Demographics, Regulations Pose Challenge for Absence Management
2015 DMEC panel discussion on Amazon’s leave policy. Photo courtesy of DMEC.
Discussions at last week’s meeting of the Disability Management Employer Coalition in San Francisco focused on the impact of shifting workforce demographics amid current challenges and potential innovative solutions to disability management.
With people continuing to work later in life, four different generations now make up the American workforce, and each has different priorities when it comes to employer benefits and how they are delivered.
This, combined with changes in the regulatory and health care landscape, presents unique challenges for employers and absence management providers. Below are some of the major themes discussed at the annual conference:
The pace of regulatory change remains a constant hurdle for employers. Absences in accordance with the Family and Medical Leave Act, in particular, have left employers vulnerable to compliance risk.
Prior to June’s Supreme Court decision to legalize same-sex marriage nationwide, employers had to cope with a definition of “spouse” that fluctuated among the growing number of states that had legalized gay marriage.
Initially, couples that lived in states where same-sex marriages were recognized were viewed as spouses under FMLA. Now, there are no location restrictions on the definition of “spouse.”
That is just one example of how quickly regulations can change, challenging employers to keep their policies up-to-date and ensure there is no infringement of employees’ rights.
Employers also consistently struggle with FMLA compliance by miscategorizing leave under regular sick time, or by punishing employees for FMLA-protected absence by discontinuing health insurance coverage or failing to restore him or her to their former position when the leave ends. Some simply fail to educate employees about their rights under the FMLA.
Federal investigations are also intensifying, with the Department of Labor increasingly requesting information on leave use and conducting more on-site visits, according to Jeff Nowak, a partner at Franczek Radelet, PC, and author of the blog “FMLA Insights.”
Companies can strengthen FMLA compliance and reduce their exposure by conducting more self-audits of their policies and implementing internal protocols to make sure requests for leave are properly designated.
While the Department of Labor is working on an FMLA guide for employers, companies can strengthen compliance and reduce their exposure by conducting more self-audits of their FMLA policies and implementing internal protocols to make sure requests for leave are properly designated.
One upcoming regulatory changes to watch is an update to the Genetic Information Non-Discrimination Act and Section 501 of the Rehabilitation Act.
New legislation is also pending concerning accommodations for pregnant workers, following clashes between the Equal Employment Opportunity Commission and several companies over the treatment of pregnancy and related conditions as disabilities.
Managing Chronic Conditions
Addressing chronic conditions was a topic touched upon in several sessions. Studies from Liberty Mutual’s Research Institute for Safety show that chronic conditions affect 40 percent of the U.S. workforce.
An aging workforce and high rates of obesity and diabetes will only make chronic conditions more prevalent.
Chronic conditions pose problems because few surefire methods have emerged to manage them. Pre-placement exams can’t predict how a condition will develop over time, and the provision of wellness programs and behavioral therapy has shown no real impact in decreasing absence related to chronic conditions.
Sutter Health was able to cut lost days down by 8,632 in one year using a system that integrated leave management and return-to-work accommodations. The estimated savings impact was $2.75 million.
Training supervisors to facilitate return-to-work and oversee ergonomics improvements was one method that did make a material difference in decreasing lost time days due to chronic issues.
Research from Liberty Mutual showed that a supervisor training program resulted in a 27 percent decrease in lost time.
Providing on-site peer support to arrange care and accommodations for minor complaints also led to a 25 percent decrease in lost time.
Several speakers advocated seeking out methods of care that would address a worker’s injury or condition within the scope of their work environment.
Overall, hastening employees’ return-to-work by focusing more on “whole person care” emerged as a big shift for employers.
Zoning in on a specific injury without considering a worker as a whole ignores the unique interactions between the worker’s personal and occupational health risks, and his or her relationship with the workplace in general.
PG&E presented results from a new health plan built around the concept of treating the whole person, and found that focusing on preventive and primary care over specialty care reduced the number of ER visits and lost work days — saving about $1,918 in medical costs per employee in 2014.
Integrated Disability and Absence Management
While integrating disability and absence management, health and safety initiatives, and return-to-work programs remains a hot topic, most experts concede that widespread integration of those programs remains far off.
The complexity of the different pieces — FMLA, the Americans with Disabilities Act and workers’ comp — make coordination difficult.
Those who succeed at streamlining these resources, though, stand to significantly reduce absences and reap savings.
Sutter Health, a nonprofit health system in Northern California, for example, was able to cut lost days down by 8,632 in one year using a system that integrated leave management and return-to-work accommodations. Over the course of that year, the savings impact was estimated at $2.75 million.
Future DMEC conferences will surely feature more employer success stories and pave the way for best practices for marshaling the data, resources and executive support to create integrated programs.
Ten Tips for Leave Management
The environment for leave management has become increasingly complex—and potentially costly to those not in compliance with the growing number of leave laws and regulations. The Family Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), and the myriad of state and local laws have made managing leave, while remaining in legal and regulatory compliance, more difficult and complex.
Leave laws not only create risk. They also create opportunity.
There is good news. A large and growing number of conferences, webinars and other resources are available to help guide risk managers and others through the ever changing leave landscape. DMEC’s recent Compliance Conference addressed many of the issues surrounding leave management and the ever-changing landscape.
During the RIMS annual conference, Karen English of Spring Consulting Group and I offered the following leave management tips at one session.
One: Training is critical. Managers must understand the leave process and their responsibilities under it and the law and uniformly administer leave policies. We don’t expect them to be experts but they need to understand how an employee might evoke their rights under FMLA or ADAA.
Two: HR and other staff must be qualified. Appropriate leave and HR administrators need to be up to date on all absence management programs and be prepared to answer employee questions about their rights for leave and job accommodation.
Three: Collaboration across business units is key. Leave programs across organizational boundaries; HR, disability, legal and other departments need to work collaboratively. Removing barriers between disciplines creates efficiencies and limits liability.
Four: Implement clear and consistent processes and policies. FMLA and ADA policies should be as uniform and applied as consistently as possible across the organization regardless of size or geography, allowing for some flexibility. Stakeholders need to engage with consistent correspondence, tracking, management, decision-making and communication.
Five: Centralize administration of the leave function. Employees and managers should have one source for questions and answers.
Six: Evaluate your program. Inventory the system used, are you tracking or managing your program. If an organization has internal system to manage or track its leave program, it should be regularly evaluated for effectiveness. If you choose a software system or outsource administration make sure that your vendor has ongoing compliance support.
Seven: Outsource if necessary. Outsourcing has increased over the last three years, there are more options than ever, and the list continues to grow. But it doesn’t fit every culture or organization; choose what works best for your company.
Eight: Evaluate your vendor. Just because a company outsources leave management, it does not mean it outsources its legal responsibilities. Even with outsourcing, an organization must establish a process to update its leave programs to meet its changing business and staff needs.
Nine: Measurement, tracking and reporting should be actionable. Key metrics like lost time, costs, return-to-work rates, abuse and productivity are useful to the degree they enable managers to change leave programs to better meet the needs of employees and the organization.
Ten: Create a culture of continual improvement. While legal and regulatory compliance is essential, it is not enough to ensure a leave program helps advance strategic business goals. That requires that managers—and executives–view leave programs as an arena for new investment and training to catalyze change to maximize returns.
Leave laws not only create risk. They also create opportunity.
Planned and implemented in a thoughtful and strategic way, effective leave management can be a competitive advantage in the battle for the best talent. Take advantage of the resources out there and become educated on both the risks and opportunities offered by the new world of employee leave.
6 Truths about Predictive Analytics
Predictive data analytics is coming out of the shadows to change the course of claims management.
But along with the real benefits of this new technology comes a lot of hype and misinformation.
A new approach, ACE 4D, provides the tools and expertise to capture, analyze and leverage both structured and unstructured claims data. The former is what the industry is used to – the traditional line-item views of claims as they progress. The latter, comprises the vital information that does not fit neatly into the rows and columns of a traditional spreadsheet or database, such as claim adjuster notes.
ACE’s recently published whitepaper, “ACE 4D: Power of Predictive Analytics” provides an in-depth perspective on how to leverage predictive analytics to improve claims outcomes.
Below are 6 key insights that are highlighted in the paper:
1) Why is predictive analytics important to claims management?
Because it finds relationships in data that achieve a more complete picture of a claim, guiding better decisions around its management.
The typical workers’ compensation claim involves an enormous volume of disparate data that accumulates as the claim progresses. Making sense of it all for decision-making purposes can be extremely challenging, given the sheer complexity of the data that includes incident descriptions, doctor visits, medications, personal information, medical records, etc.
Predictive analytics alters this paradigm, offering the means to distill and assess all the aforementioned claims information. Such analytical tools can, for instance, identify previously unrecognized potential claims severity and the relevant contributing factors. Having this information in hand early in the claims process, a claims professional can take deliberate actions to more effectively manage the claim and potentially reduce or mitigate the claim exposures.
2) Unstructured data is vital
The industry has long relied on structured data to make business decisions. But, unstructured data like claim adjuster notes can be an equally important source of claims intelligence. The difficulty in the past has been the preparation and analysis of this fast-growing source of information.
Often buried within a claim adjuster’s notes are nuggets of information that can guide better treatment of the claimant or suggest actions that might lower associated claim costs. Adjusters routinely compile these notes from the initial investigation of the claim through subsequent medical reports, legal notifications, and conversations with the employer and claimant. This unstructured data, for example, may indicate that a claimant continually comments about a high level of pain.
With ACE 4D, the model determines the relationship between the number of times the word appears and the likely severity of the claim. Similarly, the notes may disclose a claimant’s diabetic condition (or other health-related issue), unknown at the time of the claim filing but voluntarily disclosed by the claimant in conversation with the adjuster. These insights are vital to evolving management strategies and improving a claim’s outcome.
3) Insights come from careful analysis
Predictive analytics will help identify claim characteristics that drive exposure. These characteristics coupled with claims handling experience create the opportunity to change the course of a claim.
To test the efficacy of the actions implemented, a before-after impact assessment serves as a measurement tool. Otherwise, how else can program stakeholders be sure that the actions that were taken actually achieved the desired effects?
Say certain claim management interventions are proposed to reduce the duration of a particular claim. One way to test this hypothesis is to go back in time and evaluate the interventions against previous claim experience. In other words, how does the intervention group of claims compare to the claims that would have been intervened on in the past had the model been in place?
An analogy to this past-present analysis is the insight that a pharmaceutical trial captures through the use of a placebo and an actual drug, but instead of the two approaches running at the same time, the placebo group is based on historical experience.
4) Making data actionable
Information is everything in business. But, unless it is given to applicable decision-makers on a timely basis for purposeful actions, information becomes stale and of little utility. Even worse, it may direct bad decisions.
For claims data to have value as actionable information, it must be accessible to prompt dialogue among those involved in the claims process. Although a model may capture reams of structured and unstructured data, these intricate data sets must be distilled into a comprehensible collection of usable information.
To simplify client understanding, ACE 4D produces a model score illustrating the relative severity of a claim, a percentage chance of a claim breaching a certain financial threshold or retention level depending on the model and program. The tool then documents the top factors feeding into these scores.
5) Balancing action with metrics
The capacity to mine, process, and analyze both structured and unstructured data together enhances the predictability of a model. But, there is risk in not carefully weighing the value and import of each type of data. Overdependence on text, for instance, or undervaluing such structured information as the type of injury or the claimant’s age, can result in inferior deductions.
A major modeling pitfall is measurement as an afterthought. Frequently this is caused by a rush to implement the model, which results in a failure to record relevant data concerning the actions that were taken over time to affect outcomes.
For modeling to be effective, actions must be translated into metrics and then monitored to ensure their consistent application. Prior to implementing the model, insurers need to establish clear processes and metrics as part of planning. Otherwise, they are flying blind, hoping their deliberate actions achieve the desired outcomes.
6) The bottom line
While the science of data analytics continues to improve, predictive modeling is not a replacement for experience. Seasoned claims professionals and risk managers will always be relied upon to evaluate the mathematical conclusions produced by the models, and base their actions on this guidance and their seasoned knowledge.
The reason is – like people – predictive models cannot know everything. There will always be nuances, subtle shifts in direction, or data that has not been captured in the model requiring careful consideration and judgment. People must take the science of predictive data analytics and apply their intellect and imagination to make more informed decisions.
Please download the whitepaper, “ACE 4D: Power of Predictive Analytics” to learn more about how predictive analytics can help you reduce costs and increase efficiencies.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with ACE Group. The editorial staff of Risk & Insurance had no role in its preparation.