Newsletter Sign-up

At the annual National Workers' Compensation and Disability Conference & Expo in Chicago this past November, Marybeth Stevens stood up and made an intimate confession before a gathering of 60 of her peers.

"I'm a zealot," said Stevens, unapologetically. "I'm a zealot because I want your data."

EMPAQ, or Employer Measures of Productivity, Absence and Quality, is a standardized metrics initiative designed and launched by the National Business Group on Health's Council on Employee Health and Productivity in 2004, in collaboration with employers, insurers, suppliers, universities and industry organizations. EMPAQ metrics, created by the council, are now embedded inside the benchmarking program developed and provided by the Integrated Benefits Institute, a nonprofit based in San Francisco.

No longer in its infancy, the EMPAQ initiative has had its tires kicked by nearly 250 employers along the way, resulting in significant tweaks and improvements. Now ready for prime time, this project stands poised for widespread adoption across all sectors of the employer community.

The ultimate goal is to allow employers and their suppliers to measure and evaluate the quality and cost-effectiveness of their disability and absence management programs through a set of standardized definitions and metrics--supported by an online training and certification program.

Without standardization, the only true measures employers have had to work with up until now were their own, comparing outcomes year over year--benchmarking, as Stevens put it, "in our own bathwater."

Different companies provide different benefits plans, with different structures. That's one of the stickier issues preventing companies from comparing their data to other companies' data. That's where EMPAQ comes in. Plugging raw data into the EMPAQ metric formulae results in a standardized data set that allows for accurate comparison to other entities.

Prior attempts have been made to benchmark absence, productivity and quality on an industrywide basis, but the metrics in use were often questionably defined, inconsistently applied, and leading to results that were murky at best. That meant employers could never be sure if they were comparing apples to apples, or apples to oranges, so to speak.

Calculating the cost per employee for a workers' comp program, for example, sounds straightforward enough, but leaves a great deal of room for variation. Do you report paid costs or incurred costs? Are you reporting for the calendar year? The accident year? Are you calculating based on your total number of employees or based on the number of full-time equivalents?

"A common language is what has been missing in the industry," said Bryon Bass, vice president and absence practice leader for Sedgwick Claims Management Services Inc. "Everyone thinks they're saying the same thing, but they may not be necessarily saying the same thing."

"Making sure that we're all agreeing on the definition is where the power of EMPAQ is," said Stevens.

EMPAQ's metrics also normalize for company size. A 25-person plant can derive the same benchmarking benefits as a 6,000-person operation. This is also key for multifaceted companies such as GE, which opted to enter separate submissions for each of its various businesses--33 data sets in all.

CLEARING HURDLES

The demand for true industry benchmarking is high, yet many companies--burned by past benchmarking surveys that went nowhere--have taken a wait-and-see attitude about the use of the EMPAQ metrics. Even so, 139 employers, "the Class of '03," participated in IBI's initial data collection, with about 40 percent of submissions coming from suppliers on behalf of their clients. In the second year, 108 employers submitted their data directly to IBI. On the surface, this would seem to be an apparent decrease in participants. However, the figure represents a 15 percent increase in direct employer submissions to IBI. In addition, the Class of '04 boasted a 55 percent increase in the number of industries represented and an 85 percent increase in the amount of workers' comp data submitted.

The trend is positive, but stakeholders are eager to grow the program as quickly as possible. The more data submitted, the more robust the benchmarking results. But like any other force for change, EMPAQ's proponents have had to navigate their way through significant obstacles.

Some employers, for instance, balked at committing to the amount of effort needed to mine the necessary data, even while agreeing upon the need for standardized measures.

Larry Jermyn, manager of medical and health services for Honda Manufacturing in Marysville, Ohio, submitted his company's EMPAQ data to IBI for the 2003 reporting period. For Honda, Jermyn said, the time investment turned out to be steeper than expected. "Capturing the data as EMPAQ defines it, in our world, was not an easy thing to do. It took us a tremendous amount of resources to complete IBI's survey." Jermyn estimates that it required about 500 hours to complete the full data set from IBI.

That first year, participants were required to submit EMPAQ data for all of their programs, including workers' compensation, short-term and long-term disability, and Family and Medical Leave Act. But this proved to be particularly cumbersome for employers with siloed programs. Getting the cooperation from each of the departments was, for some, too daunting a challenge to overcome, particularly in the name of an as-yet-unproven initiative.

Helen Darling, NBGH's president, said the council was keenly aware of the problem. "The corporate HR world, risk management and others, like every other part of the nonrevenue producing side of corporations, are under constant pressure to do more with less," she said. "So it's always hard to get somebody to do something that isn't, literally, what they have to do to get through the day. It's a very tough world in the employer community right now."

"As part of our partnership alliance, the Business Group and IBI have a strong commitment to continuous process improvement," said Jim Curcio, NBGH's EMPAQ project manager. "Last year, the council restructured its EMPAQ metrics so employers could submit their 2004 data to IBI for individual programs." Many saw that as an opportunity to put a "toe in the waters" of EMPAQ, using one program as a test module, building upon its success to get buy-in for submitting additional program data in subsequent years.

Silos, however, weren't necessarily the trickiest obstacle for EMPAQ. Suppliers--even some considered allies--initially chafed under the demands of becoming EMPAQ-compliant. Honda's Jermyn said that resistance from Broadspire, which administers Honda's STD and LTD programs, played a major role in the company's decision not to participate in EMPAQ for the 2004 data collection year.

The underlying problem, said IBI President Tom Parry, is not that vendors don't want to give their customers the data--but their systems, in many cases, are simply not completely set up yet to collect it according to EMPAQ definitions.

"It's difficult for vendors to do this on a one-off basis," said Parry. "It's not part of what they typically do . . . no insurer or TPA is set up to do that. That's not their business. They are in the business of processing claims and having claims information systems."

Adds Vicki Schweitzer, senior vice president of Aon's Health and Productivity Practice, "Many of them had the ability to track the information within their systems, they just weren't using those fields because people weren't asking for that data. It gets back to what are you shining the flashlight on? If you shine the flashlight on an area, then somebody can measure it and somebody can manage it. But if nobody's looking, then why take the extra step?"

To make the process much more painless for both employers and vendors, Parry said, IBI has been developing new ways to collect necessary EMPAQ metrics and other data elements directly from suppliers, beginning with the collection of 2005 data. IBI will be working with insurers and third-party administrators to get the data out of their claims systems and aggregate it.

NEW WAYS TO COLLECT DATA

"If we can tap into those and do all that aggregation ourselves, now you've really dealt with the fundamental challenge on the TPA/insurer side, and it doesn't force employers to do it themselves," Parry said.

The new data collection strategy is a real turning point for EMPAQ, and it will clear the path for employers who simply don't have the resources for such an undertaking. "Employers don't have easy access to EMPAQ data in the format that IBI requires for data collection," said Jermyn. "So we have to depend on our TPAs. And if they're not committed to trying to do this kind of thing . . . it's tough for the employers to get on board."

Collection of data for the Class of '05 ends July 1, and it's expected to go smoothly now that the bulk of supplier resistance has melted away. Vendors, said Schweitzer, are now fully engaged. "Once they saw the EMPAQ train was on the track and it wasn't coming back, they jumped on with both feet," she said.

Adds Sedgwick CMS' Bass, "I think there's an understanding (among suppliers) that EMPAQ metrics are going to be the measurements for our industry . . . and we've got to make sure that we've jumped on the bandwagon."

Employers still encountering uncooperative vendors at this stage of the game should be taking a long, hard look at those partnerships, said GE's Stevens. "This isn't rocket science," she said in Chicago. "It's not OK for a supplier to say, 'I can't give you that data.'"

"As a former supplier . . . one of the key things that we were supposed to give our clients was data in a meaningful way," said Darryl Hammann, manager of workers' compensation and disability programs for 3M Health and Global Benefits in St. Paul, Minn., speaking along with Stevens at the NWCDC. "It concerns me when suppliers don't want to share that data."

Bass suggests that some of the remaining resistance could be concerns that employers will use the data solely as a tool to judge vendor performance.

"We need to dispel that fear," said Bass, because the idea behind the EMPAQ metrics is for employers to make comparisons within their industries and to discern best practices, not as a tool to use against vendors.

Most stakeholders agree that it will take the drive and determination of the employer community to ensure that the EMPAQ initiative continues on its path toward universal acceptance.

Said Bass, "I really think it's incumbent upon the clients to pull their suppliers in and say, 'I want you to do this, I expect that you're going to provide me with this type of data in my reporting packages and I want you to submit EMPAQ data to IBI so that they can use it for benchmarking.'"

NOW'S THE TIME

EMPAQ standardized metrics will play a key role in employers' ability to sustain continual improvement in their absence and productivity management programs. Employers now have access to comparative tools they've never had, particularly in the areas of disability and return-to-work. Some will now be able to drill down and locate the trouble zones they may not have even realized they had. More significantly, they'll have hard evidence to demonstrate to the C-suite the need for investment in improving those areas.

For others, EMPAQ will provide proof-in-hand that their existing programs are already best in class, allowing them to redirect resources to other areas in need of improvement.

Suppliers are finding enrichment from the initiative as well, even beyond the value of being able to offer EMPAQ-compliant data to their clients. Said IBI's Parry, "The vendors that we work with are always looking for industry information that goes beyond their own book of business. They've been able to benchmark with their internal clients, but they want to start looking more broadly at the industry at the aggregate level."

For vendors and suppliers as well as employers, EMPAQ metrics provide key data that will allow organizations to continually improve the delivery of their programs.

It's high time for fence-sitters on both sides to jump in. The more employers get involved, the more suppliers will follow, and vice versa. It's not complicated. It's not expensive. And with a little teamwork, it shouldn't take that much time at all.

Said GE's Stevens, "It's just a matter of, 'You've got my claims, you know how many I had, I know what my employee population is, you know what my total paid was--let's knit this together so we'll be able to answer important business questions based on valid comparisons.'"

MICHELLE KERR is associate editor of Risk & Insurance®.

June 1, 2006

Copyright 2006© LRP Publications