1. Integrated Benefits/Absence Management Bringing Total Absence Management Into the Workplace CAS/SOA: Enterprise Risk Management Symposium July 30, 2003 Washington, D.C. Stephanie Ramsey, B.S.N., M.P.H.

2. Employer Motivation for Integrated Disability Management Number 1: Escalating costs of employee absences due to illness/injury – from 3.9% of payroll in 1999 to 4.6% in 2002 Number 2: Heightened awareness of inherent cost structures of total costs of disability Direct (Claim costs, wage replacement, premiums) Indirect (Administrative expense, replacement employees, disability FICA taxes, decreased productivity)

3. Employers’ Time-off and Disability Programs Current Practice Planning/Considering Consistent return-to-work policy One STD/LTD carrier/TPA Common occupational and non-occupational intake Linked occupational and non-occupational claims data One STD/LTD/WC carrier/TPA Source: Marsh Mercer Study: Survey of Employers’ Time Off and Disability Programs 2002 15% 53%23% 47% 27%14% 15%24% 7% 18% (76%) (39%)

4. Employer Responses Return to Work/Stay at Work Programs Early identification/absence tracking Medical case management Job modifications/accommodations Employee Health Promotion Benefit Plan Integration Plan design Plan Administration Information Management

5. Return to Work/Stay at Work Programs I dentification of all absence episodes Identifying absence episode according to type Incentives for return to work Medical case management Health Promotion

6. Benefit Plan Integration Internal: Benefit Plan language “Human Capital Manager” “Big picture” view of costs External: Single carrier or TPA “One-stop shop” for claim service and statutory requirements Summary reporting

7. Information Management Predictive Modeling Identification of “cost drivers” Identification of “risk populations” Management Decision Support Applications What are the steps that need to be taken to achieve the desired results?

8. Information Management and a Management Decision Support System EE Demographics Med Claim $ Information STD Claim $ Information LTD Claim $ Information Pharmacy Management Programs Absence Occurrence ICD – 9 Causes of Illness/Injury Med Provider Return to Work Rates FML Utilization Management Decision Support Application Health & Productivity Management Staffing & Budgeting Management Practice Environmental Control Vendor Management

9. Total Absence Management “Supply-Side” Vendor Response 62 Suppliers of Integrated Programs (Source: Integrated Benefits Institute) Poorly Defined Product Requirements “Customized” Character of Product Separation of Product Process Features From Demonstrable Results Data Management Challenges

10. The New Client/Vendor Relationship Not “Plug-and-Play” Collaboration Program + Metrics + Methodology = Actionable Results

11. What are the Operational Risk Management Measures that will translate these employer initiatives into the financial terms that support effective control measures? Predictive Modeling Identification of “Cost Drivers” Identification of “Risk Populations” Management Decision Support Applications What are the steps that need to be taken to achieve the desired results? Information Management