Disability Management Model
Disability Prevention Strategies
Seek to eliminate causes of illness and injury by correcting potential hazards. Preventative Medicine - public health promotion
Traditional Medicine - treatment and cure
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Integrated Disability Management ModelIntegrated Disability Management Model
Single Point of Entry
Employee advocate
Triage cases
Arrange for appropriate services
Contact coordinator
“Being there”
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Integrated Disability Management ModelIntegrated Disability Management Model
Aggressive Case Management
Interface with disabled employee, attending physician, supervisor and insurer
Treatment protocols
Duration guidelines
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Integrated Disability Management ModelIntegrated Disability Management Model
Early Intervention
Proactive strategy
Prevents a short term illness or injury from becoming a long term one
Facilitated by aggressive case management
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Integrated Disability Management ModelIntegrated Disability Management Model
Early Intervention, Cont.
Targeted Diagnoses Lower Back Pain Chronic Fatigue
Syndrome Psychiatric or
Psychological Disorders Early Pregnancy Claims
Blindness or Near Blindness Progressive Conditions Head Injuries Spinal Cord Injuries Partial Paralysis Strokes
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Integrated Disability Management ModelIntegrated Disability Management Model
Return to Work Strategy
Employer must adopt and maintain a formal policy for alternative work opportunitiesLight duty assignmentsWork site modificationsPhased in progression to full-time, full duty assignments
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Integrated Disability Management ModelIntegrated Disability Management Model
Return to Work Strategy, Cont.
Coordinated by case manager in conjunction withEmployeeAttending PhysicianSupervisor
Creates sense of affinity
Promotes feeling of security
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Integrated Disability Management ModelIntegrated Disability Management Model
Return to Work Strategy, Cont.
Critical success factorsAlignment of organizational goals Integrated case management team
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Integrated Disability ManagementIntegrated Disability Management
Overcoming Barriers to Implementation Organizational Culture
Aligned objectives Caring attitude Social policy
Administration Integrated systems Linked database Low-tech solutions
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Integrated Disability ManagementIntegrated Disability Management
“How To”
Engage senior management support
Identify the business issues driving the need for change
Establish and articulate a mission and vision
Identify affected plans and organizational turf
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Integrated Disability ManagementIntegrated Disability Management
“How To” Cont.
Establish benchmarks
Draft concise request for proposal
Partner with selected vendor(s)
Communicate changes: up, down and across
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Top Ten Tips Top Ten Tips for Reducing Disability Costsfor Reducing Disability Costs1. Review and modify the disability management
program regularly. This is not a one-time activity.
2. Include specific disability cost management goals in each managers’ job description and performance evaluation.
3. Align disability management strategies with organizational strategies
4. Establish an attractive program.
5. Remember: early disability detection provides more cost savings opportunities.
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Top Ten TipsTop Ten Tipsfor Reducing Disability Costsfor Reducing Disability Costs
6. Coordinate all disability programs.
7. Make information accessible for tracking disability costs.
8. Target specific problems for the best disability management programs.
9. Develop benchmarks to measure disability management programs for cost savings.
10. Know the costs that need reducing.