Integrated disability makes a comebackReprints
A recent increase in the number of state and municipal leave regulations, along with an expansion of paid family leave laws, is prompting employers to take a fresh look at integrating their workers compensation, disability and benefit programs, either internally or through third-party vendors, and creating a new wave of momentum around the concept of integrated disability management.
There are at least 500 different federal, state and municipal rules governing job absence in the United States, including notably the Americans with Disabilities Act and the Family Medical Leave Act, said Bryon Bass, senior vice president of disability and absence practice and compliance at Memphis, Tennessee-based
Sedgwick Claims Management Services Inc. These leaves can be triggered by injury, illness, family situations, judicial proceedings and dozens of other situations, creating compliance challenges for employers, he said.
From an enforcement point of view, all leaves must be handled consistently by employers, regardless of what type of event triggers a leave. Having inconsistent leave policies and practices opens employers to audits and fines, said Terri Rhodes, CEO of the San Diego-based Disability Management Employer Coalition.
The increased complexities of complying with leave regulations is driving renewed interest in integrated disability management and an evolution to a broader focus on integrated absence management, said Mr. Bass.
“The idea isn’t necessarily new, but the amount of cooperation and partnership is reaching a new level,” said Jeff Smith, a disability and productivity consultant with the Workplace Possibilities program, an absence and disability management program operated by Portland, Oregon-based disability insurer Standard Insurance Co.
Decades ago, employers considered ways to create synergies between occupational medical claims and nonoccupational health claims to save on overhead costs. But occupational injuries and nonoccupational conditions are treated differently by doctors, and employers did not realize the synergies they hoped to achieve, said Matt Sears, executive vice president of employee benefits at San Francisco-based EPIC Insurance Brokers & Consultants.
“Because of that failed effort, a lot of people ignored the idea of integrated disability management,” said Mr. Sears “In recent years, the idea of integrated programs has come back amongst the more sophisticated employers. There are some challenges in most firms, because there are silos built up about who in the organization is managing these different issues.”
Organizational silos have been the primary reason integrated disability management has struggled to gain footing, disability management experts say.
“Workers comp is law-driven,” said Tim Rarick, vice president of product strategy and solutions at Phoenix-based Matrix Absence Management Inc. “Employers are required to have workers comp coverage, so it is viewed as an insurance program and tends to fall to risk management. Disability is viewed as a benefit and part of compensation packages. There are two different buyers and two different mentalities, and because of this disparity, their focus tends to be different.”
Attempts to break down these silos have gained some traction, but integrated disability and absence management can be difficult to accomplish until a high-level executive initiates organizational change, said Ms. Rhodes.
“It’s a very painful process trying to get everybody to work together,” she said.
“Some progressive organizations have managed to work through those silos.
In the current environment, FMLA and ADA applies to workers comp claims, so it’s important even if they are not integrating programs that they all communicate with each other. The (U.S. Department of Labor) and (U.S. Equal Employment Opportunity Commission) don’t care about organizational silos.”
In addition to ensuring compliance, integration can potentially yield other benefits for employers. Sedgwick estimates employers can experience a 10% to 20% reduction in costs by integrating their disability management programs. In addition, depending on past administrative practices, employers that implemented integrated disability managed programs saw a 10% to 25% decrease in days away from work, Sedgwick said in a 2014 white paper.
Administrative cost savings are a primary benefit of integrating workers compensation and disability management, said Mr. Sears. Another benefit is the potential to analyze collective data generated from disability, workers comp, health and wellness programs to identify patterns that can be used to prevent injuries and lost time, he said.
“One of the things most people don’t notice is the impact wellness and health plans can have on workers comp,” said Mr. Sears. He noted smokers and stressed workers have a higher risk of being injured at work, and diabetics and obese workers typically incur higher costs during treatment for injuries. Employers have an opportunity, he said, to incorporate wellness initiatives, such as smoking cessation programs, with workers comp programs to help improve medical outcomes and reduce comp costs.
Workers comp and disability programs can work together and share resources in a mutual effort to get workers back to work quickly and prevent future claims, said Mr. Smith. “Preventing a short-term disability claim might be preventing a workers comp claim as well,” he said.
Ultimately, integrated disability and absence management is about viewing and treating employees holistically so they don’t get stuck in a confusing and frustrating series of systems, said Mr. Bass.
“It’s really taking an employee-centric position, not a company- or departmentcentric position, which is the way it used to be,” Ms. Rhodes said.