Impact of Employer Size on STD Claims for Mental and Musculoskeletal Conditions

By Michael Klachefsky

Consultant
ClaimVantage

To more deeply explore the analysis around employer size provided in the feature article in this issue of @Work, we investigated mental health (MH) and musculoskeletal (MSK) condition claims to further understand the impact of employer size. Using a data set with both insured and self-insured STD plans that are outsourced to a carrier or administrator,¹ we examined these conditions in STD because, among all employers, MSK and MH conditions both rank in the top four for payments per closed claim and percent of closed claims (a proxy for incidence). In addition, MSK medical insurance claims have had the second-highest spending growth between 2000-2013.²

Figure 1 below shows the differences between the larger employer and the smaller employer groups. We chose the 20,000 threshold because the number of claims was similar above and below the threshold although the number of employers in each category differed greatly.

Figure 1: High-Cost Medical Conditions

Mental Health and STD

The differences in the MH claims outcomes durations for the two employer size groups is 24% and 65%, both large differences. The reasons for these differences are, no doubt, complex and multifactorial. One significant factor is most certainly the supervisory relationship. “The employee’s relationship to his/her supervisor is critical to a timely RTW. Smaller corporations may tend toward more support in the employee/supervisor relationship. If an employee has a trusting and supportive relationship with their supervisor, this usually leads to a better outcome and early successful RTW,” noted Mark Raderstorf, MA, CRC and PsyBar Consultant.

Given the importance of MH claims and the impact of the supervisor relationship, many employers have worked with vendors and other resources to design a strategy for supervisors. Some of these program models give supervisors a more active role and some less. Whatever the role, supervisors should be fully trained for it and should be brought in to support the RTW process as early as possible.

Musculoskeletal Disorders and STD

MSK disorders are very diverse, so standard care for these conditions also varies substantially. But there is a general consensus and specific evidence that intervening early can significantly shorten STD durations which equates to lower cost and in addition reduced medical expense. These improvements, in turn, reduce employer productivity losses and indirect absence costs. The indirect costs of absence in STD can be up to 4.7 times the direct costs.³

As shown in the chart above, durations and payments for STD MSK differ significantly between the two size groups of employers. To bend their STD cost curve, employers can apply best practices from workers’ compensation (WC), where MSK conditions have been the primary focus. In many WC programs with documented success, the basic model included early intervention, accurate diagnosis, a concise track for treatment, effective non-opioid pain management, and early transitional RTW.

In this program environment, “physical therapy, when introduced very early in an MSK injury or condition, and when indicated before extensive medical investigations, has better, shorter, and less costly outcomes,” said Todd Norwood, DPT, Head of Clinical Services for Physera, Inc.

Therefore, we recommend that employers, especially those with over 20,000 employees, work with vendors and other resources to apply WC best practices to MSK conditions in STD and other non-occupational disability programs.

Specific Industry Differences by Condition in STD

Our review of the IBI Benchmarking data also indicates that a number of industries experience the STD cost threshold of 20,000 employees in regard to MH and MSK diagnostic categories.4 Here is a sample of two industries:

Figure 2: Sample Specific Industries – Employer Size and STD Cost by Diagnostic Category⁴

The chart above highlights significant differences above and below the 20,000-employee threshold in hospitals and food manufacturing. These industries have very dissimilar working conditions and wage structures, yet both experience the STD cost-threshold divide. This finding, along with the ones based upon all employers above, provide a powerful warrant for more investigation into the impact of employer size on STD experience in specific industries. Based on our findings so far, we also encourage more research on the impact of the more prevalent diagnostic categories: neoplasms (cancer); endocrine, nutritional, metabolic, immune; nervous and sense organs; circulatory; genitourinary; respiratory; and digestive.⁵

When we began this investigation, we were amazed at the impact of employer size on STD cost. After spending several months analyzing the data, we recommend that employers, and especially those with over 20,000 employees, review STD claims:

• By similar size employers in other industries
• By peer employers in the same industry
• By diagnostic category

The findings of such a review should provide employers with specific recommendations regarding types and timing of medical interventions:

• In employer-sponsored health plans
• In STD plans
• In long-term disability plans
• For Family and Medical Leave Act intermittent leave

Conclusion

This review of mental health and musculoskeletal STD claims added detail and depth to the surprising relationship between employer size and STD experience. Employers should discuss the implications of these findings with their disability management and medical partners. As findings from hospitals and the food industry suggest, large employers may have even more potential cost reduction on the table than they already believed.

References

1. Integrated Benefits Institute (IBI). Health & Productivity Benchmarking. Data Year 2016
2. 2. Peterson-Kaiser Health System Tracker. Retrieved from https://www.healthsystemtracker.org/chart-collection/much-u-s-spend-treat-different-diseases/?_sf_s=disease#item-start.
3. Kronos Incorporated, Mercer. The Total Financial Impact of Employee Absences, p. 12. June, 2010.
4. IBI. Health & Productivity Benchmarking. Data Year 2016. All employers.
5. These are STD diagnostic categories in the IBI Benchmarking Data Base (data year 2016, all employers) where the percentage of closed STD claims is more than 5% of all closed claims.