It should be no surprise to anyone in the workforce that we are experiencing the impact of an aging workforce. For Generation Y or Millennials (born between 1980-2000), they've been waiting in the wings for their more senior colleagues to exit stage left for some time now. What may be complicating the opportunities for talent turnover involves the influence of employers needing to accommodate older workers with chronic disabilities.
Older workers = increase in prevalence of disability.
With a growing demand for younger, more technologically savvy workers, employers may find themselves less available to create opportunities for new talent given the need to accommodate age-related disability issues. Not only are employers struggling for ways to attract new hires, they also face the "brain drain" when experienced workers become disabled. As employees age, the risk of disability increases.
Aside from the impact of an aging workforce, there are other changes occurring in disability management landscape. The following list represents some of the more recently noted themes.
1) Increasing cost and number of days absent.
Statistics Canada reported that in the year 2000, the average absence per worker was 8.0 and in 2010, it jumped to 9.1 days. This increase in days absent correlates to a mounting cost burden for employers as disability from all sources (sick leave, salary continuance, short and long term disability) already represents between 2% to 3% of Canadian payroll costs. As per the Conference Board of Canada's 2012 report, the direct cost of absenteeism in businesses was estimated at $16.6 billion and the impact of the greying workforce will only continue to add pressure as a result of increases in disability related absences.
2) Greater emphasis on prevention
With the popularity of workplace wellness programs, promoting healthy lifestyles and illness prevention has picked up momentum. A growing emphasis on prevention and intervention means that employers and their service providers are taking a closer look at workplace policies, support for recovery and work environmental factors, accommodation, customized case management and supervisor training. Employers are dealing with the idea of whether they take should also assume the role of workplace health educators to create a culture where health and well-being is a priority.
3) Increased focus on claims coordination and integration
According to the 2013 Disability Management Employer Coalition and Spring Consulting Employer Leave Management Survey, 83% of employers surveyed are integrating Short-Term Disability programs with other employee leave programs. (up from 46% in 2011). Additionally, 77% of employers are integrating their LTD programs with other leave programs (up from 50% in 2011).
4) Mental health related disabilities continue to rise
According to CAMH, approximately one in five Canadians or 20% to 25% of a company's workforce may be dealing with mental health issues. Employers are challenged to face this reality head on given it is becoming the fastest growing disability type in Canada with an increasing number of cases reported for depression and anxiety. As per a Morneau Shepell survey, 66% of employees who took time off work didn't report it as a mental health issue. The associated cost to our economy from workplace losses represents more than $20 billion annually. (Mental Health Commission).
As employers continue to grapple with the pressures related to talent retention and disability accommodation in the workplace, there remain valuable ways to identify and implement areas for improvement. One of our specialities involves an evaluation of your current benefits program along with opportunities to better provide benefits information through training, mobile and in-person strategies. We invite you to contact us to learn more. We're here to help so that you can focus on what you do best.
Plan sponsors face a new and growing dilemma. While they have addressed the challenges of mitigating the costs associated with prescription drugs for years, the influx of orphan drugs creates a new and complex situation.
Imagine a scenario where a 10 year employee learns that his 4 year old son has been diagnosed with a rare and life-threatening disease. The father, a hard-working, well-liked, loyal employee, seeks help from his employer to pay for the cost of a drug that can potentially save his son's life. The dilemma? The drug's price tag is more than $700,000 for a round of treatment. It isn't covered under the group benefits plan. What does the employer do?
Before we address the scenario further, let's take a step back and look more closely at the definition of orphan drugs, the developing demand for them, and why private payers are increasingly faced with making these kind of difficult decisions.
Orphan drugs defined.
Orphan drugs are a pharmaceutical agent that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease. A rare condition is a life-threatening, seriously debilitating or serious and chronic condition affecting a small number of people.
As per Cadth.ca, it is estimated that there are between 6,000 and 8,000 distinct rare diseases in the world and according to the Canadian Organization for Rare Diseases (CORD), rare diseases affect one in 12 Canadians. Given we are a nation of approximately 37 million people, 2.8 million with rare diseases seems like a significant portion. Additionally, as patents on bestselling drugs like Lipitor and Viagra expire, drug makers are looking to other markets for growth opportunities. Orphan drugs are increasingly entering the market as technological advances continue.
While 2.8 million Canadians or 350 million people worldwide are diagnosed with a rare disease, the ratio remains too small for drug makers to develop orphan drugs using the market conditions applied to other more mainstream medications. Since research and development costs are high for orphan drugs, the cost to purchase these drugs are as well. Affordability remains a significant issue.
Who's on first?
Health Canada continues to develop a regulatory framework for orphan drugs and to increase the availability of these products on the Canadian market. Government payers want to avoid paying for expensive orphan drugs that haven't been proven effective so, at present, private plans are considered first payer with provincial health plans coming in second. A complicating factor challenging the payment model involves the fact that not all provinces have drug formularies to address rare diseases and their reimbursement under specific conditions. Throw in the lack of consistency in both the private and public sector with regard to what rare drugs warrant being covered and you have a perfect storm for the orphan drug payment dilemma.
What's your Benefits Philosophy?
Coming back to the scenario with the father seeking help to cover the cost of an orphan drug for his son's life-threatening condition, the issue remains an onerous one for the plan sponsor thrust at the forefront of the payment model. Employers who develop a benefits philosophy that aligns with the organization's vision, mission, and values have a clearer line of sight to making tough decisions such as whether to cover the cost of orphan drugs or not. Taking a preventative approach before being forced to address such a difficult decision is key. We invite you to contact us. We will work with you to create a benefits philosophy that aligns with your total rewards strategy and your company values. As ever, we are here to help so that you can focus on what you do best.
Imagine that you were traveling from one desert town to another and needed to carry water with you along the way, but the bucket you used to transport the water had holes in it. Since water was such a precious resource, you'd likely ensure that you plugged the holes in the bucket immediately or replaced it with a new bucket. You wouldn't want to risk the unnecessary loss of water by not addressing the leaks.
There's a hole in my benefits bucket.
Now picture a scenario where the bucket is your group benefits plan and the holes in the bucket are fraud and abuse that needlessly drain dollars from your healthcare spend. According to the Canadian Health Care Anti-fraud Association, the cost of healthcare in Canada rose to $215 billion in 2014 and approximately $2 billion was lost to fraud and abuse. That is one leaky bucket! Plan sponsors continually to try to manage the mounting costs of prescription drugs and other factors that influence claims expenses, but the question remains -- are they doing enough to plug the holes caused by healthcare fraud and abuse? Even the most creative benefit plan cost containment measures are challenged by the effects of fraud and abuse. The good news is there are several ways to plug the holes in the bucket and prevent leakage.
Fraud and Abuse defined.
Fraud in healthcare is defined as deliberate deception for financial gain at the expense of a group benefits plan where abuse could be considered the unnecessary use of plan dollars driven by a sense of entitlement. Where fraud is illegal, abuse doesn't usually dictate criminal intent. Rather it is often motivated without awareness of it being highly unethical or possibly criminal. An example of abuse occurs when plan members and/or their eligible dependents use their benefits to the annual maximum even though the services they receive are deemed not medically necessary. Fraud, on the other hand, involves a plan member or a healthcare provider or both, knowingly falsifying a claim or lying about services provided or received.
Plan Sponsors put pressure on service providers.
Rapidly changing technological advancements create ease of service, but also growing opportunities for healthcare fraud. As financial institutions, like the major banks, dial up their fraud prevention measures, those who look to commit fraud are instead turning their attention to the healthcare industry. As a result, plan sponsors are putting more pressure on their service providers to help them plug holes in their group benefits bucket created by more sophisticated healthcare fraud techniques.
What are service providers doing to prevent healthcare fraud?
While technology has been used to create fraud, it can also be used to prevent it. Service providers place greater emphasis on healthcare fraud prevention measures. From pre-payment to post-payment verification, random checking of submitted claims, hospital claim audits and delisting of service providers, big data is used to analyze claim patterns and feature anomalies commonly associated with fraud and abuse.
Plan Sponsors play a key role in prevention.
As service providers continue to investigate new ways to protect their plan sponsors from fraud and abuse, there are steps employers can take to fortify the walls of their benefits bucket. Plan design is an important consideration when addressing fraud prevention. Introducing features such as a Health Spending Account, deductibles and copays as well as reasonable coverage limits are some, but not all, of the steps that can be taken to limit the potential for fraud and abuse-related plan leakage.
Educate to prevent.
Plan members may unwittingly drive up claims costs through acts of healthcare abuse and waste. They also may not realize that some healthcare providers commit fraud and that their own actions unknowingly enabled a fraudulent activity. The more plan members are informed and educated about the negative consequences of healthcare fraud and abuse, the more likely they will be to do their part to help prevent it.
Additionally, plan members and their dependents should be educated about the different ways to report fraud. It should be easy for them to access a phone number, email address or website in order to reach an anti-fraud resource either internal to their organization, via their service provider or an industry contact such as the Canadian Health Care Anti-fraud Association at www.chcaa.org.
Through a combination of tactics and efforts by various parties including the plan member, plan sponsor and service provider, the effects of fraud and abuse can be minimized. With decades of experience in the benefits industry, we bring our knowledge of fraud prevention and plan design best practices to work for you. Together, we can address the risk of healthcare fraud and abuse and make sure your bucket avoids developing preventable leaks. Please contact us. We're here to help so that you can focus on what you do best.
Dave Dickinson, B.Comm, CFP, CLU, CHFC
Experienced Benefits Specialist ready to optimize your group benefits and pension plans.