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Healthcare: Linking Return to Work with Healthcare Outcomes to Lower Costs

Barton Margoshes, MDChief Medical OfficerCIGNA Group Insurance

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Primary Challenges Facing Employers Today

● Rising medical and disability costs

● Workforce demographics

● Productivity pressure

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Rising Medical Costs

● Factors fueling rising costs include: Rapidly rising hospital unit costs Inefficient and ineffective care delivery Prescription drug cost increases Increasing consumer demand Aging population

0%

2%

4%

6%

8%

10%

12%

14%

1982 2002$0

$500

$1,000

$1,500

$2,000

2000 2002

Health care as a % of GDP Employee contributions

Source: John Hopkins Bloomberg School of Public Health

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Aging Workforce

● In 2010, 51% of labor force will be over 40

US Census Bureau

● In 2003, Americans aged 55 and older made up approximately 12% of the workforce - the highest percentage ever recorded

Bureau of Labor Statistics

● Aging labor force is expected to cause 37% increase in incidence of disability

JHA Factbook 2001

5

0

1

2

3

4

5

6

1992 2002

Mill

ion

Source: Department of Labor

Individuals Receiving LTD Increased 62% from 1992-2002

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Chronic Conditions

● The five illnesses where costs increased the most were heart disease, asthma, mental disorders, cancer and hypertension

Health Affairs 8/04

● “The highest rate of increase in medical and disability claims costs is among 30 to 39 year olds, and both are due to obesity.”

Helen Darling, president of the National Group on Health, a Washington, D.C. consortium of 208 large employers

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The Aging Workforce & Lifestyle Health Risks Correlate with Short Term Disability● Risk factors studied:

Age High blood pressure High cholesterol Diabetes

Family history of heart disease Obesity Tobacco use Lack of exercise

$1,389$1,730

$2,701

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

0-1 Risks 2-3 Risks 4+ Risks

2.45

5.28

13.16

0

2

4

6

8

10

12

14

0-1 Risks 2-3 Risks 4+ Risks

Days

Source: Wayne Burton, M.D., IHPM North American Summit Meeting 2000

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Mental Health Costs

● Mental stress/depression claims are the fastest growing type of disability claim Mercer/Marsh 2003 Time Off and Absence Survey

● Depressed workers lose about 5.6 hours of productive time on the job each week, compared with an average of 1.5 hours for non-depressed workers

June 2003 issue, Journal of the American Medical Association

● 40% of disabilities have a behavioral component Managed Behavioral Health News 1998

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Employer Costs of Lost (% of Payroll)Direct Indirect Total

AON 4-6% 8-12% 12-18%

Towers Perrin 8-12% 4-6% 12-18%

Watson Wyatt 6.1% 2-4x direct costs 12-30%

Mercer 4.4% .5-4x direct costs 7-22%

The Impact of Lost Productivity ● Average $6,000 Per Employee Per Year

● Averages 15% Of Payroll

Direct Premium Costs – Only 1-2% of payroll

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Impact of Disease on Presenteeism● Percent of patients with allergies meeting performance standard

Source: Burton et al, JOEM 2001 vol. 43 (1) l

Studies have shown similar effect of disease on presenteeism for depression, osteoarthritis, migraine, diabetes, reflux disease.

6566676869707172

No allergy Allergy Allergy, treated

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Tot

al C

ost

How We Used to Weigh STD and Medical Costs

Old Paradigm

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Tot

al C

ost

Weighing the Total Cost

New Paradigm

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Integrated Health & Productivity Management Model

● Holistic approach to optimize a company’s human capital – investment in an employer’s people

● Addresses presenteeism, lost time, and employee health to lower costs and increase productivity

● Health related systems involved include: Healthcare Incidental absence & FMLA Short and long term disability Behavioral health

Pharmacy Wellness and disease management Workers’ compensation

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Health & Productivity Management

● Non Health Related Systems involved include:

Corporate Culture

Policies and Procedures

Benefit plan designs

Alignment of incentives

Training and human resources

Employee communication

Data Integration

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CIGNA’s Disability & Healthcare Connect

● A comprehensive and integrated approach for controlling quality and cost outcomes of a disability event

● Key components include:

Proactive pre-disability outreach

Coordinated disability and medical case management

Referral to disease management services

EAP assessment and referral

● Common philosophy, linked processes and technology

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Key Study Findings

● Short term disability (STD) durations and return to work percentages are consistently better for claimants having both CIGNA Disability and CIGNA HealthCare

● 20% of employees were responsible for 91% of employee medical costs

● Employees on short term disability represented only 5% of employees, but were responsible for 35% of employee medical costs

● Behavioral health conditions associated with a medically related disability result in poorer outcomes (durations 28% longer; incidence rate 7% greater)

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Key Study Findings (continued)

● Most of the top cost drivers are the same for both disability and medical

● Disability claimants with chronic conditions experience longer durations whether or not the disability was primarily due to the chronic condition

● Employees engaged in WellAware’s (disease management) Cardiovascular Disease and Low Back Pain programs experience shorter disability durations & lower incidence of short term disability

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12%Shorter STD

Durations

6%Higher Return to

Work Rates

0%

5%

10%

15%

20%

Solutions that Address Both Medical and Disability Cost Drivers Have a Greater Impact

Proven Results

Claimants with both a CIGNA STD and a CIGNA HealthCare claim have:

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Average Medical & Disability Costs for Employees

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Disease Management Reduces Both Medical and Disability Costs

ConditionAdmission Rate

ReductionMedical Cost

Savings

DisabilityIncidence Rate

Reduction

DisabilityDuration

Reduction

Cardiac 4.0% 13.0% 3.0% 7.7%

Low Back 2.2% 12.0% 1.0% 18.0%

Disease Management

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Keep the Healthy Healthy and Improve the Health Status of the High Utilizers

Average Medical & Disability Costs for Employees

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Summary● Healthcare and disability costs will continue to escalate due to

demographic trends

● Aging, chronic diseases, and mental health are inter-related and will have an adverse effect on employers profitability and competitive advantage

● Employers need to consider the total cost of care (healthcare + disability + lost productivity)

● Investing in an employer’s human capital through wellness, disease management, quality healthcare, and integrated disability makes business sense