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INTEGRATED DISABILITY NOT SO SIMPLE TODAY

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SANTA MONICA, Calif.-Moving toward true integrated disability management first requires recognizing several myths and rooting them out of a company's culture.

That is the advice from Dwight E. Davis, president and chief operating officer of Wausau Insurance Cos. of Wausau, Wis., during a keynote address to attendees of the Fifth Annual Workers Compensation Conference sponsored by Business Insurance.

The conference drew a record 350 people to the Loews Santa Monica Beach Hotel in Santa Monica, Calif., last week.

According to Mr. Davis, true integrated disability management combines disability management and claims administration for occupational and non-occupational injuries and illnesses.

The mission of such a program is "to empower employers with the means to manage workforce absences so productivity can be improved and direct and indirect disability expenses controlled," he said.

In its simplest form, it combines disability management and claims administration for short-term and long-term disability programs, as well as workers comp, said Mr. Davis. However, a more complex program to manage the time employees are off the job may also take into account group medical, unemployment compensation, wellness programs and even leave for military service and jury duty.

The need for such a comprehensive approach is increasing, especially because the aging of baby boomers will generate a 37% increase in disability costs over the next 10 years, according to Social Security Administration statistics that Mr. Davis cited.

Wausau, a unit of Nationwide Group, provides integrated services for about 75 clients by integrating service for all types of disability programs it offers and using a coordinated team approach from loss control through disability management.

In addition, the common goal of returning ill or injured workers to the job is fostered by single-source reporting of all claims, common data collection and tracking, as well as open communication among the worker, employer, case manager and care giver.

However, Mr. Davis said implementing an effective integrated program first requires overcoming eight myths within the typical organization:

Workers comp is not "an employee benefit."

"Rather than viewing workers comp as merely a statutory requirement, employers and employees should view workers comp as part of a continuum of integrated benefits which promote productivity, profitability and improve the health status of employees," Mr. Davis said.

Such a mind-set sends the right signal to the worker and will hopefully motivate the worker to return to work as promptly as possible.

That should minimize the worker's desire to litigate the claim and inspire workers to share this positive story with co-workers, he said.

Risk managers and human resource managers have "silo mentalities" and can't work together.

"Companies should consider establishing one cost center for all programs that have an impact on employee health. Under this approach, all departments responsible for human resources, risk management, safety, benefits, disability, employee health, workers comp, employee assistance programs and the Americans with Disabilities Act would report to one corporate officer," Mr. Davis recommended.

Workers comp, STD and LTD benefits cannot all be managed by the same person.

A claims examiner with workers comp expertise sometimes is the best person to manage the wage-loss portion of any disability claim.

Such an examiner tends to be "more aggressive and more likely to investigate claims and question disability status," Mr. Davis said.

However, the medical portion of a claim can best be managed by a medical professional.

Both overseers need to work as a team to effectively manage claims, he said.

A lack of benchmarking data makes it impossible to provide top management with cost/benefit analyses to justify integrated disability programs.

A lack of data has been a problem, though more sophisticated data warehouse software, capable of generating cost/benefit models, is rapidly being developed, he said.

Such data can be important in demonstrating the savings from an integrated disability management program.

Those savings are estimated at 10% to 15% of non-integrated programs.

The purpose of integrated disability management is only to reduce medical and indemnity costs over the long term.

In reality, savings from integrated disability management far exceed those direct costs, Mr. Davis said.

Medical treatment is different, depending upon whether the source of the disability is occupational or non-occupational.

Insurers and employers need to send the message to health care providers that aggressive medical care and therapy in the short term is appropriate, regardless of the source of an injury, if it helps a worker return to the job more quickly, he said.

Managed care increases the number of workdays lost due to injury or illness.

While some employers may think that, integrated disability management makes it possible to combine both high-quality care and cost containment, which should keep lost workdays to a minimum, he said.

Integrated disability management is an off-the-shelf product that can be provided by many different insurers.

The program "is not effective as an off-the-shelf product, especially for medium-sized and larger employers who have complex needs. It has to be customized," he said.

In addition, employers need to ask the right questions when choosing integrated disability management providers, Mr. Davis said.

Such programs are available from about 50 providers, half of which began operations within the past 12 months, Mr. Davis said.

According to Mr. Davis, key areas of concern for an employer when assessing a provider should include explanations of how an integrated program will:

Improve return-to-work results.

Increase productivity.

Minimize administrative redundancies.

Eliminate dual or overlapping coverages.

Reduce worker confusion.

Integrate data to improve decision-making.

Provide performance guarantees.