Testing the waters with IDM: When FleetBoston decided to pursue an integrated disability management program, the company dove into the waters and learned to swim with relative ease. Here's their story of IDM success - Disability

For most companies, saving money is the main reason to consider integrating disability programs under one plan. FleetBoston Financial Corp. was no exception. When Fleet and Bank Boston merged, Claudine Reilly, benefits manager for the newly formed FleetBoston, took on the task of combining the two companies' disability programs.

It was a daunting task, but Reilly says her company jumped in feet first on December 12, 1999. By April 1, 2000, a mere 10 weeks after deciding to integrate, FleetBoston rolled out its IDM program.

About to enter the third year of the program, FleetBoston has seen success. In 2000, the company's average short-term disability (STD) duration had been reduced from 62.1 days to 57.8 days, a 4.3 percent reduction. Its average long-term disability (LTD) incident rate dropped to 5.06 percent from 6.75 percent.

Dan Lyons, vice president and manager of the IDM program at Liberty Mutual, Boston, says that FleetBoston's success is not uncommon. What is uncommon, he says, is the speed with which FleetBoston implemented its new IDM plan. As the seventh largest financial institution in the United States, Reilly's corporation was faced with merging two separate disability programs into one and recording a savings.

Reilly and Lyons spoke with Risk & Insurance senior editor Lori Widmer about some of their challenges and the lessons learned from the experience. Below is an excerpt of that conversation.

Q: Why did you go with the IDM plan?

Claudine Reilly: This is not a classic case. This came as a result of the Bank Boston/Fleet merger. This was a merger of two very large banks. Both banks were doing managed STD, which is a big piece of IDM. We were both managing employees once they were out on a leave of absence for medical reasons. We didn't want these employees rubber-stamped with a doctor's note that would put an employee out for several weeks. We wanted those programs managed by professionals. Both banks were already doing this. One was doing it with an outsourced vendor and one was doing it internally. As a result of the merger, we were looking at a combined outsourced vendor for STD managed disability and in that process, we came upon the idea of doing IDM. We did it without doing a lot of the background work that we might, in a more classic sense, recommend other companies do. We just jumped in. One analogy is that you can learn to swim two ways--you can jump in and thrash around and learn in 10 minutes, or you can take lessons for 18 months and try to swim. We think we have a good product and we learned from it. In the long run, things are working well and more positively than if we hadn't done this.

Q: What were the problems you were looking to solve?

Reilly: Our ultimate goal was to increase health and productivity of FleetBoston employees. That has a two-fold piece. It's certainly the management of disability and it's also the management of health care costs, which is huge. That is part of the basis for making this decision. At that time, we could really make a big difference by integrating all aspects of disability, not just the STD. That would include workers' compensation, family medical leave, and LTD. Along with that is the whole issue of the Americans with Disabilities Act (ADA). We were able to put all of our data into one location and to extract outcomes from that, and have a program where employees were managed with their health care providers trying to get people back to work sooner. We were looking to decrease our duration of leaves, to decrease our incidents especially on the cost side. We think we've done that. We'd certainly like to go further with it. It has helped us to identify the statistics we needed to build other programs, to support health and productivity. That was our ultimate goal.

Q: How did Liberty Mutual go about addressing FleetBoston's concerns?

Dan Lyons: When we built our IDM process, we built it with most of those key business issues that Claudine mentioned in mind. If you look at industry information, a lot of the things that Claudine just mentioned are things other employers are saying as well.

Why do companies go with an integrated program? They want to save money; they want to improve productivity, and they want to address health care expenses. So, as a service provider, we designed our product to focus on those areas. There's a very strong emphasis on working with our clients for a common return-to-work program, for example. That certainly has an impact on the length of disabilities or durations. Returning people to alternate duty, but ideally returning them to full duty obviously impacts productivity.

Q: What was the main focus of your program?

Reilly: We were integrating STD, LTD. workers' compensation, and family medical leave. In my head, that also includes ADA. Were there problems? Well yes, to be honest. It's much like jumping in the water and having to do the dog paddle for a while. We did. We implemented our IDM program at the same time that we integrated the payroll conversion of the two large banks. That was problematic, however. There were some problems with our Administrative Services Only (ASO) program. Liberty creates an advice-to-pay report to our payroll department. In that regard, we feel payroll was not focused on our disability product as much as they were on the payroll conversion. We think that may have led to the non-ideal payroll report that was first created.

Q: What other issues did you face?

Reilly: The integration of FMLA is a real challenge for all employers. It's an administrative nightmare. Just integrating FMLA with IDM is a challenge all by itself. Part of that is because of the legal ramifications and the restrictions we have with FMLA. There are regulations that have to be followed that don't necessarily have to be followed for STD, which is a self-insured program. In that regard, we ended up with a lot of dual communicating to employees. Those are the two biggest issues-payroll and communicating well to decrease the confusion around FMLA.

Q: How does a company successfully integrate all of these programs?

Lyons: One of the things we do when we enter into an arrangement with a company is put a dedicated resource on the program immediately, a position we call an installation manager. This person's job is to make sure all of the components of the program that the client wants to integrate are in fact integrated from a service provider standpoint. In the early days of FleetBoston, we had certain challenges with integrating WC, STD, and LTD from a common claims management standpoint. FMLA became more of an issue as the program evolved. We had to put services in place and incorporate those into an integrated model as Fleet made the decision to bring those services into its own integrated asset management models.

Q: What was unique about your program?

Reilly: The fact that we included so many things. Many employers have what they call an integrated program, but they don't include FMLA or ADA. Ours is unique because so much is included. I also manage wellness, fitness, and employee assistance programs. The whole health and productivity program is in partnership with group corporate risk management. We've been able to break down some silos and get all the stakeholders to the table. The major positive result that's come from this is we have decreased duration, some of the cost, and some of the internal resources that we had to dedicate to disability. We've created a targeted intervention program in our high-risk locations. That has been done in conjunction with corporate risk management and many other partners, as well. That's our PATH program, People Achieving Total Health. It's a comprehensive health and productivity program. We wrote it very soon after the first year of IDM and implemented it at our first site this past June.

Lyons: The number one unique aspect was the speed with which Fleet made the decision to go with an integrated program. One of the biggest challenges is making the decision. A lot of companies think it through literally for years. Fleet made that decision quickly and jumped in with both feet, and they asked us to go along with them. It was an intense experience, but it was also refreshing because the decision was made quickly. Everybody was challenged to react quickly.

The other thing that is interesting about the Fleet program is that it has not remained stagnant. It's clearly a program that the entire organization endorses, so it continues to evolve. They continue to add more aspects to the program. Every time they add something, they challenge us to work with them as a partner to come up with a solution.

Q: Would you do anything differently knowing what you know now?

Reilly: In general, we're very pleased. I don't know that we'd do anything differently. I may have taken more time for the implementation. I'm glad we made the decision quickly, but I wish we'd have left more time for implementation and had more time for testing some of the systems, eligibility files, and the payroll reports. I'd not make it (implementation) on the same day as the payroll conversion though.

Q: What kind of recommendations do you have for others putting together their own IDM programs?

Reilly: I would recommend that they pull all their stakeholders together in one room and get that kind of buy-in. The first step would be a cost analysis of all your different disability programs. The second step is getting upper management to buy in. The approval process in a company this large is tremendous. It could literally take years. Be sure that you have at least the needed players in agreement. Also, make sure that you have enough of a cost analysis to bring it to upper management and be able to show what you expect to see and the programs you expect to be able to put into place, and how it's going to help the company. You have to think of all of the aspects--what's in it for the employees, for HR, for managers, for shareholders, for upper management, for public image.

Q: How are your results? How are you measuring them?

Reilly: We're measuring claims, claim cost, duration, incidents, and locations. We're doing a trend analysis. One of the purposes is so that you can see trends and fix them if you see something broken. After two years, we have reduced our duration of disability for employees that are out of work.

In our program, there's a seven-day waiting period, so it doesn't include all absences. It includes those who have taken an STD leave. We've reduced that from an average duration of 62 days to about 58 days, including maternity leave. We're about 70 percent female and average age is between 37 and 39.

We believe we've saved $371 per claim. We get 5,000 claims per year. Our target is 51-day durations. We want to save more, and we also want to start affecting the incidental absence in the first seven days.

Q: How does IDM make sense?

Lyons: Especially in programs where return to work is not aggressively managed, where there aren't return-to-work programs or disability management programs in place, the savings can be dramatic. On our book of business, individual accounts have generated savings that are as high as 30 percent to 35 percent on unmanaged occupational and nonoccupational programs.

As employers programs become more sophisticated and more effective, the dollar savings and the duration improvements drop a little bit, but they still exist, generally in the 10 percent to 15 percent range. Savings are a key issue for anybody who's looking for an integrated program.

When we talk to employers, cost is one of the things they initially cite as a reason they would look at an integrated program. The second thing is that properly done, it should make an employer's life easier. When an employer decides to integrate internally, one of the things they begin to do much better is communicate with others in the organization.

Generally, companies go with a consolidated return-to-work plan. It's easy to administer. Usually, one service provider is providing all of the documents, all of the billing. It becomes a one-stop shopping exercise and administration becomes easier. Lastly, productivity generally improves. People are back to work sooner, you have fewer absences, and you have lower amounts of overtime.

One of the nice things we see happening is that companies that go to an IDM program are not backing away from that commitment.

Lori Widmer can be reached at lwidmer@lrp.com.

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