Health Risk Management

Today’s Presentation• Define Health Risk Management (HRM)• Our vision• The bottom line impact of poor Health Risk Management• The scope of a proactive HRM study

• Elements• Program• Partnerships

• Long term study strategy• Our enrollment progress to date

Health Risk Management• A worksite-based proactive approach to helping identify and

reduce specific health risk factors through healthier lifestyle choices.• Assessment• Coaching and education• Specific interventions• Reporting

Our Vision

To reduce workers’ compensation costs and provide measurable benefits to policyholders by improving employee health and productivity.

Core areas of opportunity– Workers’ compensation cost and trend improvements– Increased productivity for employers– Improved health and wellness status of employees– Be a leader in the application of health risk management

in workers’ compensation

Why Health Risk Management Now?

Workplace Safety

MedicalManagement

OrganizationalCulture/Structure

Health RiskManagement

1970s 1980s 1990s 2010

Employer Behavior Employee BehaviorOperational Behavior

The Bottom Line Impact of Poor Health Risk Management

• Workers’ Compensation Costs• Productivity• Health Insurance Claims

Medical 22%

Disability 4%

Productivity

Loss 74%

DIR

EC

TO

TH

ER

CO

ST

S

Health Care CostsMedical CareHospitalizationPharmacyDiagnostic TestingBehavior HealthPhysical Therapy

Workers’ Compensation

Lost Productivity

Absenteeism

Employee & Customer Dissatisfaction

Turnover

Replacement Training Missed Deadlines

Overtime Pay

Sub Par Quality

Temporary Staffing

Presenteeism

Adverse Bottom Line Impact

Total Cost of Poor Employee Health

Sick Leave

Other Wage Replacement

Indemnity CostsMedical Costs

Workers’ Compensation: Direct Cost• A greater than 8-fold difference in w.c. costs between

recommended weight and obese workers. Duke University

• A 7-fold difference in w.c. costs between high and low risk workers. University of Michigan

• A 23% decline over 2 years in w.c. claims costs and 18% decline in w.c. claims volume among companies engaging in HRM. Wellsource Health Solutions

• Health risks have a compounding impact on w.c. costs

• Obese claims are 2.8 times more expensive than non-obese claims at the 12-month maturity. The cost difference climbs to a factor of 4.5 at the three year maturity and to 5.3 at the five year maturity. National Council on Compensation Insurance (NCCI), 2009

Duke Study200

180

160

140

120

100

80

60

40

20

0

14

12

10

8

6

4

2

0

BMI<18.5 (Underweight)

18.5 – 24.9 (Healthy Weight)

25 – 29.9 (Overweight)

30 - 34.9 (Obese Class I)

35 – 39.9 (Obese Class II)

40+ (Obese Class III)

40.97

14.19

60.17

75.21

117.61

183.63

Cla

ims

pe

r 10

0 F

TE

s

5.535.80

7.05

8.81

10.8011.65

The most obese have 13 times more lost workdays than healthy weight workers

Lost Workdays Claims

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Wo

rkd

ay

s p

er

10

0 F

TE

s

Source: Ostbye, T., et al, “Obesity and Workers Compensation,”

Archives of Internal Medicine, April 23, 2007.

Duke Study

$10,000

$0BMI<18.5

(Underweight)18.5 – 24.9

(Healthy Weight)25 – 29.9

(Overweight)30 - 34.9

(Obese Class I)35 – 39.9

(Obese Class II)40+ (Obese Class III)

$7,1

09

Indemnity costs are 11 times higher for the most obese workers than for healthy weight workers.

Medical Claims Costs Indemnity Claims Costs

$70,000

$60,000

$50,000

$40,000

$30,000

$20,000

$3,9

24

$7,5

03

$5,3

96 $13,

338

$13,

569

$19,

661

$23,

633

$23,

373 $3

4,29

3

$51,

091

$59

,17

8

Source: Ostbye, T., et al, “Obesity and Workers Compensation,” Archives of Internal Medicine, April 23, 2007.

Productivity

• Employers, on average, have $3 of health-related productivity costs for every $1 of medical or pharmacy claims costs. (Journal of Occupational & Environmental Medicine July 2007)

• Lost productivity represents 7.9% of total corporate earnings and 5.3% of human capital costs. (Health and Human Capital Foundation)

• The most costly conditions related to productivity are often not the same as the most costly conditions related to medical treatment costs. Taking an integrated approach to health and productivity results in more cost-effective interventions. (Journal of Occupational & Environmental Medicine July 2007)

Look Beyond Health Insurance Costs

Anxiety

$0

Medical Presenteeism

Other

Sleeping Problem

High Cholesterol

Arthritis

Hypertension

Obesity

Drug Absenteeism

Fatigue

Depression

Back/Neck Pain

$100,000 $200,000 $300,000 $400,000 $500,000 $600,000

JOEM July 2007

Chronic Pain

Impact of Health Insurance

• The vast majority of Pinnacol policyholders have fewer than 25 employees

• We assume the rate of uninsured status, from a health care perspective, mirrors the state as a whole

• Approximately 50% of our participants are likely to have no health insurance

• Placing HRM in a worksite environment rather than a health insurance environment is a key differentiator

We Believe

In the future, Health Risk Management will be as fundamental to managing risk as safety is now.

Pinnacol HRM Components• 3-5 year timeframe • Partnering with key agencies• Free HRM services to policyholders• 3,000 participating policyholders representative of Colorado’s

workforce (Small and medium sizes of employers are a critical component)

• 30,000 enrolled members

Pinnacol’s HRM Program• Health Risk Assessment for employees• Health education and coaching• Specific interventions and programs• Reporting on participation and outcomes

• Policyholders• Agents• Pinnacol• Colorado/national

Pinnacol’s HRM Partnerships

Service Delivery - InterventionsWellsource Health Solutions (WHS)

ReportingWHS: Health risk profileIntegrated Benefits Institute: HPQ-Select Productivity Survey

(Harvard-WHO tool)

Data/EvaluationIBI, Thomson Reuters/Emory University/local universities

HRM Study Strategy• Use outside independent evaluators to conduct a peer review

quality assessment of the long term impact of HRM on:• Health risk profile of our policyholders and their employees (based on trended

HRA results)• Monetized changes in productivity (based on trended results of HPQ-Select)• Changes in Workers’ Compensation (based on participant pool versus Pinnacol

control group)• Changes measured over 3 – 5 years

• Work with local universities and researchers to identify other relevant issues and make data available for non-Pinnacol initiatives

Progress Toward our Study Goals

Data as of 8/27/2010

Enrolled Policyholders 105 of 3,000 9,148 of 30,000

Enrolled Employees