How captives and insurance exchanges can reduce health care costs

Bill Goddard, Principal, Insurance Consulting, Brown Smith Wallace

Bill Goddard, Principal, Insurance Consulting, Brown Smith Wallace

Ron Present, Health Care Industry Group Leader, Brown Smith Wallace

Ron Present, Health Care Industry Group Leader, Brown Smith Wallace

The financial impact of the Patient Protection and Affordable Care Act (PPACA) may seem to be its  most challenging aspect. Mitigating that impact may seem like the most practical solution. However, Ron Present, health care industry group leader at Brown Smith Wallace, says, “There are a lot of strategic implications to what you do and how you do it. Management should avoid just calculating the math and saying, ‘This saves us money so it’s what we’re doing.’”

To that point, Bill Goddard, principal, insurance consulting at Brown Smith Wallace, says, “You should consider many potential solutions before making a decision that could drastically diminish your ability to retain and acquire talent, and keep your workforce engaged.”

Smart Business spoke with Present and Goddard about dealing with health care insurance after the PPACA from a cost and strategic perspective.

How has the PPACA affected private insurance?

Starting Jan. 1, 2014, employers with 50 or more full time or full-time equivalent employees, considered large employers, must offer health insurance that fits certain affordability and coverage criteria or face a penalty. This could have an immediate impact on an employer’s cost to provide health insurance because a group of employees that had not had insurance may enroll in the plan and because of pre-existing conditions or high use of care, will cost the employer a significant amount of money.

Also, the health care law changes the status of some who had been considered part timers for insurance purposes to full-time employees. In some industries, many employees have not historically taken health insurance, sometimes as much as 66 percent of a company’s workforce. These employees will need to be offered coverage, potentially tripling costs.

How might that impact employers?

Companies are calculating their potential risk to cost. However, that’s only one aspect. The other is the strategic impact.

Some companies have considered limiting their variable hour, or part time, employees, to less than 30 hours per week to reduce the number of employees considered full time. To maintain an adequate workforce, such changes can require hiring additional employees, or changing existing employees’ workloads and job descriptions to keep up production and prepare for 2014.

Should employers not provide coverage?

Let’s say a large employer decides not to offer health insurance and instead pay the $2,000 per employee (minus 30) penalty, which may seem cheaper. However, the law requires individuals to have insurance regardless of employer coverage, so employees may leave for a competitor that provides it. Those who stay out of necessity may always be looking for another employer that provides coverage, lessening their productivity and loyalty while raising turnover, which is a significant expense.

Counsel employees. Let them know that they can refuse insurance coverage from the employer and either purchase insurance through a public exchange/marketplace or instead pay an annual penalty. Employees may prefer to pay the penalty instead of paying far more each month for coverage.

How can employers that provide insurance cope with rising premiums?

Large employers offering health insurance to a population of purely full-time employees can potentially control premium costs by forming a captive insurance company. This is an insurance company that non-insurance companies with 50 or more full-time employees can start. It is generally owned by the company that forms it and insures a limited population, typically just its own employees.

Another potential solution is to form a private exchange, which may be complementary to forming a captive insurance company, in that the entity forming it creates its own marketplace, which means it may qualify as providing insurance with a defined contribution that may help control costs.

Bill Goddard is a principal, insurance consulting, at Brown Smith Wallace. Reach him at (314) 983-1253 or [email protected]

Ron Present is a health care industry group leader at Brown Smith Wallace. Reach him at (314) 406-5105 or [email protected]


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How to ask the right questions when choosing a health plan

Randy Narowitz, CEO, Total Health Care

U.S. employers are continuing to struggle with rising health care costs. To limit spending, many are shifting costs to employees while others are emphasizing wellness initiatives or controlling costs through health savings accounts and reimbursement arrangements.

“The biggest area of concern we are hearing from employers today is they can’t manage or predict the cost of health care benefits,” says Randy Narowitz, CEO of Total Health Care. “Having predictable, manageable cost increases is a real value to employers.”

Smart Business spoke with Narowitz about what to ask when choosing a plan.

What factors should companies consider when analyzing their employee benefits?

Typically, you start with the plan design that you offer today then decide if the company can maintain, improve or cut back on the benefits.

It’s important to evaluate alternatives in terms of cost and products offered. There are a variety of ways to differentiate carriers: size and strength of the provider network, plan design flexibility and premiums.

What questions should an employer ask a carrier when choosing a plan?

If you are using the benefits as a tool to attract or retain employees, then you want to evaluate the quality of the benefits and compare them to what else is out there in the marketplace. Features such as co-pays and deductibles are factors in the decision-making process and can be tweaked to be competitive. Also, access to care and a strong provider network are important components to consider.

If you are cost sensitive, then you want to ask about how to optimize the benefits at the lowest possible premiums and analyze the trade-off between the premium costs and the benefits.

What can a company expect from its relationship with its carrier?

Most employers use the services of a consultant or broker to assist them in the decision-making process, and their roles vary.

At one extreme, the consultant is your exclusive liaison to the carrier and can represent several health care plan options, helping the employer understand which products are best for its business. The consultant may also take the lead on administrative tasks including open enrollment, employee education, compliance and communications with the carrier.

At the other extreme, a consultant’s role is limited to the selection process. You can expect your representative to be able to differentiate the plans and the products depending on how you prioritize your decision-making criteria.

As an employer, you should expect your representative to be able to navigate through the decision-making process on your behalf.

Your plan representative, carrier and consultant also need to be able to educate you about the latest changes associated with health care reform.

How can companies save money when they are looking for a carrier?

Shifting the financial burden to employees by raising co-pays and deductibles, and having them pay a portion of the premium are ways to reduce and control your health care costs.

Savings associated with prescription drug costs can be achieved by raising co-pays or by restricting access to branded drugs when generics are available. Employees are very sensitive about changing medications, but there is a real opportunity to save money when you make these adjustments. Contracting with a restricted network, such as an HMO, and introducing wellness initiatives can also reduce costs.

What do employees need to know?

If you change a plan design in any way, it is important that the changes be communicated clearly.

Employees are very resistant to a change in their health care benefits. If you are planning to reduce benefits or shift costs to the employees, make a significant commitment up front to educate your employees.

Simplify the message and commit the time and resources to help them understand the changes before the new contract year begins.

Randy Narowitz is the CEO of Total Health Care. Reach him at (313) 871-2000.

Insights Health Care is brought to you by Total Health Care

How to take a comprehensive managed care approach to your workers’ comp

Deborah Mehalik, Manager of Network Services, UPMC WorkPartners, a segment of the UPMC Insurance Services Division

Returning injured workers to a healthy and productive lifestyle is the goal of any workers’ compensation program, but the cost can be high for all involved. For an injured worker, there is the recovery from the injury itself, anxiety regarding the workers’ compensation system and the potential loss of the identity that he or she enjoys through work. For the employer and insurer, there are the escalating costs and complexities connected with managing claims, as well as the temporary or permanent loss of valuable employees.

All could benefit from the expertise and oversight that can only be provided by a comprehensive managed care approach.

“With workers’ compensation claims, you need to have a beginning-to-end strategy,” says Deborah Mehalik, manager of Network Services for UPMC WorkPartners, which is part of the UPMC Insurance Services Division. “The traditional managed care approach needs to be expanded to specifically target extremely vulnerable points within the workers’ compensation system for all parties involved.”

Smart Business talked with Mehalik about the advantages of having a robust managed care approach to help employers handle workers’ compensation issues.

How can a managed care approach impact a company’s workers’ compensation program?

Managed care must be expanded to include concepts such as:

  • Accessing medical expertise throughout the life of the claim.
  • Identifying quality providers who have expertise in workers’ compensation.
  • Aggressively identifying early, safe return-to-work potential.
  • Developing an in-depth understanding of cost containment strategies.
  • Measuring programmatic cost drivers through the use of data analytics.

An important new concept in managed care is integrating health and wellness resources at the time of a work injury to improve the employee’s overall risk profile.

What is the key benefit that a managed care approach brings to workers’ compensation?

The primary benefit in a comprehensive managed care approach is that it is structured to produce a win-win for all stakeholders involved.

How does managed care contain costs?

Costs can be contained in several ways. This would include the identification of medical providers who understand the importance of safe, early return to work and how it directly impacts lost time days and indemnity costs. Medical expertise can assist with causality determinations and appropriateness of treatment, and also ensure correct acceptance and payment for both.

Having a clear understanding of injury drivers assists safety personnel in making the necessary changes to process and policy in an effort to avoid similar claims.

Understanding cost drivers such as pharmacy and physical therapy allows for an evaluation of the gap between current and best practices and gives valuable insight when determining which vendor to partner with. Having knowledge of bill repricing and the network(s) being utilized on the employer/insured’s behalf assists in managing costs by maximizing preferential pricing and allows for continued evaluation of provider performance.

What can employers gain from using a workers’ compensation plan with managed care?

An employer will gain enhancements in areas such as case closure rate, causality determination and utilization review. Employers also should experience reductions in areas such as DART rate (days away/restricted/transfer), and medical and indemnity costs. Accessing sophisticated data analytics allows benchmarking of current programmatic performance and, when well structured, shows value or areas of cost shifting when new strategies are introduced.

What do employees gain?

A managed care approach that focuses on quality care and outcomes benefits employees by utilizing a best-of-the-best approach, linking them to superior providers and treatment platforms. By identifying best practices in areas such as pharmacy management and physical therapy, the employee has seamless access to a prescribed regime that maximizes the recovery effort.

Click here to learn more about UPMC WorkPartners and its workers’ compensation program.


Deborah Mehalik is a manager of Network Services, UPMC WorkPartners, a segment of the UPMC Insurance Services Division. Reach her at (412) 454-7083 or [email protected]

Insights Health Care is brought to you by UPMC Health Plan

How comprehensive behavioral health management boosts health, cuts costs

Tom Albert, Manager, Behavioral Health Services, HealthLink

Integrating a comprehensive behavioral health plan into the medical health plan your company sponsors is a win-win. Employees are able to improve their health mentally and physically, and the employer can track cost savings related to direct health care costs and indirect costs through more productive, healthy employees.

“One out of every four adults will experience a mental health disorder in a given year,” says Tom Albert, manager, Behavioral Health Services at HealthLink. “I think few people, in general, realize the rates are that high.”

Smart Business spoke with Albert about how integrating behavioral and medical health allows employers to better coordinate their members’ care.

How do behavioral and medical health impact employers?

The rate of one in four adults experiencing a mental health disorder annually goes even higher for those with chronic medical problems. Furthermore, employees with untreated psychiatric or substance use disorders can be at a higher risk of on-the-job injuries. This can lead to missed time from work, expensive treatment and a decrease in quality of life for the individual.

Absenteeism is not the only concern for employers. Presenteeism, or the loss in productivity of employees who come to work sick, can also be costly for employers. The Institute for Health and Productivity Studies at Cornell University found that depression and other mental health problems are among the illnesses that have the most significant decrease to productivity.

What’s the advantage of integrating behavioral and medical health management?

Ninety-three percent of Americans believe a health care plan should cover behavioral health treatment, according to a National Association of Psychiatric Health Systems survey. Some workplaces don’t cover behavioral health. Other employer groups cover it but carve out the management, which makes it difficult to coordinate care.

Having one organization manage both medical and behavioral health benefits is gaining popularity among employers. With integration, the health plan’s medical and behavioral clinicians collaborate and ensure that individuals and their families have access to care that best meets their needs.

What are the overall goals of utilization and case management for behavioral health?

Utilization management ensures that health plan members have access to the care they need; that care is delivered in the right setting; that the quality of care meets high standards; and that resources are used efficiently in order to help control costs.

Case management involves case managers communicating directly with members and their families to assist them in navigating the health care system; addressing any obstacles to accessing treatment; and empowering members and their families to maintain an optimal level of health and functioning.

Case management helps the member to stay well so he or she doesn’t have to keep using the same services and missing work.

What is the Mental Health Parity Act?

The Mental Health Parity and Addiction Equity Act of 2008 doesn’t mandate that employers of 50 or more employees offer behavioral health coverage, but it does require that if the health plan covers behavioral health services, the financial requirements and treatment limitations are no more restrictive than medical and surgical benefits.

Prior to parity, employer groups often relied on treatment limits to control costs by limiting the number of days in a hospital or the number of visits for outpatient mental health treatment. Parity is good because the limits often were arbitrary, but it does mean the best way to control costs is to ensure care is only approved when medically necessary.

What are the results of formalized behavioral health management and review?

A Milliman case study of a large private manufacturer found a 10 percent reduction in members with chronic medical and psychological conditions saved $1 million annually and another $750,000 from reduced absenteeism, fewer and shorter disabilities, and increased productivity. An effective behavioral health management organization ensures members receive the right treatment in the least restrictive setting, which reduces costs and time missed from work, while improving overall health.

Tom Albert is manager, Behavioral Health Services, at HealthLink. Reach him at (314) 923-6288 or [email protected]

Insights Health Care is brought to you by HealthLink

How employers can use alternative health plan options to gain control, lower costs

Mark Haegele, Director, Sales and Account Management, HealthLink

Many employers feel they have no control over the health care events of their employee population, seeing themselves as victims rather than informed consumers. However, it’s important to understand there are alternative solutions outside of the “insurance” box options when choosing a health plan for employees.

“As an employer, whether you have 10 employees or 500 employees, there is a whole host of new products and concepts that may make some sense for you — that you really need to explore,” says Mark Haegele, director, sales and account management, at HealthLink.

These options, including small group self-funding, captives, exchanges and co-ops, are growing as the health care industry rapidly changes, based on improved data analysis and the drive to keep overall health care costs down.

Smart Business spoke with Haegele about how these out-of-the-box health plan options work and what advantages they can bring.

What options are available for smaller employers who want to self-fund?

There are a host of new programs under a self-funded environment for employers with 10 or more employees. The 15-life employers may never have thought these options were available, but that’s not the case anymore. Self-funded employers can avoid premium taxes and state-issued mandates, while getting away from insurance company risk and profit. The employer has additional freedom to structure its health plan and can receive more claim information to better manage the health of the employee population, and therefore lower costs. Self-funding continues to be of interest to employers.

How do captives work to some employers’ advantage?

Small employers, with help from third-party claims administrators or benefit consultants, join forces to set up their own captives or use a cell in an established captive to cover risk above a self-insured retention. It’s usually made up of similar-sized employers, not necessarily similar in industry-type. For example, a 50-life employer would take the risk up to $50,000 for each member in the health plan. The captive, getting contributions from all employers, takes the risk from $50,000 to $250,000. The re-insurance carrier would risk all costs over $250,000.

By boosting retentions and pooling risks with other employers — who typically agree to put in wellness, disease management and other programs to lower claims costs — employers hope to keep increases in health insurance costs more in check. Also, all contributions to the captive, such as the $50,000 to $250,000 in the example, are tax-free. Finally, by pooling risks, participating employers can hold on to profits — if premiums exceed claims and other costs — rather than surrendering profits to a commercial insurer, as with a fully insured program. Many employers are looking at captives and starting to understand the advantages.

How are employers exploring the use of health care exchanges, both public and private?

Exchanges are new organizations set up to create a more organized and competitive market for buying health insurance. They offer a choice of health plans, certify participating plans and provide information to help consumers better understand options. Private exchanges are beginning to pop up, and in 2014 government-run exchanges will come on line.

Like a cafeteria plan, the consumer has a menu of insurance alternatives, such as five different insurance companies and six different plans, for one rate. While this creates the ultimate choice, exchanges may not be cheaper. Exchanges take away an insurance company’s ability to decline, drawing bad risk like those with major health problems. Many national insurance carriers say when public exchanges start, commercial population premiums will increase by 40 percent.

Private exchanges may be able use their advantages over public ones to lower costs. Even though they cannot decline, they have more control over who is coming in and can make it less attractive for bad risk through higher prices or benefits. Also, public exchanges must take subsidized members — uninsured with income under a certain threshold — who are likely more of a bad-risk population.

Employers are determining whether to continue to offer a health plan or just pay the penalty and send employees to purchase health care off the exchanges. It’s not as simple as it seems — although an employer may pay $8,000 per employee per year to offer a health plan and the penalty is only $2,000 per employee, typically employees demand higher wages when not receiving benefits. Retaining and attracting key employees could be why employers offer benefits in the first place. There are also tax implications with the decision to terminate, including extra taxes. One model found that Company X with 10,030 employees, where 3,000 highly paid employees purchase health care no matter the cost, paid $26 million more to terminate its health plan rather than raise the employee premium.

What role do co-ops play with alternative health plan solutions?

Health insurance purchasing cooperatives allow small businesses and municipalities to band together to negotiate for improved health insurance coverage for employees. The California Health Care Foundation found that under the right circumstances pools can meet cost and coverage goals and expand insurance choices, but it depends on the cohesiveness of a pool’s members and the market in which it operates.

Whatever health plan alternative you find fits your company best, employers do have options outside of the big box. You can get away from typical insurance companies.

Mark Haegele is a director, sales and account management, at HealthLink. Reach him at (314) 753-2100 or [email protected]

 Insights Health Care is brought to you by HealthLink®

How resilience matters in the workplace and what employers can do to increase it

Annette Kolski-Andreaco, Manager of Account Services, LifeSolutions, an affiliate of UPMC WorkPartners

Life is full of stressful situations, be they personal or professional. Stress of some kind is often unavoidable, or, at least, a common experience for nearly everyone in the workplace.

Learning how to be resilient is a life approach that helps those who’ve developed it handle stress more effectively. For some, resilience is a way of living, but for all it’s something to learn and incorporate as they develop.

What exactly is resilience? Resilience refers to the ability to adapt, recover and grow stronger from adverse situations. Robert Brooks of Harvard Medical School calls resilience “ordinary magic” because everyone has the capacity to be more resilient.

“Managers and leaders may not realize that what they do contributes to having a more resilient work force. Their job is to create a work environment that makes it possible for each individual to contribute their competencies, to be creative,” says Annette Kolski-Andreaco, manager of Account Services for LifeSolutions, an employee assistance program and an affiliate of UPMC WorkPartners.

“It isn’t that resilient people are extraordinary people,” she says. “It’s that they’ve been tested and learned that they are adaptable.”

Smart Business spoke with Kolski-Andreaco about resilience in the workplace and why it matters to employers.

Why should the resilience of the work force matter to an employer? 

The workplace can be a challenging environment for employees for a variety of reasons. They need to navigate complex networks of relationships and continuously adapt to changing work processes to keep up with the relentless competition in the marketplace.

Many employees today can easily feel overwhelmed, fatigued and disengaged due to their work environment. They may come to question whether what they do really matters, and if they can find professional fulfillment and meaning in their work.

To succeed on the job, employees need to acquire cognitive skills through training and education. But equally important for success is the establishment of a solid work/life balance with families, social networks and leisure pursuits. It is that support that enables employees to have a solid foundation from which to better handle stress in the workplace and expand their capacity for change and resilience.

Recent surveys from Gallup polls show that less than 30 percent of employees are actively engaged in their work, while 56 percent are disengaged and 15 percent are actively disengaged. When people are able to change their mindset toward being more hopeful and optimistic, the result is healthier, happier and more productive employees.

Research also supports the idea that when employees and employers actively cultivate a positive attitude, the work environment becomes more optimistic and creative.

How can an employer create an environment that encourages resilience?

The capacity for resilience is there in all people, but there are things that can be done to nurture or reward resilience.

What that means for employers and managers is that they need to realize that their employees respond far more flexibly and readily when they have supervisors who connect with them in an authentic and personal way. When managers are able to see their employees as whole persons with a desire to contribute their talents, if given an opportunity, then both parties will benefit.

Employers need to identify their employees’ positive traits and then work with them to improve and strengthen those positives. Engaged employees who believe their contributions have value are able to be more resilient and are less vulnerable to workplace stress.

Most employees want an opportunity to shine. They also want their employer to be fair, and to give them some control over what happens to them. They want their employers to be respectful and they want to connect with their manager on a human-to-human, personal level.

What are the advantages of having a resilient work force?

A more confident, challenged and interested work force is what every employer wants. The simple truth is that for this objective to be realized, managers need to spend the time and make the effort to know each of their employees as an individual contributor to the overall mission and vision of the organization.

Employees are far more motivated by flexibility, fairness, opportunities to learn and develop themselves, and acknowledgement of their accomplishments, than we realize. Stressful work environments are a fact of life, but a more resilient response by employees and their managers makes all the difference in whether they’ll be overwhelmed and burned out.

Creating an atmosphere for resilience to emerge is something that comes from leadership at all levels. An employer can turn to an employee assistance program to learn different ways to develop resilience in their managers and for their staff.

Annette Kolski-Andreaco is manager of Account Services for LifeSolutions, an affiliate of UPMC WorkPartners. Reach her at (412) 647-8728 or [email protected]

Insights Health Care is brought to you by UPMC Health Plan

How to build a health care plan that meets your needs and those of your employees

Steve Slaga, Chief Marketing Officer, Total Health Care

Health care costs are increasing at an alarming pace and many businesses are struggling to maintain the level of health care benefits provided in the past.

While executives are keenly aware that comprehensive benefit programs play a significant role in attracting top-notch talent, many companies have neglected to analyze the effectiveness of their benefit strategy.

Reviewing your employee benefit program regularly offers the opportunity to revisit your carrier’s rates and ensure they are still competitive, says Steve Slaga, chief marketing officer at Total Health Care. Further, it presents an opportunity for employers to ensure their program continues to measure up against others in their industry.

“Health care benefits are important and serve as a very useful tool for employee retention and attracting new recruits,” Slaga says.

Smart Business spoke with Slaga about assessing the needs of your employees, how to determine an appropriate benefit plan and the importance of employee education.

How can a company assess the needs of its employees?

First, examine your health care plan to ensure you’re providing affordable, quality coverage with good service, flexibility and access to care. Make sure your plan isn’t prohibitively priced, so employees can afford to participate, and gauge employees’ satisfaction levels by utilizing surveys to determine which areas of the plan they consider strong and which can be improved upon. Bear in mind all employers are different and operate within circumstances unique to them, so not every health care plan fits every group.

The level of flexibility a health care plan facilitates is also an important consideration. Some plans work through Health Maintenance Organizations, which have a specific provider network, while others offer Preferred Provider Organizations or Point-of-Service plans with which employees have the option to go in or out of a predetermined physician and hospital network of preferred health care providers without fulfilling certain conditions, such as obtaining a referral. When choosing a health care plan, make sure the services fit the needs of your employees and that employees have access to a selection of physicians and specialists in their area.

How can employers determine an appropriate benefits plan for their employees?

Ask your agent or broker to do a comparative analysis among health care plans. That person will review the factors important to your employees, including pricing, access to care and type of benefits. The actual pricing is determined by the health care plan and is dependent on factors including the business, its industry and the average age of employees.

Employers at a minimum should review their benefit plans annually. By comparing your current plan to other plans, you can stay apprised of options in the marketplace, new products and how your premiums compare with other options. By reviewing plans regularly, you can assure employees you have shopped around and are providing them with the best value for their needs.

How can employers best balance the cost of the plan with employee needs?

This is a decision every employer must make on its own, and it hinges on factors including the type of benefit program desired for employees and how much employees will be expected to contribute.

As the cost of providing health care coverage continues to rise, many businesses have scaled back benefits. Among those companies that continue to offer benefits, their employees are more often asked to make higher contributions to offset costs. Other companies pass along a portion of the increased costs through higher deductibles or higher co-insurance; both solutions reflect the challenge of dealing with today’s rising medical costs.

Companies are also coping with escalating health care costs by implementing wellness plans designed to encourage employees to take preventive action to improve their health. The idea is that a healthier pool of insured employees makes fewer claims.

How can employers help employees understand the features of their health care plan?

Education is key. Employees need to have a clear, concise understanding of their benefits from day one. There are numerous ways to make information available to employees, including health plan websites, interactive assessment tools, newsletters and other communications.

It is also important to provide employees with forums where they can ask questions about the plan and provide feedback. In addition, many employers are looking beyond employee communication and implementing multipronged education programs that engage employees throughout the year.

Most employees receive benefit information during open enrollment periods and that’s often the last time they examine the details of the plan. Instead, there should be ongoing education with information distributed regularly to employees so they are fully aware of what their benefits cover. This will allow your employees to utilize and access their plans efficiently and effectively.

What value should a benefit provider bring to the table?

Your benefit provider should present clear and concise information about the health care plan in a timely manner. On a group level, a provider should be able to help you with billing, invoice and claims questions. On the member level, the provider should be able to answer benefits questions. Contact your provider to see what other services are available.

Steve Slaga is chief marketing officer at Total Health Care. Reach him at (313) 871-7810 or [email protected]

Insights Health Care is brought to you by Total Health Care

How employers impact their bottom line by helping employees quit smoking

Steve Martenet, President, HealthLink

Whether employees smoked used to be a hands-off subject for employers; that was their own business. Today, however, a cultural shift is driving management to take on employee smoking as a way to reduce health care costs and increase productivity, and smoking cessation programs are increasingly being rolled out as part of an organization’s overall wellness program.

“The key is the culture within that employer’s organization — really taking a top-down approach, having the business owner or CEO promote, champion and buy in to the program,” says Steve Martenet, president of HealthLink.

Employers also need to take a long-term approach to the effectiveness of smoking cessation programs because it is difficult to quit, and payback on the investment won’t happen in the first year. Additionally, the program needs to be tailored to each organization’s unique needs.

Smart Business spoke with Martenet about how to effectively employ smoking cessation programs and how doing so can impact the bottom line.

Why should employers care if employees smoke?

First, they should care from a humanistic standpoint, as caring about whether your employees smoke gets to quality-of-life issues. Smoking is the cause of nine out of 10 deaths from lung cancer, three out of 10 deaths from all cancers, nine out of 10 deaths from chronic obstructive pulmonary disease, such as emphysema, and one out of five deaths from heart disease, according to the Campaign for Tobacco-Free Kids.

From a business and cost perspective, there are very real costs in terms of health care and lost productivity as a result of having a work force that smokes. Each smoking employee costs an employer $1,000 per year due to direct medical claims, absenteeism and additional building maintenance, according to National Cancer Institute data.

And when compared to nonsmokers, the Mayo Clinic found in a seven-year study of 30,000 of its workers that the average health care costs of its smoking employees and retirees was $1,275 more per year than those of its nonsmoking employees.

How can employers encourage employees who smoke to quit?

There are steps employers can take to decrease the number of employees who smoke.

  • Educate employees about the dangers of smoking.
  • Create an environment that discourages smoking, which includes not allowing smoking in the building and/or on your property.
  • Offer smoking cessation programs as part of a corporate health and wellness strategy.

What are some best practices for smoking cessation programs?

A number of tools can be used as part of a smoking cessation program, such as:

  • Ongoing support and motivation.
  • Personalized plans to quit.
  • Rewards for participation and achieving milestones.
  • Integrating cessation efforts with health care benefits, such as paying for nicotine replacement therapy.
  • Having customized data that reports on the program’s effectiveness.

Each situation is different, depending on how big an issue smoking is for an employer and on the workplace culture, so use these variables to customize the program to meet your specific needs. With self-funded insurance, it is easier to create unique one-on-one lifestyle management programs. For fully insured employers, some insurance companies will offer — depending on state mandates — smoking cessation as part of wellness programs, either embedded into the basic offering or sold as an add-on or rider.

Many employees won’t quit in the first year, so be persistent. Every year, 17 million adults attempt to quit and only 1.3 million succeed, according to AllOneHealth Group. Smoking cessation programs require a three-year investment to break even, with benefits exceeding costs after five years when it has become ingrained in the culture of that organization.

Are cessation programs more effective than charging smokers more for health insurance?

There is a carrot-and-stick approach, and charging more is certainly a stick approach. However, a lot of employers combine the two approaches because it is easier to charge a smoker more if you are providing them with an opportunity to quit. Employers should consult with corporate attorneys before they differentiate what they charge for smoking and nonsmoking employees, as some state laws may prevent fully insured companies from doing this. In fact, the federal government thinks so much of the practice of differentiating that it is built into the health care reform act.

Smoking employees cost more and from an employer’s perspective, the ability to charge more could help offset that health care cost. Still, the addictive nature of smoking means such penalties are more of an incentive not to smoke than a reason to quit.

How does tobacco use impact employers’ costs?

Tobacco costs the U.S. $96 billion in health care expenditures and another $97 billion in lost productivity each year, according to the Centers for Disease Control. There is a huge opportunity for employers to find the right smoking cessation program for the organization. There is already incentive for many employees, as studies have found that 68 percent of smokers want to quit.

An example of the impact on cost is Illinois, which recently more than doubled its cigarette taxes. As a result, 72,700 Illinois kids will not become smokers and 53,400 adults will quit, according to the Campaign for Tobacco-Free Kids. In Missouri, voters will decide Nov. 6 whether cigarette taxes should be raised by 73 cents. HealthLink supports increasing the state cigarette tax, which is the lowest in the nation at 17 cents. Through the tax code, the health of the community will improve. Employers can do this on a smaller scale through an effective smoking cessation program.

Steve Martenet is president of HealthLink. Reach him at (314) 923-4474 or [email protected]

Insights Health Care is brought to you by HealthLink®

How to make wellness work for your company

Marty Hauser, CEO, SummaCare, Inc.

When considering whether to begin a company-wide wellness program, many CEOs and benefit administrators can be overwhelmed and confused with the options available to them. You may wonder what kind of program is right for your company, how much it will cost, how you are going to engage your employees and whether there will be a measurable return on investment (ROI). Often, by working closely with your insurance carrier, you can build a strong wellness program from the ground up.

“Implementing and maintaining a successful corporate wellness program doesn’t have to be difficult,” says Marty Hauser, CEO of SummaCare. “With a little guidance from your insurer, you can successfully begin and manage an effective program that will assist in keeping you and your employees healthy and happy.”

By working closely with your insurer, you can learn tips for overcoming hurdles before beginning your program, ways to engage employees to participate, ideas for implementing effective incentives and even how to determine success metrics — regardless of the size of your program.

Smart Business spoke with Hauser about successful wellness programs that began small and produced big results.

How can a company take the concept of wellness and turn it into an actual program that works for it?

Having an idea of what you want your wellness program to accomplish is one of the most important factors in turning the idea or concept of wellness into reality.

For an example of how this can happen, take Company A, a manufacturer of frozen bakery products. Company A has 113 employees and tried for several years to implement a wellness program before finally finding one that made sense for its culture and staff. After years of informal, sporadic wellness initiatives, Company A decided to create an organized, sustainable wellness movement for employees as a resource for improving their health conditions.

Supported by the co-owner’s belief that he owed his staff information, instruction, incentives and encouragement to help improve the quality of their lives, Company A designed a diverse, low-key and nonjudgmental program to help employees improve their diet, exercise regularly and make more positive lifestyle choices. Company A designed a program that includes a variety of programs and activities for employees to choose from, allowing each employee to participate in those most appealing to him or her, without a requirement for participation or consequence for not participating.

Though initially faced with skepticism from employees and difficulty identifying ways to interest a broad number of people at the same time, once the employees at Company A realized the company was serious and simply trying to guide and support those wishing to improve their health, participation quickly followed. Through the years, Company A has consistently offered new and different activities, formed a wellness committee that has kept in constant contact with staff and asked for suggestions from their employees to keep them engaged. To further encourage participation, Company A came up with an exciting incentive model: assigning each activity in the wellness program a certain number of credits. Once the employee accumulates the required number of annual credits he or she receives a $200 cash bonus.

Today, Company A has what they consider to be a successful program, with happy employees who have maintained healthier lives since the program’s implementation.

Is it possible for a company to quickly implement a successful wellness program?

While gauging the success of a wellness program takes time, it is possible to introduce the idea of wellness at your company and have it catch on quickly, thus turning it into a successful program in as little as a few years.

For example, look at Company B, a local manufacturing company with 180 employees. For six months, Company B considered implementing a wellness program before taking action. Employee absenteeism and unfavorable health, as well as rising insurance premiums, motivated Company B to design a program to not only improve the overall health of its employees, but to encourage early detection and treatment of health conditions.

The program launched as a voluntary participation program, but eventually became an incentive activity/points based program in which wellness activities were offered throughout the year. Employees receive points for every activity in which they participate. Employees then receive a discount, penalty or neither on their biweekly medical payroll deduction based on the points they accumulate during the previous year’s wellness program activities.

In addition to the points program, Company B holds drawings throughout the year in which employees who participate in wellness activities receive prizes. Also, they hold a monthly fruit or vegetable spotlight  — and all employees receive that month’s featured item. Employees are provided with access to a nurse who can answer questions, listen to employees, create activities and assist with annual health risk surveys.

Today, Company B maintains and manages a successful wellness program with high employee engagement, thus giving its employees the opportunity to take control of their own health and earn rewards for doing so.

What can an employer do if interested in launching a wellness program?

If you are interested in introducing wellness in your workplace, talk to your insurer to see what kind of program might be right for your employee population. Make sure to communicate what you may have already tried, what has worked and what hasn’t worked, and what your short- and long-term expectations are for the program. Your insurer should be able to help you design a wellness program that is right for you and your employees.

Marty Hauser is the CEO of SummaCare. Reach him at [email protected]

Insights Health Care is brought to you by SummaCare

How online HR/Benefits administration can benefit your business

John Galley, President, EBenefits Solutions, UPMC Insurance Services Division

As companies grow, the demands on human resources departments also increase. To satisfy demands, employers have to be aware of the advances in self-service technology in HR that can increase productivity and create real cost savings.

HR departments can see tremendous benefits from technological innovations such as online HR/Benefits administration.

“Online automated HR/Benefits administration is attractive to companies with a sizable work force — generally 200 or more employees — because at this size, HR departments can become bogged down with daily administrative activities,” says John Galley, president of EBenefits Solutions, which is part of the UPMC Insurance Services Division. “Automation of these activities via the Web can eliminate these daily tasks for HR departments so that they can focus more of their time and energy on strategic initiatives that have a greater business impact. Online HR/Benefits administration also saves companies money, while increasing efficiency and security.”

Smart Business spoke with Galley about the benefits of online HR/Benefits administration and why it matters to employers.

Why would an employer want to make use of online HR/Benefits administration?

For many companies, the HR function has become more complex, difficult and time consuming. Oftentimes, more strategic initiatives can be squeezed out by the daily demands and volumes of administrative issues that must be addressed because they affect the work force every day. Fortunately, solutions are available.

The advantages of online HR/Benefits administration to an employer are many. Massive amounts of paperwork associated with benefits and payroll can overwhelm an HR department. There is a need to handle a number of documents that need to be filled out, signed, dated, reviewed, entered into various internal and external systems, such as carrier databases and the employer’s payroll/HRIS (Human Resource Information System) platform, and then filed. But online HR/Benefits administration can automate much of that process for employers.

Online HR/Benefits administration frees staff from duplicate paperwork, prevents errors and places all employees’ files in the same system, making it easier to access and retrieve. Other databases, such as a carrier system or payroll/HRIS platform can then be securely updated in an automated fashion via an electronic exchange.

Online HR/Benefits administration can also include a host of special features, such as embedded communications tools that allow HR departments to customize messages to various employee populations. The most advanced technologies do much more than handle open enrollment — they handle new hires, life events such as marriages, birth of a child, divorce, etc., as well as employment events such as a promotion or a move from part-time to full-time employment. Each of these has benefits and other HR implications that may be automated by a single solution.

And, because HR/Benefits administration virtually eliminates mailing costs and reduces time and other third-party related costs from operations, most companies realize a return on investment of 200 to 300 percent in the first year. In short, employers can receive better service at lower costs.

What advantages are there for employers with an online HR/Benefits system in place?

Most employers are thinking about strategies to help advance their work force so they are better equipped to handle change and move more swiftly. What is their communications strategy? What is their portal strategy? How can they move wellness initiatives forward to provide meaningful impact on medical trends and other lost productivity costs?

An online HR/Benefits system can provide answers to these key questions — the most advanced and state-of-the-art technologies in the market can create an integrated and seamless experience for employees, one that allows them to easily navigate a single system to accomplish their daily HR/Benefit activities.

These technologies also provide a gateway into other platforms such that wellness, absence, and other key initiatives can be easily and seamlessly managed through the same integrated portal. Because employees could perform all of these tasks without contacting HR or leaving their desks, this saves time for employees and HR staff, thus increasing productivity for the employer.

The right online HR/Benefits system ensures greater security and privacy of information for employees. Electronic exchanges are secure and data is protected via various levels of security. For example, HR administrator access can be limited to HR administrators only, and the information they have access to can be further limited by role, department and location.

What strategic advantages can an employer gain?

We have found that getting the work force onboard with online communications can help to make the organization more nimble and quick. Key messages can be communicated instantly to the work force, and these messages are actually heard and, when needed, responded to.  Our work force has been given online tools to help them make decisions about which medical plan option might be best for themselves and their families. This saves them time and money and helps them make better decisions and better use of their pay, which increases employee satisfaction.

Lastly, because we have a fully integrated HR/Benefits portal, our employees can easily navigate among sites without having to remember separate Web addresses, user names or user IDs, and passwords. This integration helps employees quickly and easily get where they need to go and is one of the key reasons that we achieve more than 90 percent participation in our wellness program each year.

Employers need to think beyond just employee benefits when developing their Web strategy. They should think about all aspects of online self-service for employees and if they are looking for a strategic partner, find one that has the ability to offer additional services when they are ready.

John Galley is president of EBenefits Solutions, part of the UPMC Insurance Services Division. Reach him at (412) 647-3393 or [email protected]

Insights Health Care is brought to you by UPMC Health Plan