Crises Facing the EAP Field: The EAP Industry Must Link Performance Measurement to Pricing If It Is to Counter the Rise of "Free" EAPs, the "Bundling" of EA Programs with Employee Benefits, and Other Practices That Are Causing Quality to Deteriorate

By Sharar, David A.; Masi, Dale A. | The Journal of Employee Assistance, October 2006 | Go to article overview

Crises Facing the EAP Field: The EAP Industry Must Link Performance Measurement to Pricing If It Is to Counter the Rise of "Free" EAPs, the "Bundling" of EA Programs with Employee Benefits, and Other Practices That Are Causing Quality to Deteriorate


Sharar, David A., Masi, Dale A., The Journal of Employee Assistance


In the last five years, numerous ethical and quality issues have emerged in the employee assistance programming field. Many seasoned EAP experts have expressed deep concern about these issues and lamented that the overall quality of programs has deteriorated.

To initiate a discussion about these critical issues, the second author, a consultant to the Center for Employee Assistance Quality Advancement--an organization comprising numerous EAP organizations and sponsored by the Center for Mental Health Services (CMHS) of the U.S. Department of Health and Human Services--asked Ronald Manderscheid, the director of the CMHS, to sponsor a meeting about financial and quality problems in the EAP industry. The meeting, "Crisis in the EAP Field," was held in Washington, D.C., in November 2005.

Although numerous problems were identified at the meeting, this article will focus on three interrelated issues that received a good deal of attention: pricing and performance, "free" EAPs, and procurement of EAP vendors.

PRICING AND PERFORMANCE

Per-employee-per-year (PEPY) rates charged by EAPs have actually decreased over the past decade, even though they were already a miniscule part of the benefits budget. At a cost of about $22.00 PEPY for a typical model, EAPs cost far less than one-half of one percent of an employer's average annual health benefit costs (over $6,500 per capita). The objective of remaining competitive--by not raising prices and even offering lower prices--while trying to remain profitable presents significant ethical and quality problems for EAP providers.

Substandard performance by EAPs also presents problems, though these remain largely invisible to the organizational purchaser thanks to the industry's lack of accepted methods, across vendors and program models, of evaluating performance. After several years of fits and starts, we have not been able to agree on common measures or measurement tools needed to gauge and compare key aspects of performance.

The calculation of utilization rates, the most common performance measure in employee assistance, is the quintessential example. With no agreed-upon or standard definition, utilization rates are routinely submitted to employers without indicating how the numbers were derived, thereby reducing decisions about the provider's performance to assumptions. For example, Provider A may report a utilization rate of 25 percent by counting all telephone calls and Website hits, while Provider B may report a rate of 4.5 percent but count only cases that resulted in a face-to-face intervention. Which provider, A or B, achieved a higher level of performance?

Employers that require "report cards" from their vendors typically ask for measures that are not important or relevant to outcomes, such as telephone response times in a call center or the level of client satisfaction with EAP counseling (with no requirement for survey response rates). Does high performance on either of these indicators truly enhance the emotional health and productivity of the troubled employee?

Even when performance guarantees are included in an EAP contract, they typically are stated as penalties rather than bonuses. The employer will "park" some portion of the PEPY rate or require a rebate rather than pay a bonus for exceeding a critical performance measure. Employers increasingly are demanding performance guarantees from providers, but providers usually do not receive a true financial incentive or reward for excellent performance.

The relationship between price and performance in the EAP industry is both crude and perverse. In the current capitated environment, where vendors' profits depend on their ability to contain costs and services, marginal providers usually receive the same rate as optimal providers. Providers that work harder to achieve a superior outcome can bill their excess costs to no one and thus may be the providers most likely to be struggling financially. …

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Crises Facing the EAP Field: The EAP Industry Must Link Performance Measurement to Pricing If It Is to Counter the Rise of "Free" EAPs, the "Bundling" of EA Programs with Employee Benefits, and Other Practices That Are Causing Quality to Deteriorate
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