“When you say ‘yoga,’people often think of twisted bodies and a lot of chanting. But that’s notwhat it’s all about,” says Siebel, an HR generalist at Placentia,California-based Western Sky Industries Inc. “People are just trying to be inbetter health.”
From the beginning, Siebelhas paid for her classes out of pocket. But in the near future, she expects thatto change. Western Sky, she says, is currently reorganizing its health benefitspackage because various divisions are enrolled in different plans, and they wantto centralize a standard benefits package.
A manufacturer of aerospace,automotive and industrial parts, Western Sky employs 1,500 workers worldwide.Its HR department, she says, is seriously taking into account the increasingnumber of employee requests for complementary and alternative medicine (CAM)benefits. “Human resources needs to prepare for this,” says Siebel.
For example, in a recentarticle in Yoga Journal, Siebel learned that companies such as NYNEX, IBM,AT&T, Nike, HBO and Apple already offer onsite yoga classes as a regularemployee benefit. In fact, more than 81 percent of North American businesseswith 50 or more employees have some form of health promotion program. Andaccording to a Business and Health magazine “Executive Opinion Survey” lastyear, 16 percent of employers offered alternative medicine coverage in 1997, up7 percent from the previous year. For large employers with more than 500employees, the percentage tripled, from 8 percent in 1996 to 24 percent in 1997.
Indeed, by the year 2010,complementary and alternative medicine treatments are expected to be widelyrecognized as appropriate or complementary therapy for a wide range ofconditions, according to futurist Clement Bezold, president of Alexandria,Virginia-based Institute for Alternative Futures. “Two-thirds of Americanswill use some form of what we now think of as complementary and alternativemedicine,” he says.
As employers constantly lookfor ways they can reduce their long-term health costs and juice up theirbenefits packages to attract and retain top talent, CAM benefits are massagingtheir way into health care packages. Although most data is subjective andanecdotal, individuals who use CAM therapies have reportedly become healthier,happier and more productive.
Employers, on the other hand,may save costs from reduced absenteeism, fewer medical claims and by sharing theexpenses of such benefits. The key for HR is to explore the new knowledge, andto credential your providers to avoid liability, and weigh the costs againstyour company’s business goals.
“The increased use ofalternative therapies has spurred a lot of questions about [medical and legal]coverage,” says Karen Clark, executive vice president of Calveton,Maryland-based Benicor Associates Inc., an employee benefits consulting firm.
What exactly is complementary and alternativemedicine?
Complementary and alternative medicine generallyrefers to such therapies as chiropractics, Oriental medicine, homeopathy, yoga,massage therapy, herbal remedies and other practices that aren’t widely taughtin U.S. medical schools or used in U.S. hospitals. Some are as befuddling astheir names: Panchakarma, Rolfing, Huna and biorelax therapy.
The term “complementary” is commonly used bymedical researchers and advocates to emphasize that such therapies aren’treplacements for conventional medicine. In fact, the more politically correctterm is integrative medicine, which combines the best mind-body-soul practicesof conventional and alternative treatments.
To illustrate the demand, in 1997, 42 percent ofAmericans spent $21.2 billion on visits to alternative medicine practitioners -the majority paying out of pocket, according to Dr. David M. Eisenberg in anarticle published last November in the Journal of the American MedicalAssociation.
Several factors are driving employee andconsumer interest. First, this is an arena in which the experience of thedecision maker is critical, says John Weeks, publisher and editor ofSeattle-based The Integrator, a monthly newsletter focusing on the business ofalternative medicine. It’s not surprising that when major health groups suchas Oxford Health Plans and Blue Cross began providing CAM benefits, the word todo so came from the top - the CEOs, who also happen to be baby boomers. “A lot of the ideas of alternative medicine has grown as the boomers moved from the’60s to the ’90s,” says Weeks. “But now, they’re in positions thatallow them to run things.”
Regarding the academic community, 75 percent ofU.S. medical schools currently offer instruction in complementary andalternative therapies - though not because the AMA endorses it. On the contrary,patients are asking doctors to recommend or provide alternative treatments -many of which the latter know little about.
“There’s a gap right now. The consumers aremore educated about some of these therapies than the physicians themselves,”says Dr. Brian M. Berman, associate professor and director of the ComplementaryMedicine Program at Baltimore-based University of Maryland School of Medicine.
Legitimate concern and ignorance also have bredskepticism, to put it mildly. Many physicians, such as author Dr. WallaceSampson, still believe CAM advocates use “pseudoscience” to glorify theirpractices. In his book, The Flight From Science and Reason (Johns HopkinsUniversity Press, 1997), he writes: “Although it’s difficult to pinpointdirect examples of value-free analysis and cultural relativism in the advance ofpseudoscience in medicine, the footprints can be seen in many places where thevalidity of information takes second place to emotion and comfortingphilosophies.”
Nevertheless, major health groups such as OxfordHealth Plans, Aetna Life & Casualty, Blue Shield, Harvard Pilgrim HealthCare and others are still responding to employee and consumer interest. Managedcare companies and hospitals increasingly view CAM benefits as a way todifferentiate themselves in the competitive health care market.
At the same time, consumer pressure hasgenerated state laws requiring coverage of services from some alternativeproviders. For example, in January 1996, Washington state became the first inthe nation to require all health care plans and insurers to include “everycategory of provider.” The law includes chiropractors, physicians,acupuncturists, physician assistants, registered nurses, podiatrists, licensedmassage therapists, midwives and osteopaths.
And in 1997, when the Washington, D.C.-basedNational Institute of Health deemed acupuncture as an acceptable alternative tomedication for the treatment of chronic pain, the CAM movement yielded acredibility boost. It’s no wonder your employees may be needling you to findout how to include CAM in your benefits package.
Here’s how some employers are making it work -at affordable costs. There are basically two options: providing it as an insuredbenefit or as an uninsured discounted benefit.
Employers can provide CAM as an insured benefit.
Susan Kennedy, director of human resources atthe New York Academy of Sciences, is unsurprisingly skeptical of alternativemedicine. “I prefer using traditional medicine,” says Kennedy. Although shehas no quarrel with individuals who put their health needs in the hands ofnutritionists and acupuncturists, she sees no value in an employer subsidizingthese practitioners.
However, Kennedy does admit that the insured CAMbenefits provided by the company’s health provider, Oxford Health Plans, havebeen well received by her employees. “[HR] didn’t make the decision. Ourmedical benefit provider added alternative care providers for all of itsclients. I was happy to have Oxford do the [credentialing] for us.”
Oxford Health Plans, based in Norwalk,Connecticut, was the first multi-state health plan to launch a CAM program. Itserves more than 1.9 million members in the eastern states. After a surveyconducted among its members about their use of alternative therapies, Oxfordannounced in October 1996 that a program was in the works. Immediately, thecompany recorded up to 1,000 calls a day from interested plan members andnon-member consumers. Oxford Alternative Medicine Program was launched onJanuary 1, 1997.
The two-tiered program offers either a rider -which employers can purchase by adding 3 percent to the cost of annual premiumsper individual - or a contracted rate for all health plan members, which means a15 to 25 percent lower charge for services. Services include chiropractic care,acupuncture, nutritional counseling and, in some states, naturopathic treatment(non-drug therapies).
Oxford’s network of 2,300-plus providers grewby setting up requirements for participation. All providers must be statelicensed and committed to providing education. In addition, they must havemalpractice insurance and undergo a site inspection.
By providing CAM as an insured benefit,employers send a positive message to employees. It says the company is willingto invest in employees’ wellness. “Even though I understand why a companymay prefer a discounted arrangement, it’s not going to be as meaningful as aninsured benefit,” says Lee Launer, a partner and director of marketing healthplans at New York City-based PricewaterhouseCoopers.
For example, a back treatment could cost anindividual $100. When it’s a covered benefit, the employee will typically becharged a $20 co-payment. If a company contracts with a discounted network ofCAM providers, the employee will most likely end up paying $80, with the companyonly paying $20 under the terms of the employer-vendor contract. “That’s abig difference,” he says.
However, the trade-off for providing CAM as aninsured benefit may be to an employer’s long-term advantage. According to theBureau of National Affairs (BNA), for example, a 1 percent increase of workerabsenteeism reduces productivity by an estimated 2.5 percent.
Moreover, the BNA estimates that employers canreduce health costs through comprehensive health and productivity managementprograms by $1,567 per employee. These types of programs include preventionmeasures to minimize expenditures for health care expenses, turnover,unscheduled absences, non-occupational disabilities and workers’ compensationclaims.
If your company is reluctant to provide CAM asan insured benefit - either as a rider or as a core benefit - there’s stillanother option. HR can contract with a network of CAM providers who offeremployee discounts. This type of arrangement shifts the burden of searching forspecific practitioners and paying the bulk of service fees back to youremployees.
Contract with a network of practitioners.
At Benicor Associates Inc., the businesspriority is clear. As an employee benefits consulting firm, executive vicepresident Karen Clark works with HR executives who are always searching for newadd-ons. Their main goal, she says, is to attract and retain the best employeesfor their companies. That means they expect her to keep them informed about anynew and innovative benefit plans and coverage that can enhance their programs.“They want creative and non-traditional benefit solutions and products thatare both effective and cost efficient,” she says.
Clark’s own 70-employee company is noexception. She says most traditional medical insurance plans and HMOs in herarea offer little or no coverage for alternative therapies. Therefore, Benicorand many of its clients have opted to add CAM coverage through Towson,Maryland-based Complementary Care Company (C3), a network of health carepractitioners offering more than 50 alternative therapies at fixed rates or 20percent discounts.
Founder and co-partner Dr. Michael R. Steinbergsays networks such as C3 are slowly emerging. A few years ago, while attemptingto build a new HMO in the mid-Atlantic region, Steinberg made a profitablediscovery. He wanted his HMO to offer CAM benefits, but he couldn’t locate anynetworks of practitioners. The alternative health care industry, he says, wasway behind consumer demand. Because of the disorganized network of providers andinaccessible information delivery systems, he decided to establish C3.
Given the demographics of CAM users (with mostindividuals paying out of pocket), Steinberg expected most of C3’s clients tobe individuals. But today, 90 percent of C3’s members are employers andassociations. Approximately 30,000 practitioners nationwide provide servicesunder the C3 name. Among the covered treatmentsare acupuncture, aromatherapy, holistic dentistry, hypnotherapy, infant massagetherapy, magnetic field therapy, Tai Chi and yoga.
C3 charges employers a cheaper rate when theyelect to pay for the employees’ benefits, rather than offering them asservices that employees pay for on their own. For example, a company with 1,000employees may be charged $36 per family each year instead of $59.
“Depending on the size of your workforce, theemployer gets a greater discount,” says Steinberg. Most C3 providers haveagreed to charge patients a fixed amount per visit, per hour or per half hour.Those who haven’t agreed to a specific fee schedule extend a 20 percentdiscount to C3 members.
But considering these options is just the firststep. The most important duty for human resources regarding CAM benefits is toensure the reliability of your employees’ health care practitioners.
Avoid liability. Ensure the credentialingprocess.
Clearly, each employer has to decide which CAMpackage is best aligned with its business goals and financial resources. Ineither case, be sure that you check the credentialing process of your HMO ornetwork of practitioners. This critical process is the employer’s bestprotection against liability, according to attorney Ronald Cooke, a benefitsspecialist at Los Angeles-based law firm Littler Mendelsohn.
“The employers’ fiduciary obligation is toinvestigate the providers they’re offering,” he says. It’s no differentthan contracting with any health benefits provider. That means asking theprovider how they obtain, review and verify documentation of the qualificationsof health care providers, such as their licenses, certifications, insurance andmalpractice history. Remember, it’s not the employer’s duty to credentialpractitioners - HR is the one who should ensure the provider is doing a thoroughjob of it.
Keep in mind that CAM benefits will fall underthe same scrutiny as any other health care benefits - perhaps even more sobecause of their scientifically unproven results. Susan Hahn, senior health-lawanalyst with CCH Inc. in Riverwoods, Illinois, says that today’s courts havebeen forcing more accountability on the part of plan sponsors.
In fact, the U.S. Department of Labor has beeninfluential in limiting employers’ current protection under ERISA (EmployeeRetirement Income Security Act), which articulates employer’s fiduciaryresponsibilities over how a health plan is managed. “Patient protectionlegislation also has come back through a number of bills in the House andSenate,” says Hahn. “Everything we’re seeing is telling us that the thrustis toward quality of health services.”
One way for employers and providers to identifyunreliable practitioners is to ask CAM providers, “What do you think ofconventional medicine?” If you come across a practitioner who is totallyantagonistic to conventional medicine, that’s a red flag. That individualshouldn’t be credentialed, says publisher Weeks. Reliable practitionersusually view themselves as part of a larger system of health care delivery.“You want to find a service provider with a comfortable, conservative streak -ones who know their limits,” he says.
In addition, employers shouldn’t adviseemployees to use complementary or alternative medicine practices. HR’s role isto disclose what employee benefits are available - leaving all medical advice tothe practitioners. And how likely is it that employers will be held liable?
Says Michael H. Cohen, attorney and lawprofessor at Orange, California-based Chapman University: “My sense is thatemployers’ liability isn’t going to be that great because they’re one stepremoved. It’s the insurance company that does the credentialing.” Also,complementary and alternative medicine is less invasive than conventionaltreatments, thereby less problematic, says Weeks.
Although the Washington, D.C-based NationalCenter for Quality Assurance (NCQA) monitors health standards, there arecurrently no specific guidelines for complementary and alternative medicine. Sogroups such as C3 have created their own standards that conform to NCQA’sgeneral guidelines.
Landmark Healthcare Inc., a group based inSacramento, California, also has established its own credentialing criteria forpractitioners such as acupuncturists, chiropractors and massage therapists. Thecriteria are divided into five categories: minimum professional requirements,accessibility requirements, standards of care and treatment techniques (forexample, acupuncturists must use disposable needles only), general requirementsand desirable qualifications.
With these types of professional guidelines, HRshould be able to find qualified networks of practitioners, thereby enhancingyour overall benefits package.
Wellness serves business strategies.
All things considered, CAM benefits can beaffordable add-ons. It all depends on which route you decide is best for yourcompany.
The first step, of course, is to survey youremployees about their experiences and interest in complementary and alternativemedicine. Based on employee interest, HR will have to allocate personnel to dothe initial research: What does the CAM industry offer? Will your current HMOadd a rider? Should you offer CAM benefits as an insured or discounted benefit?What credentialing process is in place? How will such benefits reduceabsenteeism and improve worker productivity? Are potential recruits seekingbenefits of this kind? “Any interested organization will need to create someinternal competence about CAM,” says Weeks.
Unfortunately, the benefits of CAM still arelargely subjective and anecdotal. However, there is a growing body ofinformation suggesting that a significant percent of CAM therapies - at leastfrom the perception of the user - diminishes their use of conventional medicalservices, according to Weeks. Alternative medicine can also be used as anothertool to retain top talent.
So don’t be surprised when you see more andmore of your competitors’ employees standing on their heads. It’s justanother way of thinking out of the box.
Workforce,June 1999, Vol 78, No 6, pp. 88-100 SubscribeNow!