CEO Spotlight

Dave Carlson is the Chairman/CEO of Empyrean Benefit Solutions, Inc. Mr. Carlson's history in the health and welfare benefits space includes the following:

• Development of Hewitt Associate’s first mid-market platform
• Chairman, CEO and Founder of SynHRgy HR Technologies, which was acquired by Marsh McLennan and became Mercer HR Services
• Management of Mercer HR Services
• Founding of Empyrean in 2006 to form the industry's most flexible and cost-effective health and welfare benefits administration platform

In this month's CEO Spotlight, Dave discusses his views on HR outsourcing trends and changes, including:

• Integrated portal strategies
• Voluntary benefits
• Personal health data
• Real-time integration
• Potential healthcare reform

Thoughts on administering H&W benefits...

Those of us involved in the administration of health and welfare benefit programs for employers are entering an exciting, yet challenging, time in the evolution of these programs. We believe this evolution will require employers to make changes even more frequently than today and to add technology and administrative features more quickly as well. Any system used to administer the programs will need to be prepared for the trends beforehand and be easily changed by the client at a reasonable cost.

Trends We See on the Horizon:

Single Portal for Enrollment/Life Event Changes/Wellness
Today, with the increasing use of wellness programs by employers, an employee typically has one place to go to manage enrollment and/or life events and a second place to go for content and data relating to their health in general, wellness programs or disease management. Employers tell us that this is often confusing and challenging for employees resulting in low program utilization and disappointing outcomes. We believe a more holistic "portal" strategy for this information can have a dramatic and positive impact. Such a strategy would integrate wellness content, administration of wellness credits and benefits delivery to create greater efficiency and value for all involved. Employees would access a single website for everything from current and future-year benefits to wellness programs and associated content, to a history of their personal health spending; all accessed in real-time.

For example, an employee would be able to see a change in benefit plan pricing or plan availability based on real-time data exchange from the wellness provider and the employee's wellness credits. Within the single portal, employees could answer questions, such as "How many credits do I have?" or "Did I follow my exercise regimen for today?" and "How does the number of wellness credit affect the cost or availability of plans for me and my family?" This capability allows the majority of employees that are covered by wellness, versus medical management programs, to save time and make better, more educated decisions.

Integrating Core and Voluntary Benefits
In many cases today, core benefits are administered and communicated through a different vehicle than voluntary benefits. We believe that integrating the two types of benefits into a single portal and modeling process (or live consulting process) creates the most effective outcome for participants. There is a lot of anecdotal evidence of employees buying voluntary coverage they don't need. Sometimes the voluntary coverage purchased is already in the core benefits program. The only way that we believe someone can make the right decision is to have all of the information in front of them at the time of purchase. This can be done by having the core and voluntary plans on the same platform and providing modeling or guidance via telephone. As an employer, Empyrean is uncomfortable with commission-based salespeople selling voluntary products to employees. These products and their interaction (core and voluntary) are complicated and can lead to the truth being stretched to get a sale. Voluntary benefits can play an important role in rounding out benefits for an employee and their family. We want to make sure people are buying what they need, not what they are sold.

More Choices
Many of the employers we work with continue to look at how to offer more choices in everything from their healthcare options to life insurance and to ancillary and voluntary products (dependent life, home owners, prepaid legal, etc...). We are seeing an increasing number of employers providing a smaller core benefit to the employee, but at the same time provide additional cash that can be used to purchase ancillary benefits. This process requires a "grocery store" of options for an employee. Maybe the employer funds $5,000 to an employee for core benefits like healthcare, life insurance and AD&D. An additional 2,000 is set aside to buy ancillary products or voluntary products.

Personal Health Data
Healthcare is a complex topic requiring employees to use the information at hand to make important decisions. I have always found it frustrating that I don't have access to my family's historical health information to help in this regard. I may have access to the current year's claims through a carrier portal, but I don't have any prior information. This is especially true if I have changed carriers and/or changed employment. We believe that claims history should be part of the administrative process and that claims or medical history should be owned by the employee. Once the personal health record is established, the information should be portable; taken from one employer to another. Additionally, if the employee changed carriers, the new carrier should feed data to the same file.

If this model was used, the following advantages would result:

• Employees would have access to this data in real-time as they make decisions about healthcare plans during enrollment or during life event changes. If my prior year's medical utilization is about what is expected for the future year, I can use this information to model cost expectations for the future year(s) to see which benefit plan yields the lowest cost or best coverage.
• Employees would also be able to send their history to healthcare providers. Can you imagine sending a new Primary Care Doctor you own health history; or even your family's? Doing so could dramatically affect treatments given and especially the type and amount of prescription drugs that are prescribed. The most amazing fact is that this capability is available from Empyrean right now.
• Medical management programs or even voluntary products could be directed to employees or family members based on their health history. If you are a new employee and you are a diabetic, the employer's medical management group can contact the employee directly to engage them in successful wellness or disease management program. Alternatively, I can make voluntary products available based on an individual's health history. If someone has a history of heart disease, we can offer them some of the best voluntary plans in market to support their history (all of it balanced against the core plans as we described above).

Real Time Integration of Data
Today, the administrative process still requires a week or longer to post data from the HRIS/Payroll system and to post information back and forth with the carriers and other third-parties. New technology using SOAP Calls and Web-Services has the ability to move data in real-time from employer HRIS platforms to HR outsourcer's benefits administration systems, as well as to other entities in a highly secure fashion. Empyrean is providing real-time integration of HRIS changes with our HR outsourcing platform today. We believe this practice will become the industry standard in the near future. The advantages or real-time integration are:

• Higher Quality - All data exchanges take place automatically without manual touches, meaning there are less people managing the process. Data checks and edits can be managed by the technology, versus people.
• Greater Efficiency - As people are added and/or dropped from the HR system, these changes are automatically processed by the HR outsourcer. This means that events (such a new hires or COBRA) and data changes (such as new address or salary) are processed immediately.

Potential Legislation
This one is obvious. While it’s too early to tell if legislation will get passed this year or not, it's fair to say that the legislation proposed is very significant; much more so than anything we have seen in quite some time in the health and welfare space. The recent COBRA changes due to the Obama Economic Stimulus Package were small compared to what we could see. Based on the various bills introduced, we believe future legislation will contain all or some of the following provisions:

• Coverage for the 50 million people not covered today
• Some requirement for businesses to provide coverage for all employees (may be some exceptions for smaller employers)
• Expectation that most healthcare will still be delivered through employer sponsored plans
• Potential for a National Plan or Health Co-Ops to be offered alongside existing group plans
• Heavy focus on automating everything from enrollment to health record technology

About Empyrean:
Empyrean Benefit Solutions, Inc. is an emerging leader in providing highly customized health and welfare solutions to US employers. Empyrean's senior management team has been together for many years, having created and managed benefits administration platforms for many of the industry's best providers. Empyrean's clients are unencumbered by the administrative constraints and costs associated with legacy provider's platforms.