Clients are tired of the same old story at employee benefitrenewal meetings: Higher rates, increased deductibles/copays andcost shifting. As agents, most of us have been desperate to offersome positive news. Fortunately, we are seeing the emergence of anew story line, one that has the potential to save our clients timeand money, and to place us in the position of valued advisors andstrategic planners. As we work with employers, providers and thegovernment to script new plans for employee benefits, four ideasare moving to the forefront:

1) On-Site Medical Services

2) Health and Wellness Initiatives

3) Mental Health and Substance Abuse Parity

4) Voluntary Benefits

On-Site Medical Services

A major player in this arena is Florida-based Harris Rosen, whomyou may have seen interviewed on CNN, CBS, or Fox News. Rosen isthe president and COO of Rosen Hotels and Resorts, with sevenproperties in Central Florida. He has the distinction of startingan on-site primary care facility 19 years ago to serve the needs ofhis employees and their dependents. While most employers have seentheir health insurance rates increase every year, often in doubledigits, the costs associated with Rosen's health-care plan havebeen relatively flat for the past five years, according to KennethAldridge, Jr., director of health services for the Rosen MedicalCenter. Because the plan is totally self-insured, it is not subjectto state mandated benefits. Despite this, Aldridge said that thecompany plan greatly exceeds what most employers/employees are usedto in the traditional health insurance market. At Rosen:

• Benefits are provided to all employees working at least 32hours or more per week.
• Employees are on the clock when participating in the variousexercise programs.
• All new employees and their dependents are provided a completemedical assessment. The goal is to identify necessary interventionsas quickly as possible to achieve and maintain maximum health.
• Services not available at the on-site clinic are under directcontracts with specialists, ancillary facilities, and hospitals tomaximize cost savings. Focused case management is provided for allservices provided outside of the clinic.
• As a condition of employment, employees may not use nicotineproducts.
• Medical services are provided at the clinic while the employeeis on the clock. When necessary, roundtrip transportation isprovided from the worksite.
• The copay for pediatric services and most medications is $0;primary copay is $5.

• The $500 hospital copay is waived for use of the birthingcenter.
• More than 4,100 covered lives have access to the medicalcenter.
• As a result of the program, Rosen claims that:
• The Rosen properties' employee turnover rate is approximately17 percent. Turnover rates in the hospitality industry aretypically 50-200 percent per year.
• Diabetic compliance rate is over 70 percent.
• Generic utilization rate is over 70 percent.
• A progressive and one-of-a-kind pharmaceutical program hasreduced Rosen's spend to a fraction of what other employers pay inthe same industry.
• Workers' compensation injuries and sicknesses are handledthrough the clinic.
• Rosen's workers' compensation premiums are half those of itspeers.

Ashley Bacot, president of ProvInsure, aRosen-owned company, said, “For every dollar we put into thismodel, we get over $8 back. This is just what the doctorordered.”

The Rosen Hotels and Resorts model needs approximately 500employees to support and justify the infrastructure. However,smaller employers can implement incremental steps, such asestablishing clinics shared by multiple employers or employing avisiting physician with set office hours on the premises.

Health and Wellness Initiatives

According to the Centers for Disease Control (CDC), more thanhalf of all Americans have one or more chronic diseases, whichinclude cardiovascular (heart disease and stroke), cancer anddiabetes. Chronic diseases result not only in obvious medicalcosts, but also in indirect costs through absenteeism andpresenteeism. (“Presenteeism” is when an employee who, althoughsick, reports to work to avoid taking a sick day; his level ofproductivity is greatly diminished.)

Many chronic diseases are preventable, and corporate-directedwellness initiatives can play a critical role in improving employeehealth and productivity. While some health management programsfocus entirely on the small percentage of employees with thehighest health claims, it is generally thought that the mosteffective programs also take a proactive approach, targetingpreventative features for all employees. The goal is to minimizethe number of workers moving into the high-risk category byproviding increased awareness, education, motivation, andaccountability. Almost all wellness programs today include sometype of health risk assessment with programs for smoking cessation,weight loss, stress reduction, and/or chronic disease management.All of these are practical and cost-effective strategies to improveemployees' physical and mental health and well-being.

According to “Two Roads Diverged: Hewitt's Annual Health CareSurvey” in 2008, 88 percent of employers planned to make“significant investments in longer term solutions aimed atimproving the health and productivity of workers.” This representeda 25 percent increase from 2007. Another 2008 Hewitt report,“Wellness and Beyond: Employers Examine Ways to Improve EmployeeHealth and Productivity, Reduce Cost,” stated, “While the return oninvestment varies for each employer, studies have shown that forevery $1 an employer spends on wellness programs, employers canexpect a $3 to $6 return.”

Mental Health and Substance AbuseParity

The Wellstone and Domenici Federal Mental Health Parity andAddiction Equity Act (MHPAEA), was signed on Oct. 3, 2008, andbecame effective for plans renewing after Oct. 3, 2009. InterimFinal Rules (IFR) released on Feb. 2, 2010, and effective April 5,2010, are applicable to insurance plan years that begin on or afterJuly 1, 2010.

Under the MHPAEA, all employers with 51 or more employees whoprovide medical and surgical insurance with mental health orsubstance abuse benefits must provide those benefits in a mannerthat is no more restrictive than those required for the medical andsurgical benefits. Prior to the law, it has been customary to use adifferent standard for substance abuse and mental health treatmentbenefits. It is anticipated that over 100 million Americans will beaffected by this legislation, including over 80 million enrolled inself-funded plans regulated by ERISA who are not subject to stateparity laws. According to The Holman Group-Managed BehavioralHealth Care Services, the new regulations state that:

• Equity coverage applies to all financial requirements,including deductibles, copayments, coinsurance, and out-of-pocketexpenses; and to all treatment limitations, including frequency oftreatment, number of visits, days of coverage, or other similarlimits.
• The bill builds on the current 1996 federal parity law, whichalready requires parity coverage for annual and lifetime dollarlimits.
• Mental health and substance abuse disorder benefits are definedbroadly to mean benefits with respect to services for mental healthconditions and substance abuse disorders, as defined under theterms of the plan and in accordance with applicable federal andstate laws.
• A plan may not apply separate cost-sharing requirements ortreatment limitations to mental health and substance abuse disorderbenefits.
• If a plan offers two or more benefit packages, the requirementsof the Act will be applied separately to each package.
• As under the current federal parity law, mental health orsubstance abuse benefits coverage is not mandated. If, however, aplan offers such coverage is must be provided at parity inaccordance with the Act.

Cost exemptions are available based on set criteria, but requirethe use of a “qualified actuary” and apply for one plan year only.The Congressional Budget Office estimated that parity will resultin cost increases of 0.2 to 0.4 percent for health plans.

As part of its report, the IFR referenced studies that showed acost reduction for mental health and substance abuse premiums of20-48 percent when behavioral health carve-outs are used.

Mary Liz Schwartz, formerly a benefit administrator and headadministrator of a major airline's medical clinic and currently aFlorida account executive with The Holman Group, is familiar withthe past and current regulations. At the airline, Schwartz saidthat by carving out mental health and substance abuse benefits fromits health plan and placing these services with a stand-alonenational behavioral health provider, her company experiencedsavings on many levels.

“The savings of HR man hours in the staffing and benefitsdepartment was noticeable with manager/supervisor referrals goingdirectly to the behavioral health provider,” Schwartz said. “Issueswere often resolved before they came to HR, which resulted in lesslitigation.” Schwartz noted that savings also were realized in“reduced turnover and disability claims, and productivity increasedas employees were more closely monitored by specialists whose toppriority was curing the employees rather than merely treatingsymptoms.”

Voluntary Benefits

Perhaps the most significant finding from the seventh annualMetLife “Study of Employee Benefit Trends” (March 2009) is thatemployees are placing even greater value on benefits providedthrough their employers. Employee retention remains the mostimportant benefits objective for employers, and benefitsconsistently rank as an important factor in employee loyalty.

However, the MetLife studies have historically found thatemployers tend to underestimate the degree of value that employeesplace on benefits. The recent survey asked both groups how benefitsinfluence employee loyalty. The opinion gulf between employers andemployees on this is telling:

MetLife research also revealed that with greater financialresponsibility for benefits being shifted to employees, workers aremore aware of existing gaps in coverage and they are increasinglyinterested in filling those gaps with voluntary benefits — despitehaving to pay for these benefits themselves.

While 40 percent of employees responded that they want a widerselection of voluntary benefits, only 19 percent of employersidentified this as a benefit strategy. It may be interesting to seewhere those 19 percent rank in employee retention studies. It isprobably pretty high.

David A. Gentry, M.Ed, CFP, RHU is the COO forFringe Benefit Plans, Inc., in Winter Park, and a past statepresident of the National Association of Health Underwriters. Hemay be reached at 407-862-5900 or [email protected]; www.FringeBenefitPlans.com.