Barton Margoshes, MD Chief Medical Officer CIGNA Group Insurance

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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

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

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Individuals Receiving LTD Increased 62 from
1992-2002
Source Department of Labor
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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

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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The Impact of Lost Productivity

• Average 6,000 Per Employee Per Year
• Averages 15 Of Payroll

Employer Costs of Lost ( of
Payroll) Direct Indirect Total AON 4-6 8-1
2 12-18 Towers Perrin 8-12 4-6 12-18 Watso
n Wyatt 6.1 2-4x direct costs 12-30 Mercer 4.
4 .5-4x direct costs 7-22
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

Studies have shown similar effect of disease on
presenteeism for depression, osteoarthritis,
migraine, diabetes, reflux disease.
Source Burton et al, JOEM 2001 vol. 43 (1) l
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Old Paradigm
How We Used to Weigh STD and Medical Costs
Total Cost
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New Paradigm
Weighing the Total Cost
Total Cost
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Integrated Health Productivity Management Model

• Holistic approach to optimize a companys human
  capital investment in an employers 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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CIGNAs 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 WellAwares (disease
  management) Cardiovascular Disease and Low Back
  Pain programs experience shorter disability
  durations lower incidence of short term
  disability

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Proven Results
Solutions that Address Both Medical and
Disability Cost Drivers Have a Greater Impact
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• Claimants with both a CIGNA STD and a CIGNA
  HealthCare claim have

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10
5
0
12Shorter STD Durations
6Higher Return to Work Rates
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Average Medical Disability Costs for Employees
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Disease Management Reduces Both Medical and
Disability Costs
Disease Management
Condition Admission RateReduction Medical Cost Savings DisabilityIncidence Rate Reduction DisabilityDurationReduction
Cardiac 4.0 13.0 3.0 7.7
Low Back 2.2 12.0 1.0 18.0
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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 employers human capital through
  wellness, disease management, quality healthcare,
  and integrated disability makes business sense