How Do You Define Value?

This article is intended to provide education to Human Resource Directors, Corporate Executives, and Benefit Brokers on the differences between Local and Managed Care Employee Assistance Programs (EAP). Segments of this article come from Bjornson and Sharar's article in the Fall 2004 edition of EAP Digest ^TM

History and Perception of the Local EAP

Historically, Local EAP firms were seen as routinely involved in delivering not only high quality services, but having a presence within the purchaser's organization. Utilization was often outstanding and the EAP was a pillar of resource for organizational managers, supervisors, and HR personnel.

In a growing business economy that was becoming increasingly national based and in many cases global, Local EAP firms were becoming perceived by benefit brokers and purchasers as being geographically constrained. They also feared Local EAP's were technologically limited and lacked infrastructure to support national service delivery to their purchasers.

Consequently, many corporate benefit purchasers and brokers started looking to National and Managed Care EAP firms. The belief was that they possessed clinical infrastructure, geographic coverage, appealing new benefits, and low pricing.

In reality, if brokers and purchasers took the time to analyze results, they would discover that counseling utilization is miniscule and management consultation is virtually nonexistent within these Managed Care EAP's. Unfortunately, EAP has become increasingly irrelevant to internal HR and day to day corporate operations. The distant and commodity style service implementation has become the norm for EAP. It is resulting in fewer counseling cases with local face to face providers, and seen by purchasers and employees as a useless benefit perk with little or no value.

Behind the Curtain of Managed Care EAP

For purchasers and brokers the allure of the Managed Care EAP is the low cost. In some cases the EAP is even given away for "free" in exchange for selecting their managed care medical benefits. Managed Care purports that the link between EAP and benefits help facilitate employees not getting lost and ease the transition into the medical benefits. It all seems too good to be true.

How Do They Do It?

Most Managed Care firms rely upon sophisticated marketing spin and the appearance of comprehensiveness. For most Managed Care EAP's the counseling medium is becoming web and telephone based. In order to keep costs low for the purchaser, or be absorbed by the Managed Care when they give EAP away "free", they try to deter face to face counseling whenever possible because it's expensive. Sadly, EAP has become nothing more than a glorified Web site with passively available work life telephone referral services directly into medical benefits. Quite simply, EAP utilization does not happen when services are available primarily through passive resources.

Is this your idea of EAP counseling?

What's the End Result?

Making EAP mere pennies or even "free" does not come without a price. Current samples of actual reports from several national firms indicate face to face counseling utilization is less than 1% (Bjornson & Scharar, 2004). Having centralized account managers has isolated local work sites from the EAP providers. Because of the difficulty accessing the EAP, early intervention opportunities are lost for the organization, a once valuable benefit of EAP. Another long time asset of EAP that often yielded huge dividends for organizations is the performance based management referrals. These types of referrals have all but evaporated, leaving organizations to deal with troubled employees internally. Because brokers and purchasers are hard pressed to distinguish one Managed Care EAP from another, it generally comes down to price. After years of shopping around for the same universally poor results of Managed Care EAP's, many purchasers have lowered their overall expectations for EAP services. Managed Care essentially reduced EAP to a marketing closing tool. They have been throwing purchasers a bone in order to secure a contract for the medical benefits contract. Unfortunately, purchasers have gotten what they paid for out of their Managed Care EAP.

How Do They Cover?

It seems deception and creative number crunching are the smoke and mirrors that have allowed Managed Care EAP's to continue to exist unchecked. According to Bjornson and Scharar's (2004) research, misleading reports are commonly used to cover up poor performance and a lack of results. It is common for utilization reports by Managed Care EAP's to avoid differentiating telephone contacts and web site hits from regular face to face sessions with local providers.

A Conflict of Interest

Probably the biggest ethical concern with Managed Care is the dual role they serve of EAP and behavioral health care. Purchasers who request an audit of actual face to face counseling hours will often discover a technique designed to keep the cost of that "free" EAP down to nothing. Commonly, Managed Care EAP's will boast a six session EAP model, but in reality they will quickly refer clients directly into the employer's self-funded behavioral health benefit plan. In many cases, a client will get one EAP session, or possibly only a focused phone assessment, before being shuffled into the insurance network. This tactic shifts the financial risk to the employer for ongoing benefit utilization. Regular use of an EAP is designed to reduce utilization of insurance benefits as many problems are resolved at the EAP. Over time this reduction in utilization of insurance benefits should yield a reduction in medical premiums for the purchaser. Obviously, the Managed Care Organization has no desire to pay local providers for face to face EAP visits because it makes their "free" EAP expensive to operate. Managed Care also has no desire to see the purchaser's premiums drop. Managed Care loses on both EAP and medical premiums. By keeping members from utilizing the EAP, the EAP branch remains profitable. By continuing to funnel EAP accessing members toward benefit utilization, premiums can continue to rise; both of which results in more Managed Care profit. As you can see, the reality behind the curtain of Managed Care EAP is an illusion of service and some would say outright deception and lack of ethics.

What Should You Get From an EAP?

The most obvious thing you should expect is service; face to face service. Marital issues, substance abuse, and other mental health issues generally require face to face counseling. Medical doctors would never evaluate a client over the phone or by e-mail. Why should EAP services be any different?

Oh yeah, that's what counseling looks like!

The services provided by an EAP are for the benefit of the employees. The real value of an EAP to purchasers is the secondary gains that come from an EAP:

Managers, supervisors, and HR should be able to utilize the EAP for consultation in dealing with employee situations and internal systemic problems.

The EAP should be utilized for performance based management referrals in an effort to assess and rehabilitate employees so they can be retained. Avoiding employee turnover is one factor that often yields massive cost savings for the purchaser. The cost of saving one employee will typically pay for the EAP and leave plenty of money to be considered profit.

Proper use and utilization of the EAP can and should result in savings on medical premiums and Workers Comp premiums.

Purchasers should also see an improvement in absenteeism and worker productivity.

Utilization reports should segregate face to face from telephone and online activity.

Utilization rates should be at 4-7% for face to face counseling

Utilization rates should also be at 4-7% for telephone contact and other services

There should be at least 1% level of management consultation that result in actual performance based management referrals

How Do You Define Value?

If EAP services are not used, they are irrelevant. Paying $10 per employee per year (PEPY) may end up being expensive if it's never used. Paying $20 PEPY could turn out to be a bargain if it is used and is encouraged to be used by the EAP. An EAP that can help a purchaser reduce employee turnover alone can more than pay for itself. Conservative estimates say that the loss of one person is equal to their annual salary (Logos Research, 2004). William Bliss (2003) noted that the cost to an organization for losing a managerial or sales position is likely 200-250% of their annual compensation. The cost of many Local EAP's for 100 employees is around $2,000 annually. If an EAP assists in rehabilitating one $40,000 employee, the organization in effect profits $38,000. Many otherwise good workers will experience problems in their life that start affecting them at work. The loss of valuable employees, who with a little help can be put on the right track, is enormously costly to organizations. In an era of "cost containment" and "loss aversion", purchasers need to look for every avenue to save money and resources.

T.E.A.M., Inc: A Clear Choice

National and Managed Care EAP's create assumptions about the economic efficiency of their size and number of covered employee lives, however, there is no correlation between corporate gigantism and superior outcomes in EAP. In fact, we contend that many mid-size EAP's, like T.E.A.M., Inc., have differentiated themselves as "high touch" vendors that stress flexibility, local knowledge and responsiveness, ease of access, and preference for face to face counseling. The reality is that all health and social service delivery is ultimately local and there is no substitute for geographic proximity. Our ability to work with and integrate with local worksites is actual, not virtual.

Savvy EAP purchasers and Benefit Brokers who advocate for the clientele are insisting Managed Care companies stop bundling their services. Because Managed Care ultimately seeks to contract for medical benefits, when push comes to shove, they will un-bundle or carve out the Managed Care EAP services. In doing so, the cost of premiums for medical benefits should be lower and brokers and purchasers can compare Managed Care EAP with Local EAP vendors, rather than having a "free" EAP forced upon them.

Remember, you get what you pay for.