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CIGNA study supports integrated benefits
Disability, health care work in tandem
A new study by Philadelphia-based CIGNA confirms what a number of occ-health professionals have been asserting: the integration of disability and health care programs can help return disabled employees to work more quickly, or even prevent absences, and can also lower total benefit costs. As a result, CIGNA will institute discounts of between 3% and 7% for clients who purchase short-term disability (STD) and long-term disability (LTD) coverages in conjunction with CIGNA medical coverage.
The study, called "The Disability and Healthcare Connection . . . How Strong Is the Link?" examined STD claims data from 60,000 employees in 156 companies and compared results of those covered by both CIGNA STD and medical care with those covered by CIGNA STD and a different medical insurance carrier. Among the key findings:
A closer look at the numbers indicated that for a hypothetical employer with 3,000 employees, integrated coverage results in savings of between $100,000 and $200,000 in direct disability costs, and up to $500,000 in indirect costs (lost productivity, costs of hiring and training temporary replacement workers).
This is the this first time CIGNA has done a study like this, says Jay Menario, CLU, senior vice president CIGNA group insurance marketing and strategy, who noted the study period was 2001-2003.
"We are one of the few providers who offer both [STD and medical coverage] under one umbrella, and we finally said, if our intuition tells us this improves outcomes and saves money, let’s validate it," he explains, adding that "When we are dealing with customers and consultants, they often ask whether the benefits of integrated coverage can be validated."
The move to integrated coverage is "more employer-driven," Menario observes. "They want ways to save dollars in benefit plans and where there are synergies and overlaps and redundancies. With medical costs rising, they like to do what they can save to money."
Passing along the savings, he adds, is a win-win. "For the most part, employers want quality coverage — they want to take care of employee wellness, but they want to find efficiencies and pay less — and rightfully so," says Menario. "If we can help them save real dollars, it helps them and it helps us."
Implications of study
What are the implications of these findings for occupational health professionals? There are several important messages, says Menario.
"First, there should be proactive outreach," he advises. "We can get notification from the medical area even before a disability event has occurred." For example, Menario says, if an employee is admitted to the hospital, it will often be clear that this will be a disability case. "We can begin the process before they even file; reach out to them and say, Here’s a claim form,’" he notes. "Early notification helps us either keep employees at work, or get them back to work sooner."
Since the study shows that chronic illnesses account for more than half of all STD-related medical costs, Menario says, this indicates how important it is to have good disease management programs in place to address those chronic conditions. "If the occ-health nurse or physician can focus on those conditions and do good disease management, you will not only see benefits to disability costs, but also to medical costs," he asserts.
A third key message is the need to take a holistic approach to claims. "Of all the people who had some type of psychological or mental nervous condition, 45% of the time it was the result of some other condition," notes Menario. "For example, chronic back pain can yield depression. If you treat a mental health disability as only a psych claim, you may miss the root cause of the condition."
It’s also important, says Menario, to recognize that even when employees are back at work, they may not be ready to perform at a 100% level.
"You might want to think of those employees almost as the walking wounded," he says. "It’s great they’re back at work, but they may not be as productive as they could be. For example, they may have a lingering problem; when you can be cognizant of that, you can see if there’s anything you can do to make the work environment more productive and comfortable."
Without that approach, he says, the employees’ productivity and perhaps even their health may suffer. He notes that an earlier CIGNA study showed that some returning workers who experience high levels of anxiety face the chance of greater stress levels, and perhaps even a recurrence of injury.
A new paradigm
The combined import of the study’s findings leads logically to what CIGNA calls a new paradigm for looking at benefits. (See figure below.)
Under the old paradigm (see figure below), a disability event was considered to start when an employee filed a disability claim, and ended when he returned to work. Based on the study’s findings, however, when employees have a disability and are out of work, this may also be a leading indicator of their medical costs.
For example, the study found, on average, the total direct disability and medical cost of a short-term disability is $13,094. Of this, $2,444 is associated with STD benefits and $10,649 with medical benefits.
"In a way, this is a bit connected to the statistics that showed chronic conditions represent 26% of medical episodes but account for 52% of medical costs," Menario explains. "In the past, employers have always looked at disability and medical costs as unrelated. This says that if you really look at the real costs of STD’s you can’t just look at the premium; you have to look at how you use medical services."
Which leads back to CIGNA discounting coverages. "We saw two important statistics — the average duration of STD claims was reduced by 12% [with integrated coverage] and the number of people we were able get back to work full-time prior to expiration of STD benefits increased by 6%," Menario notes. "That’s where we see savings in terms of benefit dollars and reserves. If we didn’t do the discounts up front, our customers would see the benefits over time, but we were willing to do the discount and offer the right rate at the right time we trust the data, and we trust that the employers’ interests are aligned with ours."
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