Onwards and upwards

Private medical insurance (PMI) is widely recognised by employers and employees as a key employee benefit. But due to its well-established presence in employers' remuneration packages, the actual benefits provided by PMI can be overlooked. The traditional view that the product is just about providing access to quick, effective treatment is no longer the case.

At the same time, the concept of a job for life is rapidly disappearing. Employees know that when they choose a particular employer, the likelihood is their job will never be 100% secure. So in order to attract and retain high calibre staff, the benefits package offered is often a major consideration.

Companies increasingly understand their key resource is their staff and therefore want to take steps to retain key employees. A highly-valued benefits package will go some way towards supporting this.

While access to quick, effective care remains a priority, the emphasis of new product offerings is shifting towards providing a benefit valued by employees while helping to increase their productivity.

According to the 2001 UK Corporate Health Survey by AON Health Solutions, many employers are concentrating on giving employees access to private care so that they may return to work as soon as possible. PMI is seen as a no-frills, insurance product to support this.

Furthermore, with more people realising the importance of work/life balance and more publicity afforded to such surveys as The Sunday Times 100 Best Companies To Work For, employees are expecting more from their employer than financial incentives alone.

Easing the pressure

If these points are indicative of pressures on employers, what can PMI do to ease the pain?

Managed care is not new to the UK, with many insurers now providing some form of nursing telephone line and cost control mechanisms. Yet just because managed care has been around for a while, the way it can meet the demands of today should not be overlooked.

It is probably fair to say when managed care was first introduced to the UK, the onus was very much on cost control. This was a claiming mechanism patrolled by health professionals who were able to question the suitability of treatment for a particular patient.

By requiring a patient to telephone prior to receiving treatment and then applying a series of checks and balances to their treatment plan, insurers have been able to prevent unnecessary procedures and prevent unnecessarily long hospital stays. This in turn has a direct impact on the claims cost and therefore, ultimately, premium cost to the employer, minimising the absence of employees by promoting the most appropriate treatment at the most appropriate time.

Some managed care provisions have gone further than others. Rather than seeking to act simply as a claims authorisation process, some insurers have taken a wider approach by providing a helpline that acts as a support service to employees at what can be a significantly stressful time.

Nurses can answer any question a patient has ' questions the patient may be too intimidated to ask their consultant. Similarly, if required, the nurse can act as the patient's advocate with the consultant ' working with the consultant to ensure the best outcome for the patient is received. In addition to this, the nurse is available to provide emotional support, alleviating the patient's concerns and offering a caring, friendly voice not only to the patient, but to their family as well.

Breaking the rules

The service goes beyond the strict application of the plan rules and requirements. While these remain paramount, such an involved approach to claims authorisation enables the insurer to operate with a degree of flexibility.

For example, a mother with young children may be concerned about who looks after the children while she recuperates from an operation. The insurer may agree with the mother that, should she have the operation on the NHS rather than privately as entitled under the policy, the insurer will pay for a childminder to look after the children following the operation. Such solutions provide the best result for the patient, while having the impact of reducing the claims cost.

It can be argued, therefore, that advanced managed care services are a mechanism by which the employer can take some steps towards meeting the increasing demands employees are making. Of course, such an argument would only hold up should employees value the services offered. If they were to view this as an attempt to prevent them from claiming, it is likely the belief would rather be that the employer is seeking to limit the care provided by the policy.

Insurers regularly survey claimants who have passed through the managed care process with impressive results. Evidence suggests employees value the service provided, while for providers, it controls the claims cost at the same time.

Supporting all parties

Managed care not only benefits the employee and employer but can also help the IFA. PMI policies can be difficult to interpret at the best of times. Add to this the fact that most employees will not read their policies until they have to make a claim ' and are already under considerable pressure. It can also create headaches for advisers trying to answer queries and settle disputes. An involved managed care process, talking to the employee from start to finish as well as answering queries and managing their expectations, will reduce this burden for the adviser.

New initiatives are being developed within PMI that go further towards supporting the employee and meeting the needs of the employer. Developments such as disease management, which provides a coaching service to sufferers of chronic conditions like diabetes, are an example of this.

The purpose of such a service is to encourage the employees to help themselves. Providing information and support, the disease management nurse regularly speaks to the employee to ensure they are meeting personal goals, are remaining informed about their condition and are generally managing their health effectively.

Such a service promotes the well- being of the employee, while the health impacts help to minimise absence and prevent potential claims under the PMI policy by reducing the risk of acute flare-ups. Again, both the employee and the employer have a beneficial outcome.

Disease management services are currently available as a standalone product, or as an add-on to a PMI policy within the large corporate segment of the market. Similar developments to the benefit offered by PMI by larger providers include:

• The addition of primary care cover which enables patients to see a GP quickly. This minimises the time from work and helps to lead to early diagnosis of conditions.

• Dental cover.

• A critical illness type benefit. This generates a lump sum payment to employees whose cancer claim is no longer covered under the PMI policy by virtue of it becoming chronic.

PMI is viewed as a key management tool for achieving wider corporate objectives. AON's survey demonstrates that companies are interested in purchasing PMI in order to get staff back to work quickly and to reduce sickness absence. Indeed, some providers have looked at providing bespoke absence management services, which aim to reduce the costs of absence while providing valuable support to the employee. The most cost-effective absence programmes appear to be those that are telephone-based.

Although these developments are taking place within the large corporate sector, it is only a matter of time before they start to be offered at the smaller end of the market too.

As a result of its established status, PMI is sometimes viewed as a standard, core benefit and as a result, not much energy goes into the choice of PMI provider. This ignores recent developments with the product. By looking a little further into how the various products function, employers may find innovative ways to look after their staff while controlling expenditure and absence.

In response to changing demands placed on employers and as PMI providers have become more experienced in providing services, PMI has evolved from a simple indemnity insurance product to a multi-faceted service orientated benefit with insurance at its core.

Richard Sharman is business development executive, marketing and strategic development, at CIGNA HealthCare