Getting Smart with Lost Time...Getting Smart with Lost Time: Integrating Workers Comp & Disability Karin Landry, Managing Partner, Spring Consulting Group Kevin Confetti, Deputy Chief

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Getting Smart with Lost Time: Integrating Workers Comp & Disability

Karin Landry, Managing Partner, Spring Consulting GroupKevin Confetti, Deputy Chief Risk Officer, University of California

Fredrik Finnman, Head of Group Risk Management, Sandvik Group

March 11, 2019

Not a New Concept!

• Varying degrees

• Different paths

• Mix of resources

• Always evolving Leave

Workers’ Comp

Disability

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Why Do It?

Opportunities for Optimization

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◼ Definitions◼ RTW policies◼ Compliance◼ Program links

◼ Intake◼ Notification and

communication◼ Automatic triggers◼ Case management◼ Documentation

◼ Fully insured◼ Self insured◼ Hybrid◼ Captive◼ Claim and expense

patterns

◼ System platform(s)◼ Tracking◼ Access by managers

and employees◼ Electronic data exchange◼ Integrated reporting◼ Metrics

Plan & Policy Design

Process & Procedures

Technology & Reporting

Funding & Financials

Management

The End Goal: Target Efforts to Population Needs

Productivity/Presenteeism

Health/Wellness

Keep these employees healthy and productive

Get these employees healthy and productive (modeling, outreach, EAP,

wellness, education)

Enable these employees to live with illness

HealthyHealthy

with Risk Factors

Minor Illness

IllnessMajor Illness

Stable but Chronic

Unstable, Chronic

Catastrophic

Productive Present/ Absent Absent

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Implications for Stakeholders

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Employees

Managers

Corporate

• Fewer points of contact• Clearer process to follow• Faster turnaround times

• Improved information access• Increased self-service options• Decreased confusion

• Reduced time spent1

• Easier process to explain• Clarity of role in process

• Increased visibility of EE status• Meaningful tracking & reporting• Anytime/anywhere access

• Improved compliance2

• Easier administration• Better experience

• Reduced costs3

• Actionable trends & benchmarks• Higher employee engagement

1 It takes 2.5 hours to manage a single FMLA claim (SHRM)2 The average verdict for wrongful termination is $335,000 and it costs employers an average $78,000 to defend an FMLA

lawsuit (US Dept of Labor Wage and HR)3 Employers savings range from 0.25% to 1.00% of payroll; 5% to 25% of direct program costs; 10% to 35% lower STD durations;

average 6% increase in RTW rates; and overall ROI from 3:1 to 15:1 (Spring, IBI, Industry Benchmarks)

Levels of Savings Achieved

10%

11%

9%

15%

13%

12%

12%

5%

6%

6%

7%

21%

20%

23%

21%

20%

18%

18%

19%

17%

21%

18%

26%

25%

23%

26%

27%

25%

25%

26%

26%

24%

25%

20%

19%

18%

14%

15%

22%

16%

17%

18%

20%

17%

13%

12%

10%

12%

10%

9%

12%

20%

19%

13%

13%

10%

13%

17%

12%

14%

15%

17%

13%

14%

16%

20%

Reduce direct costs of group healthor medical

Reduce lost time for disability orworkers' compensation

Decrease claim incidence rates

Reduce internal staff/FTE count*

Reduce direct costs of disability orworkers' compensation

Decrease overall absenteeism

Decrease gaps in employee care

Increase employee satisfaction

Increase employee engagement

Increase return to work rates

Increase employee healh outcomes

None (0%) 1% to 5% 6% to 10% 11% to 15% More than 15% Don't know/unable to measure

Employer levels of savings or

improvement are significantly

higher than in 2016 with the top five metrics being

increased employee

satisfaction; reduced direct

costs; increased employee

engagement; increased RTW

rates and decreased claim

incident rates

Any Savings

81%

76%

74%

73%

73%

73%

72%

82%

80%

78%

73%

Source: Spring Consulting Group’s Integrated Disability, Absence and Health Management Employer Survey, 2018.

Continual Touchpoints Involved

Return to Work(Restore Productivity)

Stay at Work(Preserve Productivity)

Full Capacity

Lost Time

Wo

rk S

tatu

s

Full Capacity

Sick/Vacation/PTO

FML/Other LOA

Medical BenefitsMedical & Disability or Workers’ Comp Medical Benefits

HPM Programs

Leav

e an

d B

en

efit

Usa

ge

Successful programs not only impact lost time, but keep employees at work and/or prevent them from going out in the first place

Sources: Spring Consulting Group, Unum Health and Productivity Connections, An Employer’s Guide to Managing Lost Time9

• Many stakeholders involved

• All play varying roles

• HR/Benefits and RM have different perspectives

• Who takes the lead depends on the company, the coverages and the case

HR/Benefits

Risk Mgmt

Occ Health

Adm Vendors

Safety

Legal/Labor

EE Relations

EAP/Wellness

Interaction Required

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Most Common Approach is Phased• Programs are implemented in a phased manner, with priorities for services varying by workforce type,

size, culture, buying sophistication and product awareness.

Health and Productivity

Management

Total Absence Management

Integrated Disability

Management

Disability Management

“HPM”

All IDM components plus…

▪ Links prevention, health, disease, and behavioral management

▪ Allows for strategic planning and HR as business partner

“TAM”

All DM and IDM components plus…

▪ Expands to other time-off programs such as sick, PTO, vacation, to really any reason an employee is away from work

▪ Supports workforce planning and budget activities

“IDM”

▪ Disability and/or WC, with FML as baseline

▪ Single intake process

▪ Common case management, RTW and SAW

▪ Other LOA included

▪ HPM program referral

▪ Integrated▪ Data▪ Tracking▪ Reporting

“DM”

▪ STD, LTD with same vendor

▪ Telephonic intake

▪ RTW and SAW

▪ Comprehensive reporting

Case Study #1: Healthcare OrganizationThis client is currently insuring both of their retained long term disability (LTD) and workers’ compensation (WC) risks in their captive

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0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

LTD WC Total LTD WC Total LTD WC Total

Loss

es

in $

Mil

lio

ns

Combined Program Experience Last 3 Policy Years

Paid Loss To-Date Unpaid Claim Estimate

2015 2016 2017

There is an observed reduction in the volatility between policy year

totals compared to LTD and WC on a stand alone basis

Case Study #1: Healthcare Organization

• Benefits of this integrated LTD and WC insurance program include:• Observed stability in results due to the effect of diversification

• Negative correlations between LTD and WC in recent years have created additional stability in year-to-year total loss experience

• Risk management of individual claims is greatly enhanced

• A return to work program was implemented and paid for by the captive• The goal of placing more than 75% of employees with a work capacity to a transitional duty

role within 5 days of their release to work date was far exceeded

• Top workers’ comp claim cost drivers within the last 3 years were strains and slips/falls

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Case Study #1: Healthcare OrganizationAnticipated Cost Savings

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Client

Client Client RM)

Client Client RM)

Client Client RM)

Client WC claims Client RM)

Industry

Benchmark Costs

as % of Payroll

Client Costs as a %

of Payroll

Estimated Mid-

Range Savings

Disability 2.00% $14,910,197 $2,236,529

Workers' Compensation 1.50% $11,182,647 $1,677,397

Unplanned Absence 1.90% $14,164,687 $1,416,469

Vacation 6.00% $44,730,590 --

Total Direct Costs 11.40% $84,988,120 $3,093,866

Indirect Costs (1 X Direct) 11.40% $84,988,120 $3,093,866

Total Direct and Indirect Costs 22.80% $169,976,241 $6,187,732

Overall Return on Investment (ROI) Expected to Range from

3:1 to 5:1 depending on

detailed program aspects

implemented

Case Study #2: U.S. Manufacturing Company• The company engaged Spring to conduct an analysis of the overall

health of the client’s workers’ compensation program

• This entailed reviewing the frequency of claim incidence/loss and the severity of loss by division

• It also involved the following activities:• Collecting triangulation of incurred losses for medical and indemnity and

corresponding payroll by policy period, division and operation unit• Analyzing data by division and operating unit to identify frequency and

severity trends and ultimately the top operating units that warranted further focus

• Identifying outliers or additional information, and agreeing upon how operating unites could be prioritized for next phase of analysis

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Case Study #2: U.S. Manufacturing Company• Higher claim frequency rates were observed in the two divisions that

had the worst claims experience

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$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (6mos)

Ult

imat

e Lo

ss R

ate

Policy Year

The Americas Entrance Systems HID Hospitality

The blue and orange lines

toward the top indicate Spring’s

focus

Case Study #2: U.S. Manufacturing Company

• Summary of Findings• The division with the highest observed frequency of loss accounted for 75%+

of total losses in policy years 2015-17

• The division with the next highest observed frequency of loss incident had a 60% increase in loss rate since 2015

• The client’s overall workers’ compensation experience was counter to industry trends

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Next Steps

• Collaborate with team to: 1) understand the overall return to work policy, claim reporting and management process and protocol documentation and team organization structure and roles that can be shared 2) interventions that have been made to date and future changes that may be underway

• Collect available and further detailed data for the up to 3 operating units of focus to include parameters such as employee DOB, Job Title, Supervisor Name, Diagnosis, Claim Duration, Modified Duty Dates, FMLA and/or ADA Concurrency

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Case Study #2: U.S. Manufacturing Company

• Complete up to 3 site visits to get a sense of how policy, process and protocols are deployed

• Organize, analyze and selectively benchmark the detailed data against market and industry norms on Return to Work, considering the impact of client policies, processes, protocols and team structure

• Summarize findings to identify potential patterns and trends, perceived root causes and recommendations

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Case Study #2: U.S. Manufacturing Company

Although WC is the initial focus, findings will be leveraged for disability to identify further

opportunities for improvement

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Best Practice Area Minimum Mid-Range High Performers

Cost Savings5 – 7% program costs savings or

.25% of payroll ($2.7M for Client)

10 – 11% program costs savings or .50% of payroll

($5.5M for Client)

19%+ of program cost savings or 1% of payroll

($10.9M for Client)

Strategic Vision & Commitment

Committed resources, coordinated design

Committed resources; integrated design Committed SME resources; expanded design

Ownership & Accountability

Separate stakeholder management Absence Manager (or team) accountable Absence Manager accountable for outcomes

Comprehensive Technology

Efficient and centralized Advanced and centralized Advanced, centralized and concurrent

Consistent Communication, Education & Experience

Separate telephonic with letter and email follow up

Centralized (one call) with immediate notification (email, letter follow up)

Centralized (one call) and expanded with coordinated email and letters; follow up via text, auto calls

Supervisor training on absence protocols

Ongoing supervisor and manager training; linked to performance

Ongoing and just in time (videos, links, chat) supervisor and manger training; EE instructions

Coordinated RTW, SAW & Compliance

Transitional/modified WC RTW Formal WC/STD/LTD RTW Formal WC/STD/LTD RTW and ADA Accommodations

Program

Internal counsel familiar with absence regulations

Expert external/vendor legal counsel to turn to on an ad hoc basis

Combination internal and external legal counsel with real time interpretation

Supportive Metrics & Analysis

Data separate by stakeholder area but reviewed for overlap and trends

Integrated data and reports and metrics for benchmarking

Enhanced absence metrics, internal & external benchmarking, population view

Case Study #2: U.S. Manufacturing CompanyAnticipated Outcomes

Questions?

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Get in Touch

Karin LandryManaging PartnerSpring Consulting Group

[email protected]

Kevin ConfettiDeputy Chief Risk OfficerUniversity of [email protected]

Fredrik FinnmanHead of Group Risk ManagementSandvik Group+46 8 456 [email protected]

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