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DESPITE DIFFICULTY, BENEFITS UNIFICATION COMING

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ATLANTA-In the next few years, diligent employers will be able to reshape their benefits programs so that workers compensation, disability insurance and even group health share a united, streamlined administration and avoid redundancy and unneeded cost.

This is not to say it will be easy.

That is the word from the chief medical officer of a large Midwest corporation, an insurance executive and the chief of a national claims outsourcing operation, all of whom spoke last week at the annual Risk & Insurance Management Society Inc. conference.

But besides the myriad technical problems associated with uniting workers comp and long-term disability, and the mostly uncharted potholes that would interfere with further integrating these two programs with group medical administration, the workshop speakers told a crowd of about 50 that unification of the programs is an inevitable trend.

Right now, the evidence is coming in the form of early success stories, spreading gradually through the benefits industry as companies achieve goals by integrating programs step by step.

One such example is Chicago-based Ameritech Corp., the Midwest's Baby Bell and employer of 66,000 workers. The telecommunications giant in 1994 brought together its long-term and short-term disability and workers comp processes and administrative systems and began a slow and deliberate trek toward integrating the three, said Dr. Robert N. Anfield, manager of occupational medicine.

In practical terms, that means those Ameritech employees filing workers comp or disability claims now are funneled through a common triage process and are evaluated by a nurse who acts as case manager.

By eliminating duplication of claims through such coordination, Ameritech estimates that its disability insurance costs have decreased 10% since 1993. Also, its workers comp claims plummeted 28% in the first year after integration and have maintained an annual decrease of 17% thereafter, he said. All in all, the changes have saved Ameritech about 1% of its total payroll, he said.

To handle its integration, Ameritech hired Chicago-based Sedgwick Claims Management Services Inc. as its claims administrator. David A. North, president of Sedgwick Claims Management and a speaker at the session, said companies such as Ameritech that coordinate disability and workers comp programs are becoming more common. Either to save on costs, or to improve customer satisfaction or simply to maintain a state-of-the-art benefits program, employers are tending to place occupational and non-occupational disability cases in the hands of a single case manager, he said.

"In the Ameritech mode, that case manager is the adjuster," said Mr. North. "The clinician that handles that case is trained in both disability and workers compensation. . .that's a critical component of the model. They are one and the same-a fully integrated position."

The missing link, he said, is adding major medical coverage into the equation so that no artificial separation divides illnesses or sicknesses merely because they are job-related or not.

But bridging the gap between group health plan administration and disability and workers comp insurance has inherent difficulties because the players in each arena are looking at the game with different goals, said Ruth E. Estrich, assistant vp for Liberty Mutual Group in Boston.

Essentially, a managed workers comp or disability program has as its aim the return of the employee to the work site, she said. Although managed health care programs also share this objective, they tend to assign great weight to cost savings, as evidenced by clear measures such as the number of inpatient or acute care days needed. Thus utilization review features figure prominently in the actions of such plans.

These protective features of managed care might run afoul of strategies typically used by case managers of workers comp or disability claimants to get the employee back to work fast by giving all medical treatment necessary for a resolution, even if it means hospitalization or a more costly procedure at which the employee's health maintenance organization would have balked, Ms. Estrich said.

Uniting the two cultures of managed comp and managed group health care will require alerting benefits professionals to the economic benefit to doing so, she said. It would also help to have the same insurer or administrator selected for group medical and group disability. This, she pointed out, might well not be possible.

"This is very difficult to effect, because of multiple medical options, as well as the very distinct core competencies that have developed over time by the different carrier types," she said.

It would be just as effective to insist that two separate insurers or administrators maintain close communication and cooperation with each other, with rewards for teamwork, Ms. Estrich said.

Any successful attempt to meld benefits programs on an administrative level needs the backing of top leaders in the company, said Dr. Anfield. "Executive support is critical," he said. "If the CEO and senior managers are not willing to support noise in the system for leading their staffs to a different paradigm, there is no reason to go down the path."

The "noise" is the necessary consequence of transforming a system that has been unchanged for decades, and some workers will be suspicious. But "after a period of unrest," Dr. Anfield said, an employer can expect its employees to still recognize that they are receiving valuable, though reconfigured, benefits.

The presenters outlined several ways that employers can get integrated programs off on solid footing:

Initiate an aggressive loss prevention program for managed care and managed comp.

Strive to strike a sensible balance between contracting with capitated physicians, who may seek to limit care to raise profits, and those who accept fee-for-service patients, when medical care provided may be limitless and expensive.

Build an excellent disease management program and a nurse case management system that uses telephone hot lines or on-site home visits to consult with patients.

Work to find ways to get pharmacy discounts for workers comp cases, although this may be challenging because of the absence of a group medical insurer in the discounting process.

Additionally, Dr. Anfield stressed the importance of stating up front with outsourcing contractors what is expected of them and codifying it in writing. A sample contract should be submitted to the companies that submit a proposal, showing exactly what kinds of outsourcing are needed.

"It behooves you to provide language that precisely describes the services," he said.

Also, continually being prepared to default to the second-choice outsourcing contractor is prudent in case the present relationship sours, he said.

Performance measures to consider are customer service levels, average response time, lost telephone calls, length of calls, and accuracy, he said.

A remaining problem for companies wishing to take the futuristic step of integrating managed medical care with workers comp and disability is, the panel said, the state of managed health plans today. It could be difficult for employers to find networks of doctors with both a general medical orientation and occupational medicine needed for workers comp cases, the panelists said.

"There is probably no good managed care national network solution out there that can address both," said Ms. Estrich. "I think it's a matter of evolution, and it will take time."

Ms. Estrich was the session coordinator and Dr. Anfield was the moderator.