’24-hour’ policies gain market share as ‘next step for controlling costs’
A new approach to benefits that integrates health, disability, and Worker’s Compensation benefit plans is gaining momentum in the Milwaukee area because it is helping control health-care costs, employers, vendors and consultants say.
United Wisconsin Services, and Royal Alliance, formerly EBI Companies, each offer so-called "24-hour" policies in the Milwaukee area. A 24-hour policy combines group health, Worker’s Compensation, and short- and long-term disability coverage. It provides health coverage and wage replacement for both occupational and non- occupational injuries.
Compcare Blue president Mary Traver calls integrated insurance products "the next step for controlling costs." Managed care brought cost controls and efficiencies to health care; integrated plans extend them into occupational injuries, she says. At the same time, the emphasis of Worker’s Compensation plans on getting employees back on the job moves into general health-care services. "It doesn’t matter where an employee sprained his ankle, at work or at home, it’s in everyone’s interest to get him back to work quickly," she says.
"That is really what a 24-hour product is: An integrated, comprehensive approach to treating illnesses and injuries with a return-to-work philosophy that ensures appropriate health-care utilization and maintains productivity," says Kristine Seymour, director of sales for United Wisconsin Services. Seymour served as product manager for United 24 when it was launched in 1997.
Such policies have been available in the Milwaukee area since 1995 when EBI Companies of Brookfield introduced the area’s first integrated insurance product. (EBI was acquired by Royal Alliance in a 1999 merger.) However, the concept has only recently caught on.
Growing demand
Now business is booming in the mid-size market, integrated policy vendors say. United 24 "has just had one terrific year," says Coleman. "It has seen about 80% top-line growth in the past 12 months. Its 2000 fourth quarter sales topped $1.5 million in premium."
This year promises to be even better, says Coleman. In January 2001 alone, sales reached $2 million in premiums, he says.
"Demand in this market is definitely increasing," says Perry Spinelli, Royal Alliance’s marketing manager for integrated employee benefits. "In the five years we’ve had our product in the market, the increase in demand has been growing. But it’s not for everybody."
Spinelli and Coleman say the major growth market for 24-hour insurance plans is among businesses with 60 to 250 employees. United 24’s clients average about 70 employees, says Scott Coleman, United 24 product director. Royal Alliance markets integrated policies to companies with 200-plus employees, says Spinelli.
"Smaller companies find it difficult to offer the modified work duty that is required in 24-hour policies," says Coleman. "They don’t have the flexibility." Large companies, on the other hand, are likely to self-insure, he says. Even if they don’t, the task of integrating the health-care component for a big, multi-site, national company is daunting, Spinelli adds.
A closer look at a 24-hour policy
United 24 is an excellent example of a fully-integrated, 24-hour plan, says Seymour. It integrates three plans: health-care coverage from Compcare Health Services with managed Worker’s Compensation through United Heartland, Inc., and disability coverage through United Wisconsin Group. The United 24 plan also incorporates a fourth line, if you count employee/human resource services such as Employee Assistance Programs and benefit counseling. The vendors are all owned by United Wisconsin Services, and operate under one administration, providing operational efficiencies that reduce costs, says Seymour.
Each insurer in the plan has its own case managers, but those managers are cross-trained on the issues and approaches of the other insurers. However, employees have only one point of contact, no matter which product line is involved.
United 24 created new guidelines to promote return-to-work attitudes, Roger Formisano, executive vice president and chief operating officer of United Wisconsin Services told the National Underwriter, an insurance industry publication. "In traditional insurance settings," he explains, "the health plan may prefer to go easy on service so nature can take its course, while the disability plan may prefer to see intensive services applied up front, in order to spur early return to work. But in United 24, even the health plan is on the back-to-work track."
The result, he says, is that when there’s an injury, all the physical therapy is done quickly, regardless of where the fall occurred. That may increase some of the health-care costs, he concedes, but the program is managed with an eye on total dollars spent under all three insurance plans. The extra health-care costs may be offset by the savings on the disability side of the plan.
Getting results
The present boom in demand wouldn’t be happening if clients weren’t getting results, vendors say. Companies with 24-hour plans experience an average savings of 15%, according to multiple studies on 24-hour products across the country. Many of those studies are available on the Integrated Benefits Institute Web site at www.ibiweb.org. The IBI is a non-profit organization providing information, research, and analysis for employers and insurers.
United 24 has a number of clients who praise the plan in United 24’s promotional literature. "Our employees are very satisfied," says Robert V. Du Charme, chief financial officer of New Berlin Plastics.
Claire Smith, vice president of Human Resources for the Boys & Girls Clubs of Greater Milwaukee, is quoted saying, "Having our Worker’s Comp, health and disability coverage under one umbrella, and having one customer serve rep handle it all, saves us valuable time and money."
"United 24 has effectively stabilized health and disability insurance costs for employer clients in the four years it has been on the market," says Seymour. Its integrated approach controls costs by combining the administration of policies. It also provides opportunities for cost savings on medical services. Instead of paying worker’s compensation care at 100%, HMO networks can be accessed for discounted service. "Those savings are passed to employers who buy the plan," says Seymour.
However, the real savings come from spreading the risk over the three lines, she says. "That’s what you’re after in insurance."
More important, by integrating health-care delivery, patients get better care, and duplication of services is avoided, she says. "Say you have a diabetic with a strained back. With United 24, a holistic approach is taken to the patient’s care."
"There is better communication between medical service providers," adds Traver. "The patient has a single point of contact for both Worker’s Compensation and health care. Providers through both plans have access to his medical history and work together to plan treatment. That communication improves the quality of care."
That approach also improves employee satisfaction by handling all insurance claims in one place, in the same way," says Spinelli. Employees are not as likely to fall through the cracks as they are when separate insurers fight about who has responsibility for a claim."
"The future of 24-hour products is promising," says Seymour. "As more of the business community realizes the benefits of an integrated product, demand for the integrated approach to employee benefits will increase."
