Total absence management programs help mid-market employers control costsPosted On: Aug. 11, 2013 12:00 AM CST
Mid-market employers are expressing increased interest in total absence management programs to help them administer different types of occupational and nonoccupational disability leave while using integrated data to create healthier workplaces.
Integrated disability management programs developed by large employers many years ago are starting to be modified for mid-market companies, driving smaller employers to consider such programs as an option, sources say.
Meanwhile, the economy has amplified the importance of eliminating excessive employee leave time, particularly among mid-market firms in blue- and gray-collar industries, experts say.
“Larger employers tend to have what we might call more "slack' in their systems,” said Tom Parry, president and CEO of the San Francisco-based Integrated Benefits Institute. “They have more people that might be able to fill in and do jobs and that kind of thing. Smaller employers don't have that luxury, so absence and poor health really hit small employers big time.”
Experts say the definition of total absence management varies from employer to employer.
Many integrated programs tie in short- and long-term disability leave and absences under the federal Family and Medical Leave Act, while some include programs such as workers compensation and sick leave.
FMLA typically serves as the common thread for programs that employers want to integrate since the law operates concurrently with various types of occupational and nonoccupational leave.
Terri L. Rhodes, San Diego-based executive director of the Disability Management Employer Coalition, said about 60% of FMLA-related leaves are connected to short-term disability claims.
FMLA “has created more protected job time for different reasons, and so it has increased absences for many employers,” said Denise Fleury, Orange, Calif.-based senior vice president of disability and absence management for Sedgwick Claims Management Services Inc.
Companies haven't linked such programs in the past because they've traditionally been handled by different departments that often don't collaborate, said Mark Walls, St. Louis-based senior vice president and workers compensation market research leader at Marsh Inc.
“You've got the nonoccupational (leave) being handled by human resources and being paid under group benefits, whereas the occupational (leave) is being handled under risk management and coming out of workers compensation,” Mr. Walls said.
It also has been difficult for employers to integrate data from various providers that handle group health, workers comp and disability coverage, said Jim Blaney, Radnor, Pa.-based CEO of Willis North America Inc.'s human capital practice.
Employers may work with third-party administrators, insurers, brokers and other providers to administer such services, and sometimes find it difficult to get them to collaborate on leave integration, Mr. Blaney said.
Companies with integrated leave programs “have disability and wellness right, but they can't loop in workers comp effectively,” Mr. Blaney said. “Or they've got workers comp looped in effectively with the health management vendor, but disability's still a problem.”
Still, experts say the advantages of total absence management outweigh the challenges of such programs. They note that consolidating programs can reduce costs compared with operating several leave programs through various providers.
Data from integrated leave programs can be analyzed to determine health and disability cost trends that employers should target for intervention, said DMEC's Ms. Rhodes.
“Employers are more likely to be able to see those red flags when someone's absence is exceeding what the doctor's guidelines are or they have those patterns of absence,” Ms. Rhodes said.
Employees who take time off for workers comp-related injuries are prone to being reinjured, which could result in a later disability-related absence, Sedgwick's Ms. Fleury said. By linking data on employees who have taken such absences, employers can help those employees participate in wellness initiatives that could keep them at work down the road, Ms. Fleury said.
By combining leave programs, employers also can make the leave experience easier for employees to navigate, sources say. For instance, some programs establish one phone number that employees can call to report different types of absences. Integration also can allow employees to receive correspondence from one provider when their leave falls under two or more categories, such as short-term disability and FMLA.
“To them it feels like it's one voice and one piece of information to deal with,” Ms. Fleury said about the employee experience.
There are several steps employers can take to establish a total absence management program (see related story).
Experts recommend that employers shop around for providers with total absence management programs that are customized to the employer's needs. This can be particularly important for mid-market employers, they say, since outsourcing absence management can be a time- and labor-intensive endeavor for companies that attempt to create such programs in-house.
DMEC's Ms. Rhodes said companies should be prepared to commit to the program and their leave management partners for some time to see the most benefits. “It usually takes between 12 months and 18 months to ... put a program together when you're integrating,” she said.