HR Audit (Part 4)

Employee Benefits Questionnaire
    Programs by which employees receive noncash compensation to ensure that the organization attracts, retains and motivates employees to accomplish organization objectives.

1. Does the organization have a clear policy regarding employee benefits?
2. Is there one position within the organization accountable for fairly and consistently implementing employee benefit programs and ensuring compliance with governmental regulations, such as ERISA, COBRA, EEO and the Family and Medical Leave Act?
3. Is the organization current on competitive employee benefit practices, such as childcare, flextime, job sharing, vacation/sick time, time-off provisions and health plan alternatives?

HEALTH CARE COST CONTAINMENT

1. Is there a process in place to contain medical costs while offering quality health care to employees?
2. Do you periodically gauge employee satisfaction with the benefit plan in terms of customer service, timeliness, claim management and accuracy?
3. If employee dissatisfaction is high or costs are out of control or noncompetitive, do you put your benefit plans out to bid?

    How often does this occur?

1. Does your medical cost containment review cover the following:

A. Have you analyzed both of the following alternative health care programs for their cost containment processes, including services offered, accessibility, quality of care and cost?

HEALTH MAINTENANCE ORGANIZATONS (HMOS):

    What are enrollment numbers for the past three years. (Rapid enrollment rates ma result in poorer service.)

    Is the HMO accredited by the National Committee for Quality Assurance (NCQA)?

    Were any conditions attached to the accreditation?

    What is the public perception of the HMO (has it received bad press)?

    Have organizations similar to yours fared well under this HMO? (Ask for a list of clients and call some of them.)

    What are the exclusions or limitations on procedures, such as transplants, rehabilitative procedures and mental and nervous disorders?

PREFERRED PROVIDED ORGANIZATIONS (PPOS):

    In addition to all the questions for HMOs above, what is the ratio of network vs. non-network charges?

    Do employees accept the network doctors?

B. Has HR reviewed the following administrative controls:

    In-house company data on premiums paid and claims processed?

    Retention provisions of carriers, such as rebates or favorable rate consideration for retention of company funds?

    More favorable stop-loss arrangements with a carrier?

    Encouraging employees to report errors in medical bills?

    Health-care spending accounts and changing rules?

    Nonduplication of benefits instead of traditional coordination of benefits?

    Initiating a probationary period before health coverage begins?

C. Has HR reviewed basic cost management programs, including the following:

    Increasing deductibles, coinsurance responsibility or copayment amounts?

    Requiring second opinions for surgery?

    Instituting pre-admission testing and certification?

    Concurrent hospital stay reviews?

    Closely managing chronic or costly illnesses?

    Patient auditing of hospital bills?

    Requiring employee plan usage data from health care carriers/administrators?

D. Has HR reviewed employee health promotion and education programs?

E. Has HR communicated with health care providers to review customized plan options and cost containment measures?

1. Are the costs of employee benefits regularly calculated and compared to national, industry and local data?
2. Are vacation and sick leave accruals analyzed for purpose as well as cost consideration?
3. Are there programs to control absentee costs?
4. Are there programs to curb sick leave abuse?
5. Are unemployment compensation costs analyzed for cost savings?
6. Are pension plans reviewed and employees counseled on win-win pension options that will save the organization money?
7. Does your organization offer retirement counseling to employees?
8. Are there benefits to extending the retirement age?
9. Should changes in long-term disability payments be considered?
10. Does your organization regularly communicate the benefits it provides as well as emphasize the company’s contribution to employee benefits?
11. Does your organization have the capacity to provide necessary employee benefits and address cost-containment issues that affect profitability?
12. On a scale of one to seven (seven being the highest and four being adequate), how do you think the Human Resources department would rate the effectiveness of employee benefits programs?
13. On the same one-to-seven scale, how do you think internal clients (department heads and employees) would rate the effectiveness of the employee benefits programs?

Explanation of Employee Benefits Questionnaire
    Employee benefits are necessary to attract and retain quality employees. Few organizations, however are able to find new ways to contain costs and use benefits as an incentive to improve employee productivity.

    Health care cost containment is covered in questions four to seven. Aggressive negotiations with carriers, a closer look at administrative controls and cost-benefit analyses must be routinely carried out if an organization wants to convert high costs into increased profits. An annual review of benefit plan vendors should be conducted, especially for health care services which consume a large portion of expenses. The remarketing of a benefit program, however, should take place no more frequently than every three to five years, unless there are serious concerns about rates, service or accessibility. More frequent remarketing of a benefit plan damages the credibility of the employer, in terms of seeming disinterested in a long-term relationship. In an insured arrangement, the vendor will be left ‘holding the bag’ on runout claims.

    Pay particular attention to cost-management programs under question seven. Spending more time on these details will result in better claims management. Question 7C should answer the following questions:

1. How were charges distributed between employees, the employer and other payers?
2. What types of services were used: hospital (inpatient, outpatient, emergency room), physician’s services (inpatient, outpatient), lab, x-ray, durable medical equipment, supplies, surgical center, etc. Any category labeled ‘other’ on a report should account for no more than 5% of the total or require a detailed explanation.
3. What types of illnesses did employees experience? There should be at least 15 major diagnosis categories used on the report.
4. What are employees’ demographics?

    You are entitled to this information. By monitoring how the healthcare plan is used, it is possible to decrease claim costs. Some negotiation with the carrier/administrator may be necessary to obtain reports in a meaningful format.

    Because health care accounts for the largest portion of most benefit packages you should strive to raise your performance standards as an employer by applying your business strategies to health care management. According to David W. Kempken, Executive Director of Benefits for Chrysler Corporation, you should re-examine your standards for plan design, administration, communication and provider relationships with the goal of "best practices." Nonhealth-related employee benefits, such as vacation time, sick leave, pension formulas, retirement incentives, holidays and unemployment compensation tend to remain untouched. There is literature which addresses these issues. They could save your organization quite a bit of money.

    Benefits can increase productivity by meeting lifestyle and family demands in a diverse and changing work force. Daycare centers, flextime, work-at-home options, alternate leave provisions, cash options and other benefit bartering arrangements may improve worker productivity. The principle that a happy worker is a more productive worker still holds. Likewise, funding benefits that do not meet the needs of the workforce are both counterproductive and unprofitable. A U.S. Chamber of Commerce survey (March 31, 1995) cites useful benefit cost benchmarks: total benefit costs as a percentage of payroll average 41.3% nationwide. Medical benefits account for 11.1% of the total.

Employee Relations and Communications Questionnaire
    This section audits programs that govern employee treatment, communications, support systems and services that encourage greater employee satisfaction, motivation and productivity.

1. Is there one position within the organization accountable for overseeing and coordinating all employee relations and communications activities?

COMMUNICATIONS

1. Are there policies that state the organization’s employee relations philosophy governing all conditions affective employees?
2. Do these policies state expected behaviors of employees?
3. Are these policies condensed into an employee handbook?
4. How and to whom is the employee handbook distributed?
5. Is the employee handbook information reviewed by legal counsel to satisfy all laws affecting employment, personnel relations, working conditions, employment at will, implied employment contracts and disclaimer issues?
6. How frequently is it updated?
7. Is there a formal orientation for new employees?

    Are follow-up employee orientations scheduled?

1. Are employees given the opportunity to exchange information with superiors as well as assimilate information being transmitted from the top down?
2. Are there forums that allow for regular interaction and information exchanges between employees and management?

    If so, briefly describe:

1. Are there forums in which racial and ethnic minority concerns are conveyed to management with the intent of affecting positive changes? 
2. Does your organization engage in employee opinion surveys?

    If yes, how frequently?

    Do you communicate survey results to employees?

    Is there a demonstrated commitment to introducing changes based on survey data?