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TABLE OF CONTENTS

EDITORIAL Editor-in-Chief

Jonathan Edelheit

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PRODUCTION Graphic Designer

THE ADVANTAGES OF PRIVATE LONG-TERM CARE COVERAGE

by Samuel H. Fleet

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Going Ahead of the CLASS:

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Give Me Drugs!

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HEALTH REFORM AND THE CLASS ACT: THREAT OR OPPORTUNITY? by Todd Grove

by Mark Roberts

Tercy U. Toussaint

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TABLE OF CONTENTS

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LETTER FROM THE EDITOR

US Employee Benefits Industry Players Head to Chicago by Jonathan Edelheit

is the Biggest Myth 02 What about Electronic Fund Transfers?

by William H. Davis

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Worker’s Compensation Cost Escalation: TECHNOLOGY TO ROUNDUP THE USUAL SUSPECTS

by Ritza Vaughn

Narcotics Abuse 12 Reducing in Worker’s Compensation

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Directed Healthcare 13 Consumer Rescues Medicaid

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5 Steps to Good Decision Making

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Health & Care Are They Going in Different Directions?

by Nicole Ropiza

by Tron Emptage

by Lisa Holland And Gregory J. Hummer

The Costs of Doing Business

REDUCING ADMINISTRATIVE BURDENS IN A STATE HEALTH EXCHANGE

by Bob Barry

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UNIONS CHEAT MEMBERS OUT OF HEALTH AND WEALTH

Connecting Employee Health to Voluntary Discount Dental Plans

by Kescia D. Gray

by Rajiv Mudumba

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The Cost of College

by Kay Kimball Gruder

by Lisa Holland and Gregory Hummer

Copyright © 2011 Self Funding Magazine. All rights reserved. Self Funding Magazine is published monthly by Global Health Insurance Publications. Material in this publication may not be reproduced in any way without express permission from Self Funding Magazine. Requests for permission may be directed to info@SelfFundingMagazine.com. Self Funding Magazine is in no way responsible for the content of our advertisers or authors.


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EDITOR’S LETTER

US Employee Benefits Industry Players Head to Chicago

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am very excited at this year’s upcoming Employer Healthcare Congress, October 26-28th, 2011 in Chicago. This will be our 3rd year, and each year we have focused on making improvements. Last year, only in our second year, we became one of the largest employee benefits conferences in the country beating out almost all other benefits conferences, some of which have been around for over 23 years. We have moved to Chicago this year because of it’s central location which will draw a much larger audience. Our attendance this year is already almost at 200% higher than at this same time last year, and I believe this is because of our location and that Chicago is home to a high concentration of mid-size and large employers. This year we have reinvested in the congress significantly to make this the biggest and best year yet. We have two great keynote speakers, Bill Rancic, the winner of Donald Trump’s 1st “Apprentice” TV Show, and Cecil Wilson, the President of the American Medical Association. We have changed the format of the congress to have more cross-overs as to bring our symbiotic conferences closer together, and we will have more advanced educational sessions and workshops. We have also expanded our VIP program and will be including not just employers but agents and consultants also this year. What I am most excited about is our new networking software which has been newly built and is more of a social networking tool on top of meeting scheduler. It will make it easier for attendees to view who is coming to the conference, through photos, bios and allow for attendees to synch to twitter, LinkedIn and Facebook to see who in their network is attending the conference. Tomorrow I am headed to New York City for an interview with FoxNews. See you soon.

Jonathan Edelheit

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What is the Biggest Myth about Electronic Fund Transfers? by William H. Davis

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t is a common belief today, that if a claims administrator begins to send electronic payments (EFT) to healthcare providers it will lower their fulfillment costs. When, in fact, this is not the case. The problem is that, unless a claims administrator produces an 835 that providers will accept, the administrator must still print an EOB, so the provider can reconcile to their EFT payments. Since EFTs use trace numbers and printed provider EOBs generally using check numbers marked “void”, it creates difficulties for providers to reconcile the EFT deposit to the paper EOB. This in turn can cause an increase in either the number of customer service calls or the provider resubmitting the claims. Additionally, because the cost of an EFT is only pennies less than the cost of clearing a check, there is little savings to be gained by the administrator! Moreover, if an administrator is moderately successful in obtaining 50% of its benefit dollars transmitted via EFT with provider adoption in accepting 835s, this rarely represents more than

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five to ten percent of EOBs produced for providers. This is due to the fact that only the larger provider organizations can accept both an EFT & 835 making them the administrator’s largest payees. This means that the administrator must still bear the additional expense of producing provider payments over 90% of the time. The truth is that EFTs help providers increase their cash flow, but save very few dollars for the claims administers. The most effective way for administers to truly save on fulfillment costs (e.g. print, postage, and banking fees) is to dramatically reduce the number of provider EOBs processed while migrating toward electronic delivery options that can reliably deliver reimbursements to a broad base of providers. The first step in this process is to begin consolidating all payments electronically across all self-funded employer groups weekly for each individual provider in a “non-comingling and ERISA-compliant”


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manner. The savings in this consolidation process is dramatic, because the typical claims administrator approves different employer group’s payments on different days, and each of these groups generally pays the same providers with one check/per claim. On average, an administrator can achieve a consolidation rate of four or more claims on one provider EOB with one check, rather than generating four different checks being mailed out on four different days. By adopting this strategy with other treasury processes it will dramatically reduce the reconciliation costs and bank fees

Alternative delivery options include:

for the administrator, or its clients, as well the number of pages to print and postage if a provider is unwilling to accept electronic delivery. This innovative process alone will reduce an administrator’s EOB print and postage expenses by over 60%, plus saving over 75% on banking fees on provider payments!

back up the payment. The administrator is charged nothing in this case, thereby completely eliminating its print and postage costs.

Stored Value Virtual Card: The fastest payment delivery option for the provider is the stored value virtual card. Under this payment option a provider receives a fax image of the provider’s consolidated EOB for posting and a virtual card number for instant payment by entering this number in its card processing terminal. This is the easiest and safest delivery method because the providers do not have to give the administrator their bank account information, and they have the paper EOB to

Provider Direct: Many claims administrators have relationships with local providers who do not have the 835 capabilities to support EFT transactions. Provider Direct takes the Once the administrator has incorporated consolidated provider EOB and creates a PDF this consolidation process, which is under image of the document with the EFT trace their control to implement, providers may number on the document. Once the EFT has be contacted aggressively to begin accepting been created, an e-mail to the provider directs alternative payment methods of delivery. the provider to the location of the EOB

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PDF. In this way, the provider receives its EOB and can reconcile it to the EFT payment by comparing the trace number from its bank to the trace number on the document. Generally, a fee per transaction is charged to the administrator, but the fee is far less than the administrator’s consolidated print and postage costs. Provider Direct does require the provider to give the administrator its bank account information. Vendor Direct: Although many providers have clearinghouses and lockboxes, most of these vendors have been unwilling to support individual 835s and individual EFT payments from the administrators due to their or their client’s inability to reconcile these individual EFT transactions to individual 835s. With weekly consolidated EOBs, however, these vendors are now more willing to take these transactions and process them on their client’s behalf. The fees paid by the administrators range from free to a per claim fee. However, all fees are again far less than what the administrator would incur paying their print vendor. Summary In summary, EFTs alone do not lower the administrator’s fulfillment costs unless coupled with an 835, and only the largest providers process both. Therefore, the administrator is forced to produce 90% to 95% paper EOBs thus incurring additional costs. The only solution for administrators to reduce fulfillment costs is by consolidating payments more efficiently while utilizing alternative electronic delivery methods that are more acceptable to a broader base of providers.

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Bio Mr. Davis is the founder and CEO of ECHO Health, Inc. located in Cleveland, OH. With over 30 years of industry experience, he is recognized as a visionary and a pioneer in the application of technology in the medical payment space. Prior to creating ECHO Health, Mr. Davis was the CEO of Secure Solutions, where he developed anti-counterfeit processes for MasterCard International. Mr. Davis holds five U.S Patents and is a graduate from Ohio University.


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Worker’s Compensation Cost Escalation: Technology to Roundup the Usual Suspects by Ritza Vaughn

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elf-funded workers’ compensation programs across the country are struggling to roundup the usual suspects that contribute to high program costs— namely medical and indemnity expenses, claims administration costs, litigation, and compliance with reporting requirements. Whether selfinsured workers’ compensation programs perform these functions in-house or utilize a third-party service provider, they must control and oversee these processes in order to impact costs and outcomes.

Traditionally, self-funded workers’ compensation programs have been hampered by legacy systems that lacked contemporary automation capabilities and resulted in inefficient operations. These systems were highly resistant to change, inter-connection with other systems and access by external third parties, such as claims specialists, loss-control experts, and attorneys. Recognizing that today’s claims process must be flexible and extend beyond an organization’s

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four walls, program managers are beginning to leverage modern infrastructure to better support proven best practices. In fact, browser-based technology has become a means to automate operations, accelerate transactions, tightly manage quality and performance, and mine business intelligence to continually improve program results.

Supervisors and managers who need to be notified of injuries can receive automated, immediate alerts on the same 24/7 basis. In addition, the development of “intelligent” online forms has made the reporting process easier. These smart forms use drop-down lists, auto-population of fields, and threads of logic to navigate users quickly through the electronic claims submission process. Due to its intuitive, Advanced Claims Automation user-friendly design, online reporting is often faster—not to mention less expensive—than a Since claims cost the property and casualty typical phone transaction. industry approximately $40 billion just to administer, it is a core insurance process that • A paperless paradigm. Today, the vision would significantly benefit from technological of paperless claims processing is finally being automation. In fact, it’s estimated that claim realized. In its rudimentary stage, self-funded organizations spend as much as $11 – 14 billion programs may have scanned documents but in overpayment, waste, and inefficiency—or continued to use paper to exchange information what the industry generally refers to as “claims via fax and mail. To engage in a truly paperless leakage.” This leakage is primarily due to paradigm, however, organizations are now manual, paper-based operations and disparate avoiding the generation of paper documents, information systems that result in less than relying on electronic submission and exchange optimal claims outcomes and poor customer of information. In this data-driven environment, service. information is input once and made available to all parties via the browser-based infrastructure, Browser-based claims technology which spans the entire enterprise and beyond, helps organizations to achieve process so third-party partners can also participate in a transformation—moving from inefficient and paperless claims process. disjointed operations to a more automated and integrated workflow. The following claims • Consistent, quality claims handling. functions are now incorporated into a browser- In the past, consistent claims handling was based platform that exponentially increases the problematic; similar claims were often handled speed, efficiency and cost effectiveness with with widely divergent approaches and results. which claims are processed: For example, with some complex injuries, the same case given to two different adjusters could • Online reporting of injuries. Prompt produce a 100 percent variance in results. With and accurate reporting of injuries is critical business rules and workflow management, selfto achieving best-possible outcomes. With funded programs can consistently apply policies, the Internet, injuries are now reported at procedures, and best practices throughout their anytime—24 hours a day, 7 days a week. organization to ensure quality results. Business

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rules also help to guide junior adjusters through an organization’s unique claims-handling process, essentially allowing them to receive training and handholding as they go. • Business rules enable straight-through processing. Ideally, claims organizations want to apply adjuster resources where they are needed most. By leveraging a sophisticated business rules engine, self-funded programs can increase their rate of straight-through processing. This means relatively simple and straightforward claims are settled with little or no human intervention. Claims adjusters are then free to focus their time and attention on more complex injury claims that require their expertise and personalized service.

claims. With browser-based technology, online auditing enables greater transparency. Many organizations now perform real-time, concurrent reviews of 100 percent of their claims, enabling them to ensure a higher level of claims-handling performance. Audit findings then allow claim managers to fine-tune operations, achieve a tighter lifecycle and ensure cost-containment at key junctures of the claims process. Some entities have extended this function to also audit • The adjusters’ automation toolkit. Adjusters external service providers, such as medical can utilize automation tools—such as automated providers and attorneys. forms, diary systems, scheduling tools, electronic communication, and prioritization of tasks—to Technology to Manage Medical Costs help facilitate routine administrative functions, saving as much as 20 percent in adjuster time Double-digit medical inflation has affected and resources. With these capabilities, adjusters workers’ compensation programs nationwide. can focus on tasks that directly impact costs In fact, medical expenses now account for and outcomes. For example, letter-writing approximately 60 percent of the costs of an and form-generation templates automatically average claim. To control these costs, selfproduce documents with fields auto-populated funded programs are returning to tried-and-true from the claims database. Adjusters review, edit medical management, but with a slightly new and send the documents, which saves time and twist – leveraging a browser-based infrastructure automatically creates documentation within the to streamline and automate operations, as well claim. as to provide the data analysis capabilities to improve outcomes: • Quality control through online audits. Claim departments have traditionally audited • Quality providers. The most critical operations to ensure best practices are component to effective medical management is regularly performed. Since audits are time- utilizing an appropriate network of physicians consuming, they’re typically performed on a who understand workers’ compensation retrospective sampling of 10 - 20 percent of requirements, return-to-work (RTW) objectives,

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and the importance of leveraging modified duty. Today’s latest data analysis tools can help organizations profile physicians to pinpoint providers who have the lowest overall claims costs and best outcomes. As employees are injured at work, technology helps direct these patients to quality providers in pre-established networks, ensuring the best delivery of care and the greatest level of provider discounts. • Nurse case management. Nurse case managers should immediately be notified of urgent claims, so they can accompany injured employees to an initial medical visit; begin communication about RTW expectations and transitional work assignments; and help direct care to the extent allowed in the jurisdiction. Many of today’s nurse case managers are mobile or work from home. The latest browserbased technology allows them to access claims and medical information securely, at anytime from anywhere—as well as to communicate and collaborate with claims management staff to enable optimal outcomes.

Today, not only is the number of litigated cases growing, but average settlements are also rising. Generally, lawyer involvement drives up the cost of claims, but it does not increase the actual benefits paid to injured workers. As a result, it is in the interest of all parties to reduce litigation and lawyer involvement. • Rules to alert litigation specialists. The best defense to claims litigation is to enable highly qualified and experienced claims professionals to get involved early in a case to minimize the likelihood of litigation through up-front management. Business rules and alerts enable claims litigation specialists to ensure proper procedures are followed to evaluate claims and identify problems early on, so preventive measures can be taken.

• Medical bill review. Medical bills must be reviewed to ensure costs are billed in accordance with fee schedules, as well as provider discounts for additional savings. Bill review technology can update fees and discounts in real-time, ensuring the highest level of savings. In the past, medical bills and reports were housed separately from claims, creating silos of information that hampered efficiency. Today, medical bills and reports can be scanned and stored in one location, and linked at the claims level to ensure the most complete claims and • Hyperlinks to share data with attorneys. When litigation must occur, communication medical cost picture. and sharing of information with attorneys must be seamless. A browser-based platform Litigation Management provides hyperlink technology. A link can be

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identifying where losses are occurring and why, and to formulate a strategy to reduce and mitigate these incidents. To do this effectively, organizations require a 360-degree view of their risks and exposures.

sent via email, allowing attorneys to directly access claims information. These hyperlinks are secure and access rights are defined by the sender. For instance, a claims adjuster can email a hyperlink to the defense attorney. By clicking on the link, the attorney can connect to claim notes and can add information as well. • Analysis of litigation results. A browserbased platform also enables program managers to document and track judgments for plaintiff and defense counsels in order to identify trends and enable healthy competition among firms. For example, program managers may realize plaintiff counsel is targeting their employees, or certain defense firms may have a higher win rate.

In the past, there was no way to effectively collect and analyze loss information at an enterprise level; instead risks were reported and monitored by department. Many organizations utilized paper-based spreadsheets with data manually entered. These reports were timeconsuming and labor-intensive to generate. They often relied on poor data, and since reports were not dynamic, if information changed, someone had to update the corresponding files. In many cases, reports were delivered too late to effectively affect change. Today, browser-based technology compiles all claims and loss information in one location and shares it with appropriate stakeholders. The resulting real-time business intelligence provides self-funded programs with the data to monitor claims activity and to recommend effective loss-control initiatives for high-cost and high-risk areas:

By regularly receiving and distributing reports, program managers systematically build awareness of program performance against defined goals and objectives. Business units and frontline managers can view departmental losses and compel respective divisions to follow policies and procedures to help reduce injuries. In this way, people at every level of an Analysis for Safety & Injury Prevention organization contribute to program success. Supervisors use reports to identify departments Safety and injury prevention is another critical with significant losses, and work with these component to optimizing workers’compensation departments to reduce frequency and severity program performance. The key to success is of injuries. If a department has a high number

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of back-related claims, the department can reporting requirements. respond with injury-prevention training or by providing safety equipment. Rounding up the Usual Suspects According to many industry experts, organizations that utilize advanced data analysis capabilities gain a greater awareness of risks and can save as much as three to 10 percent on their “total cost of risk” or TCOR – the costs to monitor the effectiveness of their risk management programs.

Continued Compliance with New Reporting Requirements Finally, self-funded programs must ensure continued adherence with mandatory reporting requirements. Starting January 1, 2011, many self-insured entities started to report claims involving Medicare beneficiaries to the Centers for Medicare and Medicaid Services (CMS). Section 111 of the Medicare, Medicaid and SCHIP Extension Action of 2007 (MMSEA) has added these new reporting requirements, and meeting these requirements will be a huge undertaking. If claims are not reported appropriately, organizations may be fined $1,000 a day per claim. Self-funded entities must invest time, money and resources to understand the CMS guidelines, which are more than 200 pages in length. Many self-funded programs do not have prior experience with mandatory reporting procedures. Some lack the right data management and IT capabilities. Others do not want to rely on a reporting vendor to perform reporting on their behalf. Whatever the situation, self-funded programs can utilize browser-based claims technology to self-report and thereby comply with MMSEA

Workers’ compensation has been in a state of flux, but the usual suspects in terms of cost escalation remain the same. The critical new piece is utilizing technology to tightly manage and even improve program performance. Browser-based claims and risk management technology manages timely reporting of injuries, optimizes medical cost containment, and ensures best practices are consistently applied. Program managers should realize that a modern browser-based architecture has the ability to boost claims-handling efficiency and staff productivity. With a sophisticated IT infrastructure in place, self-funded program managers will be better equipped to put the usual suspects under lock and key. Many early adopters have already reaped the benefits: browser-based technology makes it easier for them to automate increasingly complex claims transactions, which involve multiple parties, multiple systems and various regulatory requirements.

Bio Ritza Vaughn is the global product director of claims. In this role, she leads the strategic direction of Aon eSolutions claims product. She also leads product planning and oversees the execution of the development lifecycle. She can be reached at ritza.vaughn@aon.com.

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Reducing Narcotics Abuse in Worker’s Compensation by Tron Emptage

Best practices a PBM can implement to reduce abuse and cost On-the-job injuries often involve chronic pain for injured workers and long-term liability for workers’ compensation self-insured payors. Many times, pain from a chronic injury is treated with narcotics. According to the 2010 Progressive Medical Drug Spend Analysis, narcotic spending accounts for 34 percent of workers’ compensation medication expenses. And while narcotics can be beneficial in the treatment plan for a patient in pain, there are serious risks involved when they are not used properly.

analgesics. In addition, another study co-released by CDC and SAMHSA found that emergency room visits linked to non-medical use of narcotics rose 111 percent between 2004 and 2008. Risks Associated With Narcotics Abuse While narcotics are considered safe and effective if used properly, they have the potential for leading to addiction and abuse if their use is not monitored and controlled. Misuse and abuse of narcotics represent three areas of particular concern for workers’ compensation self insurers including: 1. Potential for serious health risks 2. Higher percentage of medical expenses as claims age 3. Risk of litigation

The Centers for Disease Control (CDC) and the Substance Abuse and Mental Health Services Administration (SAMHSA) both indicate increasing misuse and abuse of narcotics over the past decade. SAMHSA data shows that there was a significant As the cost of prescriptions ─ including narcotic increase from 2000 to 2006 in the treatment of medications ─ directly impacts the cost of a substance abuse cases related to abuse of opioid workers’ compensation claim,

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insurers are looking for ways to quickly get control of cases of misuse and abuse. One of the most efficient ways to manage narcotic use in a claimant population is to partner with a pharmacy benefit manager (PBM). A PBM can clearly define a strategy for proactively and effectively monitoring narcotics. These plans and strategies help payors ensure injured worker safety and reduce expenses. Best Practices to Reduce Narcotics Abuse and Manage Expenses Forming a partnership with a PBM can provide workers’ compensation self insurers a valuable resource in controlling narcotics use and thereby reducing risk for all stakeholders. There are several key best practices that can be deployed by PBMs to assist self-insured payors. Best Practice #1: Defining a strategy Getting control of narcotics usage requires a well-defined strategy. Once the PBM reviews the prescription history, it should be used to develop a customized narcotics strategy for each medication plan to identify which medications are appropriate for the injury type and body part. They also account for proper duration of use and quantity limits. Best Practice #2: Capturing prescriptions at first fill When new claims are filed, it is important to capture when and what type of medication is filled at the onset of injury. PBMs should have in place a mechanism to capture this prescription information. Often these early prescriptions begin telling the story of the medication history and medication therapy to come. One method to capturing this data is through First Fill cards. These cards are typically distributed by the employer to the injured worker at the point of accident or injury. To ensure that both employers and injured workers use the program, PBMs

should offer training programs on their use. Best Practice #3: Offering home delivery programs and retail drug cards Both retail and home delivery programs provide the workers’ compensation self insurer an effective means to monitor and control an injured worker’s medication utilization. They also provide self-insured payors an opportunity to fully leverage pharmacy network participation and discounts, thereby reducing medication expenses. Retail drug cards. When an injured worker requires additional medications, a retail drug card program will give the self-insured payor control over what, when and where the prescriptions can be filled. Home delivery programs. A home delivery program offers the injured worker the convenience of ordering prescriptions online or on the phone while providing the workers’ compensation self-insured payor the ability to engage in proactive utilization review programs. They also give the self insurer a mechanism to educate injured workers on the risks associated with narcotics through direct interaction with the pharmacist dispensing the injured worker’s prescriptions. Best Practice #4: Managing prospective and concurrent narcotics utilization review programs The PBM should have a clinical management process to govern narcotics utilization that is managed by clinical pharmacists. The clinical drug utilization review (DUR) program should use a combination of evidence-based guidelines, peer review journals and recommendations provided by government organizations. Both

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prospective and concurrent review processes are essential to a successful program: Prospective utilization reviews. A prospective program allows all involved parties to plan for future outcomes with up-front information. Historical data and practices guide future decisions at the establishment of the PBM relationship. This prospective process allows for the achievement of cost control and utilization control. Concurrent utilization reviews. The PBM triggers concurrent alerts to inform the dispensing pharmacist about possible reasons a prescription should be questioned further prior to filling. These point-of-sale alerts may establish behaviors that could indicate abuse involving the use of multiple pharmacies and physicians for different narcotics or excessive early refill attempts. The messaging from the PBM ensures that prescriptions for narcotics will not be fulfilled at the point-of-sale unless the medication is allowed or the PBM receives authorization from the self-insured payor. Best Practice #5: Conducting retrospective drug utilization reviews and clinical intervention programs Retrospective reviews. After a prescription is fulfilled, a PBM’s clinical pharmacist team should audit these prescriptions for indicators of inappropriate use. Indicators often include: 1. Sole use of narcotics as treatment 2. Multiple physicians 3. Use of multiple short or long acting narcotics 4. Excessive duration and use

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These types of utilization review programs are essential to maximize the effectiveness of a narcotics usage strategy and are most effective when leveraged in conjunction with prospective and concurrent drug utilization reviews. PBM programs should be flexible enough to allow for customization of review requirements for clients, as client goals and objectives often vary even within organizations. Physician monitoring. A PBM should continually monitor the use of multiple physicians by one injured worker. The physician monitoring program should be based on established best practices and contain multiple components including: 1. Monitoring for appropriate medication utilization using evidence-based published therapeutic guidelines


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2. Overseeing prescribing patterns at the physician level to establish appropriate/ inappropriate use of brand name medications when an FDA-approved generic equivalent exists

to consult with clients on how to adapt their DUR programs accordingly.

Best Practice #7: Validating narcotics use through reporting If a DUR program is successful, there will be Participating in mandatory and voluntary state a reduction in unnecessary medication usage, reporting programs that monitor for excessive including narcotic use. A PBM should easily be prescribing patterns able to validate those reductions through a wide range of real-time and ad-hoc reports. Clinical intervention programs. The PBM should have a range of clinical intervention User-run reports. The PBM should programs to assist a client with evaluation offer a tool that gives a client an option needs. The range of programs should to run a wide range of reports to gain an consist of registered pharmacists, nurses in-depth understanding of all activity. To and other health professionals available maximize the effectiveness and ease of use for consultation on medication questions of the reports, the PBM should ensure the to more detailed evaluations including reports are categorized into varying levels peer reviews and direct consultation depending on how the reports will be used. with prescribing physicians. The PBM’s Management level users should be able clinical intervention team should provide to run reports to assist with managing the recommendations for specific claims that claims professional, such as a report that require further evaluation through the use provides exception or override information of the information gathered in prospective, as well as a report that provides details on concurrent and retrospective review actions sent to the PBM. processes. Other available reports should include: Best Practice #6: Providing ongoing savings reports that can be sorted by a range consultation of time periods, jurisdictions, groups and/ A quality narcotics utilization program is an or branches, pharmacy network utilization essential component of controlling narcotics and savings reports, generic efficiency and use. To ensure the utilization program is opportunity, as well as a wide range of effective, the pharmacists managing the trending reports including top prescribing programs should take proactive measures to physicians, top therapeutic classifications, continually expand utilization review programs top pharmacy medications, top ICD-9, top as the workers’ compensation industry evolves. injury type and reports detailing prescribing As changes occur, they should also be available physician habits. w w w. S e l f F u n d i n g M a g a z i n e . c o m

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Drug utilization review report. To provide information on savings achieved as a result of the program, the PBM should have a detailed DUR report. This report should provide information on savings achieved as a result of the program and should document savings in distinct areas rather than broad categories in order to provide the complete picture of DUR activity. Ad-hoc reporting. The PBM should have the ability to supply ad-hoc reports to assist with narcotic utilization management. If the PBM captures the data, then the PBM should be able to provide reports based on those data elements.

Summary It is expected that narcotics will continue to play a role in treating pain in workers’ compensation, so self insurers must take proactive measures to reduce misuse and abuse. By doing so, they Best Practice #8: Reduce Out-of-Network Bills decrease risk for litigation, improve injured A high number of out-of-network bills can lead worker safety and obtain more control over to issues with managing utilization of narcotics. medication expenses. Not only are individual out-of-network bills typically higher than those in-network, they are By partnering with a PBM, workers’ often not included in the utilization process. It compensation self-insured payors can put an is vital for payors to have a process in place effective narcotics utilization strategy into for properly driving those bills back into the place. A relationship with a strong PBM partner network. This can be done by working with experienced in workers’ compensation will a PBM that offers both paper and electronic enable the self insurer to not only monitor out-of-network bill solutions. This will ensure utilization but stop point-of-sale fulfillment of that critical injured worker data on number unnecessary narcotics. of prescriptions, duration of therapy, doctor information and other related factors are captured to better monitor utilization.

Bio

However, the best method for controlling outof-network bills is to make it easier for the injured worker to go in-network as early in the life of the claim as possible by utilizing First Fill cards, which are distributed by the employer at the onset of the injury. Two other strategies for reducing out-of-network bills are home delivery and retail drug card programs.

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Tron Emptage is Chief Clinical and Compliance Officer for Progressive Medical, a leading provider of cost management solutions for the workers’ compensation and auto no-fault industries. Emptage can be reached at tron.emptage@progressivemedical.com.


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The Costs of Doing Business Reducing Administrative Burdens in a State Health Exchange by Bob Barry

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he health insurance industry is loaded with back-office costs from marketing to plan and rate maintenance to enrollment paperwork. The introduction of exchanges will soon add administrative burdens of its own to both state governments and health insurance carriers. Exchanges will not only need to be integrated into the operations of health plans but they will also need to be managed. Determining the best way to integrate the capabilities and processes of insurance providers within the operations of the exchanges will determine the most efficient way to fulfil customers’ needs.

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Carriers want to automate the transfer of information to and from the exchange. They do not want to compile and send a spreadsheet to the exchange for plan and rate information. Carriers also do not want to manage their plans and rates on their own systems and then a second time on the state health insurance exchange. Carriers already have systems that maintain products and rates, store membership information and handle financial services. The more that state health insurance exchanges can interface directly with carrier systems, the less administrative functions and duplication of effort will need to occur. States would also benefit from streamlining the communication process with carriers. One of the key purposes behind the exchange is to centralize and lessen the administrative costs associated with distributing individual and small group health insurance. Plan and rate maintenance, enrollment, and financial services are three areas where the state health insurance exchange runs the risks of adding to carriers’ administrative burden. To streamline this process and reduce administrative costs for both the state and the carrier, states should make every effort to allow for the automated transfer of information to and from the exchange. States should focus on providing a health insurance exchange solution that is sustainable and affordable over time. In order to achieve sustainability, administration costs need to be minimized by eliminating duplication of efforts. One critical way to minimize administration costs is by using technology to automate and streamline time-intensive processes.

Plan and Rate Administration Tools Plan and rate administration tools allow carriers and / or the state administrator to maintain products, rates, and rating algorithms easily and directly on the webbased health insurance exchange site. These tools

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provide two key benefits to states. First, the product and administration tool will allow carriers that may not have the ability to integrate directly with the exchange to maintain their products and rates on the web portal. Having such a tool would simplify the process of maintaining products and rates for both the carrier and the state. Secondly, states need a way to review carrier products and rates prior to their release on the health insurance exchange. In addition, states would be able to perform modeling, allowing them to better understand the impact of new rates.

Application Administration Tools Another function that can further assist the states in building a sustainable and affordable health insurance exchange is to utilize an application administration tool. The tool allows a state business user to modify the application rather than a technical developer. Business users could make changes to the style, branding, and images used on the application. In addition, the


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state health insurance exchanges. However, there are complexities unique to state exchanges that states need to consider during the planning process, including the coordination of premium subsidies in the individual benefit exchange and the multi-carrier list bill in the small group (SHOP) health insurance exchange. Most likely, much of the financial services will fall on the exchange with the financial information being passed to the carrier once subsidies, individual, and group payment has been collected. Technology can reduce administrative efforts and therefore reduce costs. By integrating technology into every aspect of the exchange, insurance carriers can manage rates and plans in one solution and automatically push the updates to all channels.

business user can add/remove fields, add business rules, and adjust error messages. This functionality allows the health insurance exchange administrator to quickly create and modify any application that is a part of the exchange. It is likely that state health insurance exchanges will include separate enrollment applications for individuals, employers, and employees. The exchange will also likely require a navigator to complete an application to become qualified to assist the consumer in the plan selection process. By enabling a business user to make application changes directly in the web-based exchange versus involving a developer, states will incur less administrative costs related to maintaining the multiple applications.

eBilling and Premium Collection Offering consumers and employers the convenience of online bill presentment and payment will improve customer satisfaction, while minimizing paperwork and processing time. eBilling and premium collection functionality exists today and can be leveraged in

Self-service tools and straight-through connectivity are key sales tools that aid in reducing administrative costs while engaging potential and current enrollees. Giving more control to customers not only improves their satisfaction, but when paired with full integration to back-end systems, it also reduces a health plans’ administrative burden. Virtually instantaneous case installation, fewer errors, and reduced resource requirements are just some of the benefits that an integrated sales technology solution offers.

Bio Bob Barry’s 28 years of experience in the health and life insurance industry give him great insight into the challenges of the industry. At Connecture, Bob is responsible for identifying market needs that InsureAdvantage solutions can serve. His ongoing client interaction, industry experience and expertise ensures that current and future health plan business needs are met in the InsureAdvantage suite.

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UNIONS CHEAT MEMBERS

OUT OF HEALTH AND

WEALTH by Lisa Holland

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et’s start by saying that we are promember, pro-health and pro-wealth! Now that we’ve gone on record stating that we are not bias towards Unions, let’s talk about the health of America. It’s not good. It’s getting worse and union members aren’t any healthier than the general population, yet they have some of the best health benefits in the nation! So, what’s wrong with this picture? Just look at the recent CDC stats on obesity…it’s appalling. America spends more on healthcare and is one of the sickest nations in the world. You can draw your own conclusion on that fact but it’s now obvious that the amount of money in terms of benefits that are available to an individual or union member makes no difference in their health status. It’s the member that makes the difference in their personal health. If we accept these facts as correct then union members are paying huge amounts of cash to doctors, hospitals and administrators. Why not pay union members to be healthy? Yes, that’s right. It’s the concept inherent in a Consumer Directed Health Plan with an HSA. But Unions have been loath to listen to the facts. We say it’s time for the Unions to stop cheating their members out of health and wealth. Here’s how: The facts speak for themselves that CDHP changes an individual’s healthcare behavior. McKinsey’s research and recent findings continue to show that 25% or more of members in a CDHP change their actual health behavior for the better. They stop smoking and lose weight. First year medical trend reduction is in the range of 14-17%. Health spend continues to decline as members maintain their better health status year after year. This demonstrates how improved health behaviors and lifestyle changes can impact healthcare affordability. Where does the saved money go? In a CDHP model it goes to the member’s HSA account. Cash, tax free… accumulating tax free w w w. S e l f F u n d i n g M a g a z i n e . c o m

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for the use of members and their families for future medical care and retirement. Who can argue with a plan that makes members healthier and wealthier? The transfer of wealth to union members might possibly be the largest transfer in history and will eclipse any rate of pay increase that most Americans may see in the next 20 years. Union leaders continue to perceive CDHP as a “take away” rather then a benefit and continue to ignore the hard facts that members on a CDHP are not only getting healthier but wealthier. Unions have special leverage with their management and are in a position to seek this wealth transfer to their members. This is not a wealth transfer from management but from the medical establishment as a reward for just being healthy. We think it’s a nobrainer for Unions to go to management and seek a CDHP/HSA plan that pay first dollar for preventive care, then ask management to fund the first two year deductibles essentially giving members a “ZERO” deductible plan. Stay healthy and get wealthy! It’s a win/win/win situation for members, union leaders

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and management. Here are the facts: 80% of members in any health plan never spend on average more than $800 a year on healthcare and that includes families. Most members will have their deductible accumulated within a year or two. For every dollar “shifted” from a member’s paycheck to their own HSA account they will save about 42 cents in taxes while management saves about 8 cents in taxes. For example, a contribution from management of $2,000 a year saves enough taxes ($840) to pay for 80% of all workers’ healthcare in any one year. Re-routing tax dollars for the benefit of union members seems to be a good idea too. New point-of-service adjudication and payment technology now makes the implemention of a CDHP with HSA a hassle free experience for members, since members no longer get reams of bills at home nor have to deal with a debit card. Just walk in, get treated and walk out. It’s Simple. Imagine a system that enriches the union member with tax savings, tax free dollars, a “zero” deductible plan, paid preventive


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healthcare, additional money for retirement, no more bills at home and that actually can make the member more healthy while at the same time saving management money that makes the Union leaders look like heroes. The time has come for Unions to take a real close look into the world of CDHP.

About Simplicity Health Plans Cleveland, Ohio - Simplicity Health Plans is the best implementation of a CDHP/HSA. It aligns the interests of the Employer, Employee and the Provider to provide a turn-key, fully integrated Consumer Directed Health Plan. It also delivers a low cost, scalable solution to control claim costs. The Plan fuses unparalleled technology, point of service adjudication, real-time data, and first of its kind anti-fraud controls. Services include an ERISA compliant health plan, HSA administration and banking, medical claims administration, TPA functions, pharmacy, dental & vision, COBRA, stop loss reinsurance, real-time Utilization Review and Case Management, Health Coaching, Comparison Shopper, Health & Wellness programs, and a host of on-line tools for Providers, Employers and Members.

Bio Lisa M. Holland, RN, MBA has been in the healthcare care industry for over 18 years and held senior level positions within major healthcare organization in the US. Lisa is an accomplished business development professional. Lisa’s professional objective is to promote appropriate utilization of healthcare services/solutions that empower healthcare consumerism. Gregory J. Hummer, M.D., has spent the last 18 years developing and perfecting Simplicity Health Plans to solve the vexing complexities, out-of-control costs, burdens and inefficiencies that are associated with healthcare coverage in America today. Dr. Hummer is chairman and CEO of Simplicity Health Plans.

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Going Ahead of the CLASS: The Advantages of Private Long-Term Care Coverage by Samuel H. Fleet

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s Baby Boomers age and shoulder the responsibility for their parents’ deteriorating health, many are facing the reality that the need for long-term care is both pervasive and costly in post-retirement years. When they look in the mirror, they know their turn is next. That haunting reality can make one portion of the Patient Protection and Affordable Care Act very attractive. The Community Living Assistance Services and Support Act – better known as CLASS – is designed to spread insured long-term care coverage to a larger base of the nation’s population. The conduit for delivering this insurance product is the workplace. Because of serious problems with the way CLASS is designed, however, its primary benefit may be surfacing long-term care as an issue that should be addressed, as well as driving awareness of other, more suitable options. Both employers and employees can benefit from understanding the advantages of products on the market today, particularly in comparison to CLASS. By taking a fact-based approach to decisions about long-term care insurance, everyone emerges a winner. Employees can have policies that provide realistic coverage; employers can have a powerful costeffective tool for attracting, retaining and rewarding employees; and brokers can have one more option in their portfolio that gives employers the value-added service they are looking for.

Need is Growing Rather than beginning with the product, the place to start this story is with the need for long-term care. Statistics from the National Clearinghouse for Long-Term Care Information operated by the U.S. Department of Health and Human Services demonstrate the need already prevalent today and give a strong indication of the future that lies ahead. These statistics include:

• About 9 million Americans over the age of 65 will need long-term care services this year – a number that is expected to increase to 12 million by 2020. • About 70 percent of individuals over age 65 will need some type of long-term services during their lifetime. More than 40 percent will need care in a nursing home. • The cost of long-term care services across the United States, as calculated in 2005, totaled more than $200 billion. While 49 percent is paid for by Medicaid after individuals have exhausted their personal assets, much of the cost falls upon private resources. Medicare pays only about 20 percent, usually under very specific circumstances and for limited periods. Other statistics from the National Alliance for Caregiving make clear why helping employees with long-term care obligations makes sense for employers. These include: • Of the 65 million family members who provide care for someone over the age of 18 for an average of 20 hours per week, 66 percent say it has affected their job by such things as getting to work late or having to quit. One in five caregivers has had to take a leave of absence. • One study estimates that employees taking care of family members over the age of 50 cause as much as $34 billion in lost productivity at worksites nationally.

The CLASS Act As part of an effort to reduce Medicaid costs over time, legislators wanted a way to transition long-term care spending from the publicly funded program to an insurance-based system. The CLASS Act does that by creating an employment-based system that uses w w w. S e l f F u n d i n g M a g a z i n e . c o m

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payroll deductions to cover premiums.

will be required to handle administration, including collecting the premiums through payroll deductions After a waiting period of five years, the anticipated and remitting them to the program. Employees who benefit for the covered person is $50 per day, with choose not to participate if their employer offers growth in that payment based on the increase in CLASS will have to opt out individually. the Consumer Price Index. Benefits, which are tax-free, are expected to be payable based on the While the opportunity to opt out at the employer person’s level of need, even if formal services are level exists, many believe federal regulators are not received. leaning towards requiring employers to opt in if at least one employee wants to participate. Because the program does not begin until 2014, federal regulators are not expected to finalize Where CLASS Falls Short specifics until 2012 or 2013. In the meantime, different sources have offered a range of likely Unfortunately, the promise of CLASS falls far short premiums. The American Academy of Actuaries of what is already on the market today. The primary estimates a 60-year-old enrollee should pay between problem is that the program was not designed to $160 and $240 per month. The Congressional cover the full price of care. In fact, it creates a Budget Office has suggested $123 per month, while significant gap in coverage that employees may the Centers for Medicare and Medicaid Services is only recognize after they have paid premiums for using $180 per month as its estimate. years and it comes time to use the benefits. At the moment, the expectation is that employers will be able to opt in or out. If they opt in, they 26

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As the Table 1 below illustrates, a $50-per-day benefit may pay about half of needed home care,


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but will not even cover a quarter of the cost of nursing home care. The government’s own website recognizes this. The National Clearinghouse for Long-Term Care Information lists average daily costs in the United States of $198 for a semi-private

room in a nursing home; $104 for assisted living in a one-bedroom unit; $84 for an average of four hours of care by a home health aide at $21 per hour; and $67 for care in an Adult Day Health Care Center.

(Source: American Association for Long-Term Care Insurance, 2008, LTCi Sourcebook)

In sharp contrast, private long-term care plans already on the market typically pay significantly higher benefits. As the table below illustrates, only 15 percent of plans pay less than $100 per day. Two-thirds of them pay between $100 and $200 per day. One comparison of the monthly cost and benefits of CLASS vs. private long-term care insurance indicates that a 59-year-old would pay very similar premiums -$152 vs. $157 per month – under both programs, but would collect $150 per day, up to $400,000, with the private coverage.

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(Source: American Association for Long-Term Care Insurance, 2008, LTCi Sourcebook)

Another drawback of the CLASS Act plan is that premiums are collected for five years before any payout can be made. Most currently offered private plans have a 90-day elimination period, after which the insured is eligible for payments based on their condition and care needs.

Why Employers Want Options

that 50 percent of large employers (20,000-plus employees) offered long-term care insurance, and Although the CLASS Act is new, the concept of roughly one-third of companies with 5,000 to offering long-term care insurance through the 20,000 did so. workplace is not. Between 1995 and 2007, the number of employers offering plans grew almost One factor that makes long-term care an attractive eight-fold. A 2007 Mercer Benefits Survey indicated benefit for employers to offer is that they can

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customize coverage to meet their goals. Unlike health insurance, federal laws allow them to provide coverage at different levels for various groups of employees. They can choose a no-cost option of offering a voluntary program where employees pay the full premium; they can have an employer-paid base coverage and offer employees the option of “buying up” to higher benefits by paying extra; and they can create an executive carve-out to reward valued employees with an employer-funded, more generous benefit. Besides using long-term care insurance as a tool for retaining employees, employers can view this benefit as a way to protect worker productivity. Because the policies typically include care coordination, the time an employee spends on the job during business hours trying to arrange for or monitor care is reduced. In addition, long-term care insurance provides tax benefits to both the employer and the employee. Assuming that the employer is a C-corporation the premiums are tax deductible, there is no imputed income for employees and the benefit is tax free when it is paid out. Finally, the administrative burden imposed by CLASS is not an issue when employers opt to offer employees private long-term care insurance. Instead, the carrier handles tasks such as enrollment.

Making the Case for Long-Term Care Coverage Waiting for CLASS to take effect has several drawbacks, the biggest being that employees will not be eligible for benefits until five years after the first premiums are collected in 2014. In the meantime, they are at risk of becoming disabled and finding the cost of necessary care beyond their reach.

People who would not think of going without fire insurance on their home or accident coverage for their car are probably unaware that they are far more likely to be faced with paying for long-term care. In fact, out of every 1,000 Americans who are over the age of 65, five will have their home burn to the ground and 70 will have an automobile accident serious enough to file a claim. But 600 – well over half – will need some form of long-term care. Employers who make getting long-term care coverage easy are providing a valuable benefit to their employees. By working closely with a broker who understands private long-term care insurance offerings, employers can offer their workforce almost immediate benefits, without the regulatory uncertainty and time delay imposed by CLASS. The advantages, to both employer and employee, make going ahead of CLASS worthwhile.

Bio Samuel H. Fleet is President of AmWINS Group Benefits, a leading wholesale broker of comprehensive group insurance programs and administrative services. With more than 20 years of health and benefit experience, Sam has guided the rapid rise of AmWINS Group Benefits from a small regional organization to one of the most successful wholesale brokers and group insurance administrators in the country. Responding to the crisis of rising medical care and health insurance costs over the past few years, Fleet has positioned AmWINS Group Benefits as an industry leader that can offer innovative solutions to help benefit brokers assist their clients. Sam can be reached at sam.fleet@amwins.com or 401.734.4121.

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Give Me Drugs! by Mark Roberts

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he pharmaceutical industry is big bucks…research, manufacturing, registration with the Feds, marketing, and sales. Billions and billions of dollars every year are spent not only on new medications, but also existing medications, whether they are generic or brand name. Is America the most medicated nation on Earth? Could be, according data released by the Department of Health and Human Services (HHS). At least half of all Americans take at least one prescription drug, with one in six taking three or more medications. Prescription drug use is rising among people of all ages, and use increases with age. Five out of six persons 65 and older are taking at least one medication, and almost half the elderly take three or more. Man, that’s a lot of meds!

Among the report’s findings: •

Use varied by sex, race and ethnicity. Three times as many white adults as black or Mexican adults took antidepressants, and women take more drugs than men;

Boys were prescribed drugs to treat attention deficit hyperactivity disorder (ADHD) twice as often as girls,

but antidepressants were prescribed to boys and girls at the same rates; •

Private health insurance covered almost half of prescription drug costs, and 30% of people pay out of pocket.

Those who were without a regular place for health care, health insurance, or prescription drug benefit hadless prescription drug use compared with those who had these benefits.

The most commonly used types of drugs included: asthma medicines for children, central nervous system timulants for adolescents, antidepressants for middle-aged adults, and cholesterol lowering drugs for older Americans.

According to the CDC, these patterns reflect the main chronic diseases common at these ages, but may also likely reflect more aggressive treatments for chronic medical conditions such as high cholesterol and high blood pressure as recommended in the updated clinical guidelines. Lack of access to medicines

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may impact health and quality of life, as The increase in the price index from the first quarter prescriptiondrugs are essential to treat acute and of 2009 through the first quarter of 2010--prior to chronic diseases. passage of health reform in March 2010--was 5.9 percent, less than the increase for the 2 years prior Finally, with older Americans using multiple but higher than in 2006. The study also found that the medications, this likely reflects the need to treat U&C price index for the second basket of 55 brandthe many diseases that commonly occur in this name drugs increased at an average annual rate of 8.3 age group; however, excessive prescribing or percent during the time period. In contrast, the U&C polypharmacy is also an acknowledged safety risk price index for the third basket of 45 generic drugs for older Americans, and a continuing challenge that decreased at an average annual rate of 2.6 percent. may contribute to adverse drug events, medication compliance issues, and increased health care costs. What do all these numbers mean? Drugs cost money, and in certain cases people are forced to choose Prescription drug use in the U.S. has been rising between medications, and food and rent. Typically, steadily in the past decade and the trend shows no those that are not insured experience the greatest signs of slowing, the CDC says. Plus, according to hardship as the price paid at the pharmacy is out WebMD, the CDC also says that: of pocket and not covered by an insurance plan. That’s one reason that the Wal-Mart $4 generics • People with a regular place for health care are so popular. Seniors who are in the Medicare were 2.7 times as likely to have used prescription Part D “doughnut hole”, and those under 65 who drugs in the past month compared to those without are low income families and individuals are forced the benefit. to find alternative ways to pay for their prescription medications. • People with health insurance were about twice as likely to have used at least one prescription According to the Kaiser Foundation, prescription medication in the past month as those without health drugs are vital to preventing and treating illness and insurance. in helping to avoid more costly medical problems. Three main factors drive changes in prescription drug • People with prescription drug benefits in spending: changes in the number of prescriptions their health insurance plans were 22% more likely to dispensed (utilization), price changes, and changes use prescription medications than those who did not in the types of drugs used. The cost of drug-related have that benefit. morbidity, including poor adherence (not taking medication as prescribed by doctors) and suboptimal All these statistics boggle the mind, especially when prescribing, drug administration, and diagnosis, is the cost of prescription medications continues to estimated to be as much as $289 billion annually, about increase. According to HealthExecMobile.com, a 13% of total health care expenditures. The barriers to market basket of 100 commonly used prescription medication adherence are many: cost, side effects, the drugs increased at an average annual rate of 6.6% difficulty of managing multiple prescriptions, patients’ from 2006 through the first quarter of 2010, compared understanding of their disease, forgetfulness, cultural with a 3.8% average annual increase in the consumer and belief systems, imperfect drug regimens, patients’ price index for medical goods and services (medical ability to navigate the health care system, cognitive CPI). impairments, and are reduced sense of urgency due to asymptomatic conditions.

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Prescription drug spending is affected when new drugs enter the market and when existing medications lose patent protection. New drugs can increase overall drug spending if they are used in place of older, less expensive medications; if they supplement rather than replace existing drugs treatments; or if they treat a condition not previously treated with drug therapy. New drugs can reduce drug spending if they come into the market at a lower price than existing drug therapies; this can occur when a new drug enters a therapeutic category with one or two dominant brand competitors. New drug use is affected by the number of new drugs (new molecular entities) approved by the US Food and Drug Administration.

in employer-sponsored plans had a prescription drug benefit in 2009. For individuals, according to a survey by America’s Health Insurance Plans, the vast majority of policies purchased by individuals (rather than employer or other group coverage) had drug benefits. Department of Health and Human Services data show that as of February, 2010, approximately 41.8 million (90%) of the 46.5 eligible Medicare beneficiaries had drug coverage. The total number of beneficiaries in a Medicare Part D plans was 27.7 million (60%), including 17.7 million beneficiaries (38%) in stand-alone prescription drug plans and 9.9 million (21%) in Medicare Advantage drug plans. Another 14.2 million beneficiaries (31%) had coverage from either employer or union retiree plans including FEHB and TRICARE (8.3 million, or 18%) and drug coverage from the VA and other sources (5.9 million, or 13%). About 4.7 million Medicare beneficiaries (10%) had no drug coverage.

Employers are the principal source of health insurance in the United States, providing coverage for 176 million (58%) of Americans in 2008, according to Kaiser. Sixty percent of employers offered health insurance to their employees in 2009, and 65% of employees in those firms are covered by their employer’s health plan. Other Medicaid is the joint federal-state program that employees may have obtained coverage through pays for medical assistance to 60 million lowa spouse. Nearly all (98%) of covered workers w w w. S e l f F u n d i n g M a g a z i n e . c o m

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income individuals and is the major source of outpatient pharmacy services to the nonelderly lowincome population. Although prescription drugs is an optional service, all state Medicaid programs cover prescription drugs for most beneficiary groups, although there are important differences in state policies with regard to copayments, preferred drugs, and the number of prescriptions that can be filled. Since January 1, 2006, states have been required to make payments to Medicare (known as the “clawback”) to help finance Medicare drug coverage for those who are dually eligible for both Medicare and Medicaid. According to the Kaiser Foundation, the new PPACA provides for a significant expansion of coverage to the uninsured through a Medicaid expansion, an individual requirement to obtain health insurance, and subsidies to help low and middle income individuals buy coverage through newly established Health Benefit Exchanges. PPACA provides that prescription drugs are one of the “essential health benefits” that must be included in health plans in the Exchanges and in the benchmark benefit package or benchmark-equivalent for newly eligible adults under Medicaid. Also, it provides for a $250 rebate to Medicare 34

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Part D beneficiaries with out-of-pocket spending in the Medicare Part D coverage gap in 2010, a 50% discount for brand name drugs for beneficiaries in the coverage gap that started this year, a phasing-in of coverage in the gap for generic and brand name drugs which will reduce the beneficiary coinsurance rate from 100% in 2010 to 25% in 2020, a reduction between 2014 and 2019 in the threshold that qualifies enrollees for catastrophic coverage, and elimination of the tax deduction for employers who receive Medicare Part D retiree drug subsidy payments, starting in 2013. The HHS projects US prescription drug spending to increase to $457.8 billion in 2019, almost doubling over the next several years. In the coming years, implementation of various provisions of PPACA will affect prescription drug coverage, utilization, prices, and regulation. Coverage and utilization of prescription drugs will be expanded by PPACA’s health insurance mandate and premium and costsharing subsidies; the designation of prescription drugs as an essential health benefit to be covered by private health plans through the new health benefit Exchanges and by Medicaid for newly eligible adults; and Medicare’s prescription drug rebate, cost-sharing, and catastrophic threshold changes, according to the Kaiser Foundation.


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Prices charged to government programs will be affected by changes to Medicaid rebate requirements and expansions to the Section 340B program. Prescription drug regulation will be affected by the new process for licensure of bio-similar versions of brand name biological products and by drug labeling requirements. These and other PPACA changes will ultimately impact national spending for prescription drugs in ways yet to be seen. Another option is to include a discount pharmacy card for customers. There are many of these available through various sponsors; including pharmaceutical companies such as AstraZeneca, pharmacy benefit managers (PBMs) like CVS Caremark, plan administrators like Careington International, and other sources. Customers can enroll through websites, over the phone, or at pharmacy counters based on the business model for the card. Typically, in this arrangement, the customer gets a discount at the point of sale (and via mail order in some cases) and is able to save on both brand name and generic medications without worrying about over using or worrying about a maximum utilization of their pharmacy card. Discounts can range from 5% up to 40% depending on the store and the medication. Often, PBMs will share available some small revenue for eligible prescriptions with the sponsor to help offset the cost of marketing to consumers. Discount pharmacy cards can be used by anyone at almost any pharmacy nationwide, and the savings are immediate. The cards have broad application for uninsured and underinsured individuals, and the cards can be used as a stand- alone service or embedded as a value added component in a health plan, limited medical benefit plan, or discount medical plan with other services. However, you cannot use a discount pharmacy card in conjunction with a co-pay; no double dipping just to save extra money.

sell, the more profit is generated for the manufacturer, the pharmacy, and the sponsor. And, since PBMs have tracked utilization for years with electronic adjudication of claims, you can find out how much has been saved and what drugs are being dispensed. Although HIPAA regulations will not allow personal customer information to be disclosed, at least information is available on the types and amounts of drugs being dispensed. Plus, the customer saves money. Everybody wins. So, when someone says “Give me drugs,” let’s hope it’s for the right reason. Profitability, patient care and advocacy, and prescriptions—a great antidote for what ails you.

Bio Mark Roberts’ professional sales background includes almost 30 years of sales and marketing in the tax, insurance, and investment markets. Currently his key focus is developing relationships with clients at Careington International (www. careington.com). Mark also is a licensed life, health and accident insurance agent in all 50 states and DC. Additionally, Mark has been writing a health care blog for the past 3 years, found at www.yourbesthealthcare.blogspot.com , which is a topical weblog about various health care issues. He has been noted recently as the Medical Reporter for an online news service with over 110,000 subscribers at www.thecypresstimes.com , and he has been pleased to regularly contribute articles to magazines for both medical and dental topics both in the US and the UK. You can contact Mark at markr@careington.com or 800.441.0380.

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Health Reform and the CLASS Act: Threat or Opportunity? by Todd Grove March 23, 2011 was the one year anniversary following buckets: of President Obama signing into law the health • Reduction in income. Most health care reform bill, which includes the Community brokers believe that their income will be Living Assistance Services and Supports adversely affected. (CLASS) provisions. Many of the details of the • Client Relationships may be threatened. CLASS provisions are not yet defined and will Loyalty is becoming a very rare trait be developed through regulation, but as with all amongst even our most well entrenched other aspects of this industry altering legislation, clients and that could be shaken even further nothing will ever be the same – both for the by an upheaval in policy design/pricing. consumers of health care and the brokers who service them. • Value proposition could be diminished. As a consolidation of plans occurs, Most brokers I speak with are very concerned understanding the differences between about most of the health care reform in its one broker and another may become more present form. Some of the major concerns I hear difficult. fall into the

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All of these are the perceived threats of health care As a result of these alarming statistics, Senator reform which will roll out over the course of the next Ted Kennedy made it his mission to include some two years. benefit, albeit small and controversial, in the final health reform legislation. Another school of thought lies around the opportunities the reform act presents, and we will The CLASS provisions create a voluntary focus here on the CLASS Act as a particularly government program under which participants effective way for health brokers to combat all three will pay a monthly premium, will be covered on of the concerns mentioned above. a guaranteed-issue basis, and will be eligible for modest benefits for their long-term care needs A Bit of Background after five years of paying premiums. While it has been characterized as a long-term care program, Why does health care reform include any provisions it is primarily designed as a program to provide for long-term care? After all, no major medical plan; assistance to the working disabled. It’s important to not even Medicare, presently cover LTC costs at all. note that benefits will be paid by premiums collected from voluntary participants and not by the taxpayers. Let’s look at why long-term care cost are so alarming and need to be addressed now with all employers and their staff: • According to the Technical Report 1-01, Scripps Gerontology Center, February 2001, of every 100 people over 65 years of age, 43% will need long term care • 40% of those receiving long term care are working adults between the ages of 18 and 64. (GAO/HEHS-95-109 long term Care Issues, p. 7). What are the details of the coverage that • Reported by the U.S Department of Health and Human Services, when you reach age 65, you have a 40% lifetime chance of entering a nursing home, and a 10% risk that you will stay there at least five years

would be provided?

Most of the terms of the new CLASS program that passed as part of the Patient Protection and Affordable Care Act will be developed by the Department of Health and Human Services over the next few years. Certain terms are set in statute, “The average length of stay in a nursing home including the following: (current resident) is 892 days” (The National Nursing Home Survey). Enrollees will: In some parts of the country it can cost over $100,000 a year. If we assume that nursing home costs will continue to reflect recent trends, by the year 2021, the average rate will have risen to about $480 a day, or $175,200 annually.

• Pay a monthly premium, through payroll deduction, that has yet to be determined, but most recentestimates indicate that the average

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premium will be $180-$240/month; that first 10 years, so they appear nowhere in the premium could be increased yearly to ensure cost of the legislation.” that the CLASS fund is actuarially sound. “Removing the unrealistic annual Medicare • Be covered on a guaranteed-issue basis; savings ($463 billion) and the stolen annual • Be eligible for benefits for their long- revenues from Social Security and long-term term care needs after paying premiums care insurance ($123 billion), and adding in for the first 60 months of coverage (i.e., a the annual spending that so far is not accounted 5-year waiting period) and have worked at for ($114 billion) quickly generates additional least three of those five years; deficits of $562 billion in the first 10 years. And • Receive a lifetime cash benefit after the nation would be on the hook for two more meeting benefit eligibility criteria, based on entitlement programs rapidly expanding as far the degree of impairment, which is expected as the eye can see.” to average about $75/day or more than $27,000 per year and is payable as long as the claimant remains disabled.

Why should Benefit Brokers Care?

Enrollees will be offered coverage through their employers and will be automatically covered unless they opt out. They can opt back in at a later time. Self-employed people or those whose employers do not offer the benefit will also be able to join the CLASS program through a government payment mechanism.

Bad math This part of health care reform is one of the most controversial – in large part because it creates so many unanswered questions. What are the premiums, how are they set and where do they go once collected are but a few of the more pressing queries. . Douglas Holtz-Eakin, who was the director of the Congressional Budget Office from 2003 to 2005, wrote concerning this issue; “Consider, the fate of the $70 billion in premiums expected to be raised in the first 10 years for the legislation’s new long-term health care insurance program. This money is counted as deficit reduction, but the benefits it is intended to finance are assumed not to materialize in the 38

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To begin, they have to starting caring now. CLASS is not “voluntary.” Every worker is involuntarily and automatically opted into the program. Each employee or self-employed person must willfully opt out to avoid the program’s large “premiums” that will otherwise accrue by default. Secondly CLASS is not “insurance” by its true definition. Insurance is for healthy people who want to prepare responsibly for the relatively small possibility they may become disabled or chronically ill. CLASS is in essence a “prepayment” of care subsidized by the insurable


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for the benefit of the uninsurable. CLASS will suffer significant adverse selection. People most likely to use the benefits will be far more likely to participate than people who are privately insurable otherwise. As a result of all these problems and concerns, why would an employer offer CLASS when a voluntary offering of true long-term care insurance would make so much more sense for the vast majority of his/her employees? The answer: not many. Unfortunately, most benefit brokers are woefully uneducated on both CLASS and the multi-life offerings in the market. Therefore, they will not be able to position private sector options well when the employers start calling. But with education comes opportunity. Employers need guidance. Brokers need clients. LTC insurance specialists bridge the gap and can accomplish the goals each party has throughout this turbulent period.

So, how can the important subject of long-term care planning be addressed professionally and The best defense… ethically with the millions of at-risk, actively The average broker in America today still working baby boomers? The only sensible sells—and will continue to sell—one or two and effective approach is through what I call LTC policies a year. Why? That can be explained strategic partnering. in one word: focus. As the importance of LTC insurance has grown, so has the complexity Most agents who have been successful at of the policies. In addition, most brokers who providing LTC insurance have focused solely provide financial products are having enough of on this complex product and the emotionally a challenge keeping up with the changes in state charged sales process that accompanies it. They health insurance regulations, rate increases, are never a threat or a competitor to benefit health reform related to major medical plans brokers because LTCi is all they provide. updates and so on to concentrate on the complex and emotional sale of LTC insurance. The client Years ago, direct mail and seminars were an doesn’t want to talk about it, the advisor doesn’t effective way to generate significant LTC know enough about the coverage and the insurance leads. 15 years ago, the average age underwriting guidelines change as frequently as of a LTCi purchaser was 68. Today: 58. Today, virtually no one buys LTCi through the mail. the policies they are associated with. Now, carriers – with the help of government w w w. S e l f F u n d i n g M a g a z i n e . c o m

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incentives(non-ERISA classification, tax breaks, care insurance specialist. exec carve out options) – have repositioned LTCi and sales at the worksite are sharply on The best method for finding a specialist to work the rise. with is obviously word of mouth/professional networking. However, locating them can As a result, how we reach and market to the also start with a Google search in your area. future owners of policies must change to mirror One organization that is national with trained buying patterns of our prospects. worksite specialist is LTCFP. Another, ACSIA, can also be identified on the web. The CLASS Act is exactly what has been needed to crystallize attention by employers, When searching, designations can be helpful LTCi specialists and benefit brokers on this as well. The two most common are CLTC and voluntary benefit. LTCP. Of the two, CLTC is commonly accepted as the industry standard. The LTC insurance specialist needs access to boomers where they work. The advisors need Attend NAIFA and NAHU meetings. Many of to fulfill fiduciary responsibility and inform the leading LTC specialists are involved on a their corporate clients of the severe limitations local level in these organizations. of CLASS. These are two great disciplines that perfectly support one another. The key is Questions to ask when interviewing bringing them together in a way that benefits all specialists parties involved. • How long have you been in the field? The importance of LTC insurance will continue Look for at least 5 years. If they were to grow, as will the options on how to design previously affiliated with a captive or and underwrite coverage. Therefore, it is in the career shop, that is a benefit because they best interests of all parties—benefit brokers, received significant training and support. LTC insurance specialists and their clients— to develop trusting and mutually beneficial • What businesses/organizations have you partnerships. This model will in large part worked with? Experience at the worksite transform the marketing of LTC insurance using simplified underwriting and a 60 day throughout the years ahead. enrollment period are important.

The How-to’s of Partnering with LTCi Specialists Broker partnering is a challenging process – much more art than science. It must start with the realization by the broker that they need to work collaboratively to support their clients in the brave new world of health care reform. Once that fact has been accepted, the first step is to locate a professional and ethical long-term 40

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• What carriers do you work with? Pick an agent who has appointments with many large, reputable carriers like Prudential, Mutual of Omaha and Transamerica. Captive agents are not effective in the worksite due to the fact that “one size does NOT fit all” in this marketplace. Ask if the specialist is compensated identically carrier to carrier. This obviously avoids conflict of interest.


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• What other benefit brokers do you partner with? You might as well find out about what your competition is up to. • Maximizing the relationship: Keeping it Productive – and Profitable Here are a few tips to help set appropriate expectations and develop long-term, mutually beneficial relationships that proactively address the issue of LTC planning with your client base: • Commit to addressing LTC – with all clients. The most common reason why benefit broker/ltc specialist partnerships fail is lack of focus. Both parties get excited and a few introductions are made, then things fade to black. This is avoided by creating a marketing plan that both the benefit broker and the specialist document and sign off on. The most important element is consistency. Speaking with clients every week about LTC and a voluntary offering or carve out is essential. This proactive approach repositions the broker in the mind of the employer and he/she is seen as a valuable resource on health care reform – and the welfare of the employees. • Don’t get greedy. Any specialist worth his/her salt will provide all of the following on each worksite enrollment: vet carriers, implementation calls with carrier, worksite case preparation, proposal development and presentation, enrollment presentation, application processing, bill preparation and reconciliation, policy delivery and ongoing customer service on active cases. As a result, the broker will earn a small percentage of the commission, but generate significantly more income off of LTCi than at any time in the past. The adage “A small

percentage of a lot beats 100% of nothing” truly applies in this scenario. Re-Brand your image in community. The brokers who truly leverage their relationship with LTCi specialists take a proactive approach to addressing this benefit – and the concerns most employees have surrounding it. That is completely different from the majority of benefit brokers and as a result, provides real opportunity to differentiate their services in a highly competitive market. Incorporate CLASS into many discussions, include some aspect of it in advertising/marketing pieces. LTC Education at the worksite will cut stress, improve productivity – and solidify your relationship with clients who are confused about this issue. CLASS Act forces an acceptance of long-term care planning. Those brokers who view this as an opportunity by partnering with LTCi specialists will “ride the wave” of government mandated health reform and be viewed as a resource rather than a “bearer of bad news”.

Bio Todd Grove, LTCP, CLTC is a founding partner of LTC Financial Partners and has specialized in this field for 20 years. Some of the publications he has contributed to are the New York Times, Senior Market advisor, National Underwriter Magazine, and the Portland Press Herald. He is a member of the Estate Planning Council of Maine and Past President of the Maine Employee Benefits Council. He can be reached in Portland at 207-772-5793 or todd. grove@ltcfp.net

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Connecting Employee Health to Voluntary Discount Dental Plans by Nicole Ropiza

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tudies and word-of-mouth in recent years Academy of Periodontology.” have brought much needed attention to the connection between dental care and For those who religiously keep up with their a person’s overall health. dental hygiene ; brushing twice daily, flossing daily and scheduling semi-annual dental According to the Academy of General Dentistry, checkups, the preventive care and daily dental more than 90 percent of all systematic diseases hygiene habits can help them avoid some major have oral health symptoms. Poor or lacking out-of-pocket dental expenses tomorrow. dental health may have negative effects on a range of diseases and conditions, including Proper dental care can also help keep employees diabetes, osteoporosis, heart attack, stroke, at work. Considering that lost work due to pregnancy and pre-term birth weights. dental problems equates to 164 million hours of employee productivity each year, according to In addition, a report in Dental Health Magazine the U.S. Department of Labor’s Bureau of Labor from February 2011 goes on to read, “People Statistics. with gum disease are almost twice as likely to suffer from coronary artery disease as those But sometimes, dental health is not as simple as without gum disease, according to the American just brushing, flossing, chewing sugarless gum

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and so on. You might need a cavity filling or root canal and our children might need braces. And, sometimes our mouth is a major investment not covered by employer-sponsored insurance plans. Meanwhile, the cost of dental care procedures is rising faster than you can say “commission.” According to a 2010 report from Pew Center on the States, the total annual spending for dental care is expected to increase 58 percent, from $101.9 billion to $161.4 billion, through 2018. Coincidentally, a 2009 poll by Harris Interactive and Health Day found that 50 percent of uninsured Americans skipped necessary dental care visits due to financial burdens.

workers have access to employer-offered dental plans, compared to the 74 percent of workers with access to similar medical coverage. As many companies do not offer dental coverage and are considering insurance cuts in response to a questionable economy and newfound financial strategies, dental benefits are beginning to play a major role in employers attracting and retaining workers. Dental is the third most requested benefit after major medical insurance and retirement benefits, according to a report by LIMRA. And nearly 80 percent of workers participate in benefit programs if dental care is part of the program. Giving employees an option and resources for dental plans is an investment for companies. Employees with dental benefits are more likely to take part in preventive dental care, contributing to their overall health and wellbeing. According to a recent survey by The Long Group, 83 percent of employees with an employer contributory dental plan visited the dentist twice or more a year.

The fast increase in dental costs and lack of dental coverage has prompted some workers to get creative with their dental care budgets. A few money saving dental care solutions that have hit the newscycle in recent years include: visiting local university dental schools for dental care at a fraction of the cost; heading overseas for a dental vacation and discount dental work in countries like Costa Rica and Tijuana; and negotiating with dentists to find a discount wherever possible. Brush Up On Voluntary Discount Dental Plans Employees More Conscious of Employer Dental Benefits Some companies find employer-paid dental programs too expensive and not necessary to Other media reports in recent years, including their employees overall health and well-being. the New York Times, “How to manage dental costs, with or without insurance” and BankRate. And while employers discuss how best to com, “Dental insurance or discount plan,” have respond to cost challenges and the anticipated brought attention to the struggle against high effects of health care reform, voluntary dental dental expenses and the growing gap between plans are becoming an alternative for companies employers and dental benefits. to share with their employees and save on health care costs. These days, the reality is that many employer- But, let’s say for instance “Company A” offers offered health care plans do not include dental a mom of three a full-time job with a healthy coverage or offer it as a supplementary benefit. base salary, halfway decent medical insurance, According to the U.S. Department of Labor’s a 401k program to participate in and no dental Bureau of Labor Statistics, only 48 percent of insurance. The mom considers the offer and

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reviews another opportunity with “Company B,” which will provide everything that “Company A” will, as well as voluntary discount dental plans. The mom weighs her options while considering one of her sons is going to need braces soon and she’s anticipating a cavity filling or two this year. She decides to go with “Company B,” knowing that she will take advantage of the voluntary discount dental plans for her family and save money in the long-run versus paying out more of her salary. She also knows that she’ll be more productive at work without having to worry about how she is going to afford her son’s orthodontist bill, which can cost up to $7,000 without any benefits. With voluntary discount dental plans, employees and families typically pay an annual membership fee that gives them access to discount dental dentists have agreed to offer at dental care services at discounted rates. Major providers, such as Aetna and Cigna, offer plans where savings can range from 10 to 60 percent on routine exams, x-rays and costly dental procedures. Voluntary discount dental plans are not dental insurance. Employees and families typically pay an annual membership fee starting at $79.95 per year for individual employee and $129.95 per year for families. Plans also activate within three business days, without paperwork hassles or health restrictions. Plans do not have annual limits and can be used as often as needed, which offers employees a choice and affordable alternative to dental insurance while they choose the plan that best fits their needs. Some plans can also be used for procedures such as cosmetic dentistry, and may include discounts on vision and prescription

drugs. As a solution for employees and employers, voluntary discount dental plans can help companies cut costs while providing workers with an option to manage necessary dental expenses. It also gives brokers an alternative to provide clients who want to cut dental benefits as a whole. And the next time the sensitive topic of no help with employee dental care comes up for your client, they could say, “We do not provide employer-paid dental plans, however, you can join a voluntary discount dental plan with access to significant savings on dental care procedures for you and your family. And you have the flexibility of choosing an affordable plan without annual limits.”

Bio Nicole Ropiza is the broker/affiliate and group manager at DentalPlans.com. The leading online source for discount dental plans, DentalPlans. com connects individual, family and group members to significant savings on dental care procedures such as cleanings, braces, root canals and crowns. The company offers more than 30 of the leading regional and national discount dental plans with more than 100,000 participating dentist listings in combined networks across the country. For more information and to find a discount dental plan that fits your family’s needs, visit www.DentalPlans.com. For more information about a turnkey sales solution for insurance brokers to fill the growing need for affordable dental care, visit www. DentalPlans.com or call 1-888-632-5353 choose option 5 for brokers and 6 for groups or email DPBrokers@DentalPlans.com.

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5 Steps to Good Decision Making by Kescia D. Gray

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ach day we are faced with situations in life that require us to make choices. Some of these choices are easy, and at times, some of them can be difficult. Easy decisions consist of things like what clothing you should wear; most people choose what to wear based on the season of the year, the weather of the day, and where they might be going. Other easy decisions consist of things like what to eat, what movie to see, and what television programs to watch. Decisions that seem to be the most difficult are those that require a deeper level of thought. Examples of difficult decisions consist of thinks like where to attend college, what career path would be best, and/or whether or not to marry and start a family. These types of decisions are difficult because they are life changing decisions; they shape who we are, and they shape our future.

be learned. It is not something with which we are innately born, but merely a step by step process that is usually ascertained from life experience. Most adults know that experience can be a costly, ineffective teacher that teaches more bad habits than good; and because decisions can vary so obviously from one situation to the next, the experience gained from making one important decision is often times of little or no use when another decisionmaking problem arises.

Making good decisions is a method that must

One of the most effective decision making

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When making decisions, there are many steps that can be taken; but when making good decisions there are really only five steps that need to be considered. These steps are as follows:

Step 1: Identify Your Goal


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strategies is to keep an eye on your goal. This simply means identifying the purpose of your decision by asking yourself what exactly is the problem that needs to be solved? And why does this problem need to be solved?

generate ideas for a possible solution.

When gathering information, it is best to make a list of every possible alternative; even ones that may initially sound silly or seem unrealistic. Always seek the opinions of Figuring out what’s most important to you people that you trust or speak to experts and will help you make good decisions. When professionals, because it will help you to come you know the reason why you have making a up with a variety of solutions when weighing particular decision; it will better serve you in all your options for a final decision. You will staying with it, and defending it. want to gather as many resources as possible in order to make the best decision.

Step 2: Gather Information for Weighing Your Options Step 3: Consider the Consequences When making good decisions it is best to gather necessary information that is directly related to the problem. Doing his will help you to better understand what needs to be done in solving the problem, and will also help to

This step can be just as important as step one because it will help you determine how your final decision will impact yourself, and/ or others involved. In this step, you will be asking yourself what is likely to be the results

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of your decision. How will it affect you now? And how will it affect your future?

outcome. Recognizing that if the first decision is not working, you may have to go back to step two and choose another option. Always This is an essential step because it allows you looking for and anticipating unexpected to review the pros and cons of the different problems will help alleviate undue stress, if options that you listed in the previous step. and when a problem occurs. It is also important because you want to feel comfortable with all your options and the Although these five steps can help assist in possible outcome of whichever one you choose. simplifying the decision-making process, there are some common drawbacks that you must Step 4: Make Your Decision also take into account. Consider these: Now that you have identified your goal, gathered all necessary information, and weighed the consequences, it is time to make a choice and actually execute your final decision. Understanding that this step can cause some people a lot of anxiety is important because this is where you have to trust your instincts. Although you may still be slightly indecisive about your final decision, you have to take into account how this makes you feel. Ask yourself, does it feel right? And does this decision work best for you now, and in the future? When you answer those questions back, you should feel good about the result.

Misidentifying The Problem Many times the problem will be obvious; but there may come a time when identifying the main problem is not that easy. When this issue arises, figuring out exactly what it is, and where you need to focus your efforts will save you a lot of time and energy in the long run.

Having a Single Source

When considering the consequences, you must be open to a broad choice of alternatives in order to find the best solution. This can become a problem if you rely solely on a single source Step 5: Evaluate Your Decision of information because that one source may not b reliable, or may not be completely inline Once you have made your final decision and with the problem; thus altering your chances of put it into action, it is necessary to evaluate the making the best decision. decision and the steps you have taken to ensure that it works. This final step is probably just as Having Too Many Sources important as step one, if not more important, because it will help you to further develop your Having a variety of sources is usually not a bad decision making skills for future problems. thing; but not in every situation. Collecting This step is also fundamental because it may as much information as possible can be very require you to seek out new information and helpful at arriving to a decision, but an overload make some changes along the way. of information can leave you confused and misguided, and prevents you from following Remember, this step requires some patience your intuition. Remember, trusting your and it can also encourage perseverance. Why? gut instincts is a major key to making good Because it may take some time to see the final decisions.

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Overestimating the Outcome

by Hammond, J.S., Keeney, R.L., and Raiffa, H., The Right Decision Every Time: How to When making a decision and putting your plan Reach Perfect Clarity on Tough Decisions by into action you should have taken care to weigh Kopeikina, L., or How We Decide by Lehrer, J. all your valid options. Making a decision based upon an outcome that may not be plausible will not help you solve the problem.

Poor Timing

Time can be a futile friend. Sometimes it is good, and sometimes it is not. When making major decisions, it beneficial to take your time in order to make the best choice from your options. But understanding the timing process is crucial because sometimes it is best to delay a decision, and other times delaying a response can cause more problems. There are also times when making a quick decision is advantageous because it allows you more time to make necessary changes should problems arise. In summary we all have to make many decisions throughout our daily lives. Some of these decisions require little effort, while others require more time and deeper thought before coming to a final solution. Remember, there are five basic steps to good decision making. Why is those five the ideal number? Because a significant part of decision making skills is understanding and knowing a simple technique; and also regularly practicing that technique. When there are more steps than we can count on one hand, most people tend to either forget a step, or misconstrue the order in which the steps must be taken. If you follow these five steps, and also remember the common pitfalls previously addressed, you will be well on your way to making good decisions for yourself. For more information on decision making skills, you can read: Smart Choices: A Practical Guide to Making Better Decisions

Bio

Kescia D. Gray, RN, MS, PHN, CHES is the owner and president of GrayKo Clinical Consultants, LLC. Previously published in Corporate Wellness Magazine, she is also an international author and speaker. Some of her most recent works includes co-author of Raising Healthy Children in an Unhealthy World, The Teen Handbook for Self-Confidence, and Transformation: Reinventing the Woman Within. GrayKo Clinical Consultants, LLC is a health and wellness education company dedicated to providing quality education programs, workshops, in-services, and seminars tailored to individuals, groups, and corporate clients. Their detail-specific program plans can be customized to fit your needs in order to foster success at meeting your goals of better health, increased productivity, job satisfaction, health safety, and more. Subject content related your needs and the needs of your company may include, but is not limited to stress management, emotional wellness, personal development, diet, and exercise. To contact Kescia Gray, please call (866) 653-2570, or go to www. graykoclinicalconsultants.com.

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Health & Care

Are They Going in Different Directions?

by Rajiv Mudumba

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ealth is an indicator of well -being that has implications not only on the quality of life of an individual but also for an entire society in terms of the production of economic goods and services. On an average, the developed world has pledged about 14-20 percent of its annual GDP to healthcare while the developing countries have pledged anywhere from 3-20 percent of the annual GDP, most of them at the lower end of the scale. Cases in point - The United States spends 16.5% percent of its GDP on health care expenses. Mexico uses 11.8 percent and Morocco spends 4.8 percent.

The health care of South Africa is 9.1 percent of GDP. In India, health care spending is 5.2 percent. Thailand spends 11.3 percent of its money on its health care while Indonesia sends 6.2 percent. Now, let’s take a closer look at healthcare in 2 countries - India, an emerging economy which currently spends a humble 5.2 percent of its GDP on healthcare and USA, a country that spends the most on healthcare than any other country in the world. Of course, they are two very different countries with their own varied population matrices, epidemiology and political/ social strategy as to how these healthcare dollars are spent. These two provide an interesting glimpse into healthcare of the world in general.


The Indian healthcare industry is growing and is poised to become a US$280 billion industry by 2020. [1] The Indian healthcare market is expected to reach over US$70 billion by 2012 and US$145 billion by 2017.[2] According to the Investment Commission of India, the healthcare sector has grown at 12 percent per annum in the last 4 years.[3] This growth comes from several sources such as rising income levels in a growing economy, a growing elderly population, changing demographics, endemic disease profiles and the shift from chronic to lifestyle diseases.[4]

One more fact to note about India’s growing healthcare economy is that a part of it is attributed to the rise in private players that cater to a population that demands a higher quality of care no matter the cost. The opportunity remains huge for insurance providers entering into the Indian healthcare market since 75% of expenditure on healthcare in India is still being met by ‘out-of-pocket’ consumers.[5] Even though only 10% of the Indian population today has health insurance coverage, this industry is expected to face tremendous growth over the next few years as a result of several private players that have entered into the market. Health insurance coverage among urban, middle and upper class Indians, however, is significantly higher and stands at approximately 50%.[6] In summary, India’s healthcare spending is poised to grow but there is still a long road of health improvement to be worked on while addressing care in order to ensure that root causes to improve the health standards of the population are worked on which will eventually ensure that all the spending is geared more towards health improvement rather than just care improvement.

Despite efforts in the direction of improving healthcare in the country, India continues to have high levels of morbidity, especially among children, women and elderly. There is also the issue of poor infrastructure leading to low levels of sanitation, public and personal hygiene. These contribute to a higher incidence of diseases. Infrastructure to support a billion plus people is not easy to build. Slowly but surely, India is ramping up on its infrastructure which will help manage the issues associated with health. More important is the fact that a majority of the billion plus population is under the poverty line and there are things such as education, awareness etc. that need to be worked on Ironically, USA is a country with the highest % of its to help people improve their lives which again will GDP spent on healthcare but US Life Expectancy is ultimately show an improved effect on healthcare. ranked at 50th place in the world.[7] It faces conditions


of escalating healthcare spending and poor health conditions similar to India. According to a CMS published report, U.S. healthcare spending in 2009 was at 17.4% of GDP at $2.47 trillion and is projected to reach $4.5 trillion by 2019. This equates to approximately one fifth (or 19.5%) of the gross domestic product (GDP). Hospital spending is expected to increase and gradually slow down through 2017, going from $696.7 billion in 2007 to more than $1.3 trillion in 2017. Prescription drug spending is expected to slow down initially and then start to accelerate through 2017. Drug spending will increase from $231.3 billion in 2007 to $515.7 billion in 2017.

How is the U.S. health care dollar spent? As shown in the figure below, hospital care and physician/clinical services combined account for half (52%) of the nation’s health expenditures. That shows that a majority share of healthcare spending finds its way into hospital coffers and physician pockets. The question remains, is this high percent of spend due to the need of a larger number of people visiting physicians and hospitals and/or on a more frequent basis because their health demands it or is it that the physicians and hospitals get to charge what they deem fit per their corporate policies and are operating as free economy private enterprises. The answer is out there since the US has the highest incidence of lifestyle diseases and despite the spending, health of the population in general is not improving. Moreover, the country is not acing other countries in mortality, morbidity etc. What’s ironic is that there is a 10% spend on Rx programs (it doesn’t show how much of it is on research) but definitely, there is a heavy spend on Rx advertising and push to get consumers to avail these drugs. Eventually, there is more spending around care than prevention, whether prudent or not. As a result, spending as well as healthcare


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costs go up each year while the insurance carriers are out scouting to support the providers that give the most discounts. This just goes to show that it’s again cost that is impacting service decisions and not the quality of care. Forbes released their report in February 2010 of the most expensive drugs in the US. It talks about expensive drugs costing a few thousand dollars per year to as much as 350K to 400K per year. These costs are being attributed to advances in technology but more than that, its basically for rare diseases for which patients have no other option but to buy these drugs. According to Forbes, “Alexion Pharmaceutical’s Soliris, at $409,500 a year, is the world’s single most expensive drug. This monoclonal antibody drug treats a rare disorder in which the immune system destroys red blood cells at night. The disorder, paroxysymal nocturnal hemoglobinuria (PNH), hits 8,000 American.Folotyn treats a rare type of lymphoma and costs $30,000 per month. Myozyme, which inspired the Harrison Ford movie Extraordinary Measures, costs up to $100,000 for a child. But according to Genzyme, the average cost of adult treatment is $300,000 per year.”[8] These costs are guaranteed to constantly increase as time goes on and more technology is developed. There is nothing being done to lower the costs. Technology to drive advancement of drugs is great but some of the healthcare dollars need to be used to subsidize this research, thus enabling these drugs reaching the needy for a much reasonable price. There is also the need for more stringent regulation to curb the drug manufacturers from profiteering. This is a true example of where the healthcare dollars could support health and not just care. Health and Healthcare are two separate entities divided by a very fine line. The former deals with the betterment & maintenance of health of the people (which can be very personal at an individual level) 54

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while the latter deals with the nature of offering care to the population. Often times, these are used synonymously. The Health Care Reform Bill that came out about a year ago professes to expand coverage to millions of uninsured Americans. It deals with establishing health insurance exchanges to help self employed and uninsured buy insurance with subsidies, details helping Medicare and Medicaid programs and insurance reforms to provide better coverage to children and adults with or without pre-existing conditions and keeps illegal immigrants from benefiting from health insurance exchanges. Basically, healthcare reform is not about improving the healthcare we get. It’s more about re-shuffling how the care is provided and how the money to support the system is obtained and allocated. When it talks about millions of uninsured getting coverage, it’s also ensuring that more money flows through the


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educate and make decisions on the type of care they want/need. The system is geared to steer everyone towards more care whether needed or not. Physicians, Hospitals and Drug manufacturers are all part of a major public/private enterprise and the system is trended to run as a private enterprise. Hence, hospitals want beds filled, physicians want to prescribe tests, do procedures and prescribe drugs, some you may need; some you can do without. It’s always up to the patients to make smart decisions, whether it is to choose the right insurance plan, the right doctor, and the right hospital or understanding the drugs they are prescribed. In today’s healthcare system, education and empowerment is a crucial factor for individuals to get the care they need and deserve than what is given. Having said that, there are still certain things that can be done within the system to contain/decrease the speed with which the costs are escalating. Prevention & Screening - Emphasis on prevention and proactive health management will ensure that individual health improves and there is minimal care needed later in life due to the proactive measures taken initially. Timely screenings and checkups will ensure that any health issues are caught at the outset and are easier to treat and manage. In some cases, ongoing disease management can be minimized or totally eradicated.

system to support it. The amount of care provided across our entire population will increase because the number of patients will increase. But that doesn’t mean that the care will be any faster or better - unless you are among the millions who had no insurance and will now have access. The healthcare system cannot dictate the type of care one needs. It will be up to the individual to self

Healthcare Quality Improvement - Focus on specific diagnoses, accurate and needed tests, timely and right treatment, less invasive procedures, etc will ensure that unnecessary or outliers in health management that are based on the principle of “more is better” are minimized and enhances accuracy in treatment as well as paves way for more focused health management. Integrated Care Management - Integrated health centers where all the needed specialties that care for a patient from diagnosis, screening and treatment are under the same roof are needed. The current system of sending the patients out to various specialties/centers based on doctor recommendations only add to

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the pain and administrative burden for the patient.

quality and value. Employers must expect health plans to direct patients to excellent providers, not those provider networks that offer the biggest discounts. A lot more needs to occur in addressing the base question of improving health. Improving health will eventually result in the need for less care. All the dollars spent today on care can infact, be aligned with an improved health strategy and how efficient would it be if the economy is health based than healthcare based.

Clinical Analytics - This is a crucial part of the entire healthcare strategy as no amount of work is useful until we are able to measure the outcome. Value based information comes from analyzing the data obtained from various sources that provide insight into medical conditions, treatments, patient outcomes, provider results etc. This will help patients make informed decisions about where they want to seek care and can be assured of best results. Also, this can help health plans better negotiate services with providers and We should move from an economy that sustains ensure that the best are signed up to support patients. sickness and then, cares for it to an economy that sustains health and cares for the sick to turn them Employer backed wellness strategy - To foster healthy. We thrive today on providing more and more value towards employee health benefits, employers expensive care when we could make a few strategic must come forward as leaders in the wellness arena. and tactical changes and move into an economy based Employers need to spearhead healthy living by on growing and improving health. A health based spreading the word of healthy choices; in food, economy will promote health among people. There entertainment, activities etc. Employers must advocate will be less need for care after the fact that one is an aggressive approach to wellness, prevention, sick but there will be a lot more to do to ensure that screening, and active management of chronic everyone is healthy and to keep it that way. conditions. Many employers in the United States are already treading in this direction. Some companies have advocated healthcare consumerism and health plans associated with it. As a part of health strategy, some companies cover the costs of smoking cessation Rajeev Mudumba works with and weight loss programs, reward participation in SHPS, a leading, independent health and risk assessment screenings with incentives provider of integrated health in health plans. Some offer fitness programs and solutions that improve personal healthy menu choices in company cafeterias, some health and reduce spending. support local farmers markets to provide produce to Rajeev has over 16 years of their employees’ right at the place of work. Further, leadership experience in the HRO, Healthcare and companies are tracking the ROIs of these investments Technology consulting industries. His distinguished in health with great results, thus showing that it is a winrecord of accomplishment and innovation includes win situation for the employees and the employers. high level strategy and ideation, precise execution and enhanced focus on efficiencies through the use Employers need to influence healthcare execution technology in business across various verticals. He - Employers need to directly engage in improving the can be contacted at rajeevsagar@gmail.com. structure of health care delivery, and thus its quality. This begins with redefining relationships with health plans away from cost reduction and discounts to

Bio

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The Cost of College by Kay Kimball Gruder

What does a family with a newborn have often additionally experience a sense of loss and in common with a family who has a son or anxious feelings around the shifting locus of daughter entering college? their control. So let me ask, “What percentage of your work/life initiatives provide a range This sounds like the beginning of a joke, but both of offerings and programs to employees who have far more in common than most work/life have a child either entering college or currently balance programs have considered. Employees enrolled in college?� with young children and employees with a son or daughter embarking on the college years Societal Factors and Trends share high levels of stress, uncertainty, financial changes, a long list of new expenditures, Our society provides many more offerings and constant transitions, heightened worry, and resources to parents who have young children changing family relationships. The employees than to parents of older children. This pattern is with the pre-college or college-enrolled child also reflected in many work/life wellness

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programs, yet the teen through college years are high stake and high transition. Maybe as a society we hope that parents have figured out how to successfully parent by the time children have entered their mid-teens, but parenting has one stepping into new or unknown territory at a steady pace.

What We Already Know Family-to-work interference makes concentration at work difficult, and we know that when people are preoccupied they are less focused – though there is ongoing debate and research about whether there is a systematic relationship between work/life balance and productivity. We know that too much stress is bad for one’s psychosocial well-being and that stress-related illnesses raise medical costs, and that absenteeism comes at a price too. We know that not everyone seeks or solely needs counseling to improve family-towork interference, so to assume that employees will have their needs met by accessing mental health services is a narrow view. In the wellness industry we recognize the value of preventative measures. As with other physical and emotional life occurrences, families that are better prepared for the stressors associated with parenting a precollege and college enrolled student, and who can anticipate the range of parenting challenges that they will likely encounter, have the greatest opportunity to more effectively handle stress and transitions with expanded skills and knowledge.

As a Parent Coaching InstituteTM Certified Parent Coach®, with over 22 years in higher education as an advisor to students and families, I can share that my clients are your employees. They are men and women from all job levels. Some went to college decades ago and some have never set foot on a college campus. Some clients have had one child already attend college, but most have not. Some families are financially secure, but most are just getting by. What they all have in common is that they share varying degrees of stress, worry, confusion, and distraction by virtue of parenting either a pre-college or college enrolled student. Their list of parenting concerns spans from the college application process through to having their recent college graduate move back home. In between they are parenting children who have lots of opportunities to make mistakes. While it has always been true that college environment is What are businesses providing to parents of fertile ground for errors in judgment, today the pre-college and college enrolled students? impacts are greater due to the cost of a college The work/life balance initiatives that are education. When in history: available to parents of pre-college and collegeenrolled students are uneven. While there • has college cost so much; • has a college education been essentially are now industry expectations for what great a mandatory next step for virtually every childcare looks like or what offerings make for a generous fitness program, the same is not true high school student; • has parent involvement played such for work/life initiatives targeting parents of prea significant role in the day-to-day college or college-enrolled students. At one end decisions and the personal organization of the spectrum you have companies like SAS which have an on-site Teen/College Resource of a child’s life; • has there been a time when young people Consultant as part of the Work/Life program are so insulated from experiencing risk staff. The Work/Life Center creates and delivers an annual “College Series” and invites experts in and failure?

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too, to share their knowledge about topics of interest to parents of teens and adolescents. As Page Cvelich, the Teen/College Resource Consultant shares, the presentations not only address the nuts and bolts of things like saving for college, test prep, and the college selection and admission process, but offerings also consist of seminars designed “to help parents support their college-bound students as well as to parent more effectively” during this time in their child’s development. Through evaluations of services, SAS employees report “feeling a reduction in stress and cared for by the company.” In addition to a steady stream of parent education, Ms. Cvelich provides parents with resources, referrals, and parent coaching. She also offers family programs and topics for the teens. The department has a work/life lending library and two electronic lists which facilitate a flow of information to parents of teens and parents of college students and beyond. After students are at college, Ms. Cvelich is available as a point of contact to parents, providing suggestions about whom best at the college to act as a resource to their student in crisis. The average age of SAS’s world-wide employee population is forty-five, which places many in the throes of parenting a pre-college or college enrolled child. SAS presents a very comprehensive work/life program to parents of teens and college students. A more common model is one by which a company contracts for services that focus largely on guiding parents and their student through the college admission process or helping employees to address financial concerns and needs associated with sending a child to college. While these services are definitely meeting employee needs, they often lack a continuum of offerings and support that truly carry a parent through the teen and college years.

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The “best fit” for your company or organization should be determined through consultation with employees from all segments of your workforce. As well, take a reading on whether your organization’s culture is open and ready for the benefits you intend to offer and whether you can respond to the demand if a new program or initiative is a huge success. Remember too that parents may know that they are stressed and frustrated about various circumstances related to their pre-college or college enrolled student, but they might not recognize that the bulk of the stress comes from their inability to effectively parent their student through problems, crises and challenging situations. Parents won’t come running to you expressing a need for a parenting class, though having new knowledge and expanded parenting tools and strategies leads to reduced stress and more confident parenting. It is over time and through a continuum of offerings that parents can reach a comfortable and effective new parenting paradigm as they navigate their role with their emerging adult. Recommendations That Won’t Break the Bank If you historically have not offered work/life balance programs tailored to parents of pre60

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college and college enrolled students you can definitely test employee interest with relatively low-cost and low-risk pilot programs and services. Consider the following: • If you have a work/life lending library consider adding and featuring books that guide parents in their parenting of precollege and college enrolled students – not just the nuts and bolts of how to get into college, but books about experiencing transitions, making the most of college, and parenting a college student. • Consider organizing a monthly discussion group that targets parents of college students or parents of high school seniors. • Create a mentor program where parents with students already in college act as a sounding board for parents who are just embarking on this stage of parenting. • Start a lunchtime book group that reads a range of parenting books or shorter articles of interest to parents of teens and college students. • Contract with a provider to deliver live presentations or on-demand parenting webinars.


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• Survey your parents and identify “hot topics” – then invite speakers in from different departments at area colleges to share information and to answer questions. • Celebrate a student’s success by sending a company note when a student is on the Dean’s list, has graduated, or receives an athletic award, etc. • Create or deliver an electronic parent publication that is expressly for parents of college students. • Consider short-term flex time for employees who need to make a round of college visits with their child – that way they won’t call in sick or take vacation time for an experience that is anything but a vacation! There are definitely other considerations to factor in as you learn about employee needs and interests. For example, if you have employees who have children who will be the first generation to go to college you will likely want to tailor some offerings to address their questions and desire for information. Additionally, if you have a global workforce you will find that there are very different norms elsewhere in the world for how involved parents are with their teen or college student. You might also find that some of your global workforce desires to send their child to college in the U.S., and this too provides content for niche programming. Exploring the right fit for your workforce might mean offering variations on a theme. As with any new initiative or program, the ROI for creating new or broadening your existing work/life offerings might be realized immediately or it might take more time for the intangibles to emerge. Interestingly much of parent education revolves around improving

parent communication skills which usually has a ripple effect on one’s personal and workplace interactions. My clients often share that they find themselves applying the parenting strategies that they gained through parent education to other situations where they are faced with challenges, transitions, decisions, and difficult people. The cost of college to your workforce is more than just a financial commitment. It comes at an emotional expense, complete with parenting confusion, unanticipated twists and turns, sleepless nights, and sometimes even weeks or more of worry. As you evaluate older initiatives and cycle in the new, consider evaluating what you might offer to a potentially significant segment of your workforce. Chances are that they will be both surprised and grateful – as much of one’s parenting of older children occurs without guidance or inspiration.

Bio Kay Kimball Gruder, M.Ed. and Parent Coaching Institute™ Certified Parent Coach® founded SuccessfulCollegeParenting. com and is also the College Parent Expert for CollegeParenting.com. Kay delivers on-site and webinar-based parent programming on topics that guide parents in their evolving relationship with their student. She also provides individual and small group parent coaching. She is the author of “Successful College Parenting Strategies”, a free electronic monthly newsletter.

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2011 May Issue of Self Funding Magazine

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