leave administration outsourcing: who, what, why

Leave Administration Outsourcing:Who, What, Why

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Speakers

2 May 12, 2016

Mary Armstrong-FlippoNational Practice Leader,Absence & Productivity SolutionsXerox HR Services

East Coast

[email protected]

Yvonne Breiter, MBADirector, ConsultantAbsence & Productivity SolutionsXerox HR Services

West Coast

[email protected]

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Today’s Objectives:

• Determine if outsourcing, insourcing or co-sourcing administration is right for your company

• Understand the various carriers and Third Party Administrators (TPA) in the market and their capabilities

• Learn about new and emerging technologies to manage leaves, disability and ADAAA

• Know how to take the next steps towards a solution

Leave Administration Discussion

3 May 12, 2016

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Administration is burdensome

• Ever changing state laws

• Vague standards and definitions in the law

• Multiple populations (unions, legacy businesses, etc..) add complexity

Compliance with the law is difficult to achieve

• Litigation is increasing and more visible

• Weak point is manager behavior

The Problem with Leave Administration

4 May 12, 2016

Increased use of intermittent leave (multiple small increments of time instead of one continuous period of time)

• Overwhelming to track accurately

• Difficult to manage

• Most negative impact on productivity (typically unplanned absences)

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3 Federal Leaves

• FMLA

• USERRA

• ADAAA – leave as an accommodation

>150 State/Leave combinations:

• State FMLA Leave

• State Pregnancy Disability Leave (PDL)

• State Disability Insurance with Job Protection Leave

The Problem with Leave Administration(cont.)

5 May 12, 2016

• FMLA for care of a same-sex spouse as required by state definition of marriage/gender

• State Domestic Violence Leave

• State Family Military Leave

• State Bone Marrow or Organ Donation Leave

• State Civic Volunteer Leave

• State School Visitation Leave

• State Crime Victim/Court Witness Leave

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Leave administration statistics for the typical employer:

• Total average lost workdays: 6 per employee

• Intermittent leave days per 100 eligible employees: 16

• Continuous leave days per 100 eligible employees: 234

• FLMA work days correlate to percentage of female workers: 41% female

• Average # STD claims per 100 eligible employees: 8.4

• Average # LTD claims per 1,000 eligible employees: 4.13

The total direct cost of employee paid time off was 15.4% as a percentage of payroll.

• This accounts for wages/salaries, overtime costs, and replacement workers.

Leave AdministrationFast Facts*

6 May 12, 2016

Cited: 2015 EMPAQ Report*

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Considerations for Leave Administration

• Full outsource, hybrid co-source or software model?

• Insured or disability product bundling desired?

• Most critical performance imperatives (compliance, quality, customer service, etc..)

• Balance of cost vs. customer service?

• Degree to which customization or configuration are required?

• How “hands on” do you wish to be?

• What are the escalation and integration requirements?

• What are the cultural sensitivities about outsourcing?

Leave AdministrationConsiderations

7 May 12, 2016

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Options for Leave of Absence Administration

• Strengthen current process with updated forms, tools and workflows

• Enhance current process with licensed software – Software as a Solution (SaaS)

• Co-source administration (software + some “shared” vendor-supported workflow)

• Outsource administration (leave and/or disability)

Leave AdministrationOptions

8 May 12, 2016

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Leave AdministrationPros/Cons

9 May 12, 2016

Approach Pros Cons

Strengthen current

process

• Least expensive

• Least threatening

• Can be scaled and prioritized to limit burden on internal resources

• Outcomes dependent on adoption of changes

• Requires some form of surveillance to ensure consistent use

of new tools, workflows

• May not be taken as seriously as options that create more

culture change

License software • Ensures standardized process and materials

• Creates “checks & balances” to ensure compliance with the

process and use of the tool

• Less expensive than outsourcing

• Can receive feeds from disability and workers’ comp programs for

integration

• Requires ongoing “user support” and training to ensure

continued compliance

• Outcomes dependent on adoption of system and appropriate

use

Co-source

administration

• Less threatening than full outsource

• Can target vendor activities on most critical compliance risk steps

• Can be integrated with disability plan administration

• Almost as much work as full outsourcing

• Requires standardization of ‘retained activities’ and process

discipline to ensure support for vendored activities

Outsource

administration

• Most efficient approach

• Ensured consistency of process and compliance

• Least demand on internal resources

• Can be integrated with disability plan administration

• May not be a cultural fit

• Most expensive option

• Still requires resourcing of ‘retained activities’ to support for

vendored activities

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Leave AdministrationVendor Market

10 May 12, 2016

Group I: Third Party Administrators (TPAs)

• Typically no insured products (some exceptions)

• More flexible

• More specialization in LOA administration and integration with partners

Group II: Insurance Carriers

• Offer insured and ASO products (generally will not agree to ‘standalone’ LOA without ASO or insured products)

• Less flexible

• Typically better pricing than TPAs due to bundled disability work

Group III: Software as a Service (in house administration)

• Least expensive option

• Relies on expertise and capacity of Benefits/HR team

• Multiple components (LOA, ADAAA, Claim Administration)

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Leave AdministrationVendor Market – Leading Group I TPAs

11 May 12, 2016

Vendor LOA ADAAA Disability / IntegrationWorkers’

Comp (WC)Highlights

CareWorks ASO STD;

Coordination with Insured

Via

partnerships

• Strong clinical management focused on reducing durations

• Employer size 50 – 20,000

ComPsych

(FMLA

Source)

FMLA only; coordination

with STD carrier

n/a • Competitive FMLA outsourcing platform

• Reasonable fees

• Built to suit – custom

• Employer size 50 – 2,000

• EAP add on services a core business

Matrix Via

partnerships

• Owned by Reliance Standard

• Employer size >2,000

• Robust and user-friendly technologies

• Premium bill pay services while on leave

Reed Group Via

partnerships

• Owned by The Guardian

• Developed MDGuidelines

• 2016 acquired Aon Hewitt’s 360 ASP business

• Robust manager dashboards


Sedgwick • Leader in the industry due to size & discipline

• Insurance partnership with Prudential


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Leave AdministrationVendor Market – Leading Group II Carriers

12 May 12, 2016

Vendor LOA ADAAADisability /

Integration

System &

ReportingHighlights

Liberty Mutual WC, STD, LTD • Rapid improvements in their product have gained

market share, commitment to emerging technology

(mobile, etc..)

• May consider LOA standalone

Aetna STD, LTD • Strong history in absence

• Typically no standalone LOA (requires insurance)

Unum STD, LTD • Available for smaller employers

• May consider LOA standalone

• Reasonable fees

The Standard STD, LTD • Solid customer service for employers with

“hand-holding” culture

• Limited standalone

• Very strong RTW and Voc Rehab capabilities,

with focus on ergonomics

The above quick-list does not fully represent the carrier market

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Leave AdministrationVendor Market – Leading Group III Software Providers

13 May 12, 2016

Vendor LOA ADAAADisability

/Integration

System &

ReportingHighlights

AbsenceSoft

(AbsenceTracker) In the market less than 2 years. Positive feedback from

clients thus far.

• Developers have deep experience

• Cloud-based offering

• “On-demand” focus with texting, dashboards

• Separate ADA and self-insured STD modules

Absentys

(LeaveLink) • Acquired by Sedgwick 2014

• Leading provider of software as a service ADALink less

flexible than Qcera’s product, but more user friendly

Claim Vantage

(AbsenceDirect) • Cloud-based technology solution

• SaaS and FML/STD/LTD outsourcing options

• Flexible solutions and client size

Qcera

(iTimeBank) • Strong provider

• Integration with self-administered disability

• Superior reporting

Reed Group

(LeavePro) • Offering their product as SaaS

• Integration with their administration of disability

• Not as robust as specialty software

• Integration with MDGuidelines for RTW

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Available TechnologiesVendors

14 May 12, 2016

Jellyvision – Interactive help tools,

intuitive per employee

Manager dashboard - staffing at

a glance for proactive scheduling

Mobile access to report a leave,

review status of a leave

IVR and texting to report

intermittent leaves, check on

a claim

Advice to Pay (ATP) interfaces

with payroll

Leave Status Feed (LSF) interfaces

with HRIS

HR Reporting for actionable insight,

trends and metrics

Bar code scanning of forms and

letters reduces time, quick access

Manager training module for

compliance at fingertips

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Technology ExamplesVendors

15 May 12, 2016

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ADAAA: Leave and Stay at Work

16 May 12, 2016

Full-spectrum

solutions available

per vendor: Leave as an accommodation,

restrictions, accommodations

Process initial accommodation request

Facilitate employee communications

Review medical certification/clarification

Define essential job functions

Provide documentation & governance of Interactive Process; participation and coaching

Coordinate specialty resources: cognitive, Voc rehab, environmental, etc.

Recommend decision to accommodate

Define essential job functions

Follow up on decision and documentation

Track and manage accommodations

Conduct ongoing outreach and communication post RTW (stay at work)

Provide HR reporting and metrics of ADAAA incidence, accommodation types, etc.Vendor capabilities, 2016 Matrix ADAAA model

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Estimated savings of 10-15% in the first 12-18 months of leave/disability outsourcing due to:

• Moving from unmanaged/decentralized to managed/centralized absence program

• Improved processes allowing key staff to focus on high priority items: trends and metrics, program strategy, return to work efforts

• Savings associated with possible consolidation to one primary provider, economies of scale

• Reduction in incidence and duration of absences, improved productivity

‒ Concurrent reduction in related healthcare costs associated with reduction of durations

• Improved accuracy in managing benefit offsets and overpayments

• Reduction of risk and/or penalties associated with lack of compliance (FMLA, ADAAA, perceived discrimination, inconsistency)

Leave AdministrationOutsource Savings

17 May 12, 2016

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Typical Vendor Selection Timeline

18 May 12, 2016

~ 6 Weeks ~ 8-10 Weeks ~ 12-14 Weeks

Mobilize Analyze Finalize Realize

• Collect and consolidate

program documentation and

utilization data

• Publish project plan and

milestones

• Document current internal

program parameters and

create financial baseline

• Outline initial vendor program

parameters, scope of work &

installation timeline

• Collect and review policies,

procedures and

communications

• Compare to best practices and

compliance imperatives

• Identify opportunities for

improvement & readiness

• Establish Future State model,

including retained activity

strategy

• Prioritize program changes,

finalize future state and

implementation strategy

• Establish internal program

parameters

• Finalize vendor statement of

work & performance standards

• Initiate vendor selection

process

• Select vendor partner(s)

• Work with project team and

vendor resources to translate

implementation strategy into

an integrated implementation

work plan

• Establish work stream teams

and project management

protocols

• Manage to the work plan with

each workstream team

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Phase I: Outsourcing Analysis & Business Case Development

Typical Program Goals

• Enhance the overall customer experience

• Comply with FMLA and state laws

• Reduce the cost and burden of leave administration

• Centralize data for greater reporting and transparency

• Reduce absence and increase productivity

• Coordinate leaves tracking with disability

Phase II: Conduct Request for Proposal and Vendor Selection

Phase III: Implementation Support and Process Mapping

Our Consulting Support Approach: 3 Phases

19 May 12, 2016

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Mobilize (typically 1-2 weeks, depending on data availability)

• Conduct an analysis of current people, processes, and technologies supporting current leaves administration structure

• Create baseline cost of current operational model: staff, incidence, fees

• Create baseline assessment of current risk: compliance, inefficiency, technology

• Define strategic goals – what is the desired outcome for the operations, timing, impact, financials

• Develop a “Needs and Wants” list aligned to the strategic goals, including cultural fit, reporting, self-service tools

Phase I Approach

20 May 12, 2016

Analyze (typically 3 weeks)

• High-level review of market options for complete understanding of services offered

• Define hard and soft “savings” of insource versus outsource models

• Compare current risk and cost to strategic goals

Finalize (typically 4-6 weeks)

• Develop business case, based on full analysis, to identify and support best administration approach

• Leverage documented business case to support action to select a technology offering (insource) or outsourced provider

Xerox Internal Use Only21 May 12, 2016

Mary Armstrong-FlippoNational Practice Leader, Absence & Productivity SolutionsEast [email protected]

Yvonne Breiter, MBADirector, ConsultantAbsence & Productivity SolutionsWest [email protected]

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leave administration outsourcing: who, what, why

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