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Many group benefits brokers looking for ways to help their clients lower healthcare costs are overlooking low-hanging fruit: programs that help employees quit smoking.

If you’re thinking, “been there, done that,” think again. Paying for smoking cessation treatments is the single most cost-effective health insurance benefit for adults that employers can provide their workers, according to the U.S. Centers for Disease Control and Prevention.

While many health insurance and employee assistance plans offer some smoking cessation benefits, experts say they lack many of the components that are critical for success: comprehensive and affordable treatment options, powerful incentives, aggressive senior-management support and the ability to measure results.

In a 2007 survey conducted by the National Business Group on Health (NBGH), 85% of employers with 1,000 or more workers said they believe providing smoking cessation benefits to help employees quit or reduce smoking can be cost-effective for their company. Yet the survey also found that only 2% provide the comprehensive benefits that research shows produce the best results—and promise the greatest cost savings.

Savvy employee benefits brokers are capitalizing on the opportunity to help clients improve their healthcare claims trends with smoking cessation benefits and other wellness programs. Brokers who don’t offer a strategic approach won’t be able to deliver the results clients want to see.

“I would tell all the brokers in the world, ‘if you are not talking about tobacco cessation, you are really missing a big one,’” says Fred Williams, director of health benefits management at Quest Diagnostics, which provides diagnostic testing services worldwide. “They are missing a huge opportunity to help their clients improve the health of their employees, improve productivity and reduce costs.”

Williams talks from experience. For years, Quest’s 43,500 employees have had access to smoking cessation benefits through the company’s health plans. In 2005, however, Quest introduced an intensive health initiative called HealthyQuest, which addresses five major health areas. It was then that the company began to “affirmatively and aggressively approach smoking cessation as a benefit,” Williams says. The company contracted with Seattle-based Free & Clear to provide the “Quit for Life” program, which includes phone-based treatment sessions with a trained counselor, a tailored plan for quitting, and a free eight-week course of nicotine patches or gum. Employees also get prescription drugs that help smokers quit at normal copayments and a huge amount of workplace support—including a “smoking cessation leader” at every worksite. Sometimes the smoking cessation leader is a smoker, Williams says. “One person raised their hand and said, ‘I want to do it,’ who is going to help me?’”

Every person who lives in the employee’s household—whether or not a family member—is eligible for the Quit for Life program, and they can enroll once a year for as long as it takes to quit.

“The message is that if you are ready to quit, we are ready to help you,” Williams says. “We’ve learned it may take smokers five to seven times before they’re successful. We tell them if you are unsuccessful this time, you are still one step closer to being successful next time.”

The results have been impressive: Based on responses to the company’s health risk assessment tool, the percentage of tobacco users fell from 16.5% of employees in 2005 to 12.5% in 2007. By mid- 2008, the quit rate had risen to 47%—meaning almost half the smokers who tried to quit succeeded.

Quest’s message to employees is “we care about your health”—and the money naturally follows, William says. The effort seems to have paid off.

Quest calculates that the smoking cessation program alone saved the company $3.2 million in its first two years and $6.8 million by the end of the third year. That works out to a return on investment of 4-to-1 in 2006 and 8-to-1 in 2007. That kind of return will motivate a CFO to keep the program rolling. But here’s the number that Williams likes to share with employees: “Someone who quits potentially adds 10 years to their life, so we may have helped add about 10,000 years of life to our employees,” he says. “That’s a powerful message, one we use far more often than ROI.”

Still, for brokers who want to sell busy benefits managers on a smoking cessation program, money talks. “If you can save an employer $5,000 per smoker, and 20% of employees are smokers, and you can get even just 10% of smokers to enroll, and a third of them are successful, that’s going to be dollars in the pocket of the employer,” Williams says, “and the broker comes off as a hero.”

Whether their motivation is altruistic or purely financial, more employers today are adopting smoking cessation programs—or thinking about it. Aon Consulting’s Benefits & Talent Survey found that 46% of employers were implementing smoking cessation programs in 2008. More than a third of the 1,100 companies in the Aon survey had fewer than 500 employees.

“There’s been a sea change in attitudes by employers,” says Tom Lerche, Aon Consulting’s Health Care Practice leader. He sees a “high degree of consensus” that employers should take steps to help workers quit smoking. “And that includes the middle market as well as larger companies,” Lerche says.

Employee benefits brokers are an increasingly important distributor of third-party programs to middle-market companies, though the vendors usually do not pay commissions to brokers.

“In our middle-market business, about half the deals come through as a result of some broker contact. They are growing in importance, so it’s my full-time job to reach out and educate them,” says John Seidler, director of professional relations with Free & Clear, which offers the Quit for Life program. “The brokers are not compensated by us, but they are bringing added value to their clients. Their clients are looking for cost savings, and tobacco cessation is really low-hanging fruit.” The Business Case

In the NBGH survey, 52% of companies report that they are doing more today to help employees quit than they did in the past—with large companies doing more than smaller ones, says Ron Finch, vice president of the nonprofit group, which represents the perspective of large employers on national health policy issues and provides practical ideas to help them solve healthcare problems.

By getting employees to quit smoking, employers of all sizes can save on more than just medical costs. A smoking cessation program that really gets employees to quit can affect productivity, absenteeism and disability costs, says Lerche. The key is having top management support, an incentive program and data measurement of success.

For brokers, the first step—and the easiest—is getting employers to understand the costs of not helping smokers quit. Tobacco use is the leading cause of preventable death in the U.S., and roughly 10% of smokers live with a smoking-related illness, according to the surgeon general and the CDC. Here’s how smoking hits the bottom line:

· Higher medical costs. Using 1999 data, the CDC estimated that smokers cost their employer an average $1,623 in excess medical costs each year—and you can bet the amount has grown larger in the years since.

· Higher workers comp costs. Businesses pay an average of $2,189 in workers compensation costs for smokers, compared with $176 for nonsmokers, according to research published in the Journal of Occupational and Environmental Medicine.

· Lost productivity. A national survey found that smoking was one of greatest causes of lost productivity—a more significant factor than alcohol consumption or family emergencies. In 2005, the CDC concluded that smokers cost employers $1,897 a year in lost productivity.

· More sick days. On average, smokers miss 6.16 days of work per year due to sickness, compared to nonsmokers, who miss 3.86 days of work per year.

· More costly building maintenance. The Organization for Economic Cooperation and Development estimates that construction and maintenance costs are 7% higher in buildings that allow smoking than in buildings that are smoke-free. What Can Employers Do?

The most effective smoking cessation programs are comprehensive. They combine health plan benefits, workplace support and policies that discourage smoking in or near the office. Managers need to be patient and compassionate, recognizing that tobacco addiction may be more powerful than cocaine and heroine, Finch says.

“Only 5% of smokers are successful in stopping tobacco use unaided,” he says. “That means 95% of people need some kind of assistance.”

NBGH has published A Purchaser’s Guide to Clinical Preventive Services: Moving Science into Coverage, which includes evidenced-based recommendations for tobacco cessation benefits and other preventive services—down to suggested language for summary plan descriptions and medical procedure codes. The CDC and the Agency for Healthcare Research and Quality recommend that companies include all of the following components in a smoking cessation program:

* Counseling. Cover for at least four counseling sessions of at least 30 minutes each, including telephone and individual counseling sessions. * Medications. Cover proven smoking cessation prescription drugs and over-the-counter nicotine replacement medication, including gums, patches and lozenges. * Multiple attempts. Provide coverage for at least two smoking cessation attempts per year. * Low financial barriers. Eliminate or minimize copayments or deductibles for counseling and medications.

Speaking at a joint forum of the NBGH and the Integrated Benefits Institute last fall, Jeffrey Harris of the University of Washington Health Promotion Research Center said the combination of counseling and medication increases quitting fourfold. Telephone “quit lines,” which offer practical help from experts, increase quit rates by 50%—and they are most effective, he said, if nicotine gum or patches are included for free. The Bottom Line

Brokers can expect employers to ask: “How much?”

A comprehensive and effective smoking cessation program will generally cost less than 50 cents per member per month, according to the NBGH. Harris says programs tend to break even in one to three years and produce savings in three to five.

Given the evidence, you’d think more employers would be offering comprehensive smoking cessation benefits, but most don’t.

In last year’s NBGH survey, 93% of employers said they believe implementing the CDC guidelines would be an effective way to help employees quit smoking, but only 2% provide comprehensive benefits and one in five employers offer none of the recommended components.

Brokers play an important role in helping employers recognize the benefits of smoking-cessation benefits and implementing programs that work, Finch says. At the very least they help employers ensure that tobacco screening and counseling are paid preventive services in all of their health plans, Finch says.

“I would like to believe that all of my consultants are engaging in a discussion about wellness and smoking cessation with clients and prospects,” says Steven Williams, president of employee benefits for Heffernan Insurance Brokers and a board member of the Council of Employee Benefits Executives. While most employers express interest, he says, it takes time—and education—before they actually take the leap. “They’re all interested in learning about it, but most of them are taking baby steps at getting involved.”

Sara LaVallee, vice president with William Gallagher Associates in Boston, sees the opportunity growing as more clients introduce consumer-driven health plans. These plans often provide 100% coverage for preventive services and offer “credits” for smokers who participate in a smoking cessation program.

One client that is instituting a smoking ban sent LaVallee on a mission to research resources for helping employees quit. The company has worked through its employee assistance program to offer counseling and covers the cost of nicotine gum and patches, but LaVallee is documenting the breadth of outside community resources that employees could tap if they don’t want to use the employee assistance program. While this employer wants to offer workers more resources to help them quit without investing more money, another of her clients has hired a third-party vendor to provide smoking cessation programs.

From these experiences, LaVallee sees the opportunity to broach the subject with clients who aren’t already motivated to act. “Every time you deliver a tough renewal, it’s usually because the claims experience is poor,” she says. “What can we do to change this? Getting people to quit smoking is the most obvious thing to do, but it’s hard to do because people are addicted.”

The National Business Group on Health has published A Purchaser’s Guide to Clinical Preventive Services: Moving Science into Coverage to assist employers and their consultants with the design of clinical preventive services benefits, including those shown to be effective in helping smokers quit. The guide, along with a wealth of other smoking cessation information and resources, is available at www.businessgrouphealth.org/tobacco. The Purchaser’s Guide recommends the following summary plan descriptions for tobacco cessation programs.

Tobacco Cessation Screening

Covered Screening Screening for tobacco use is a covered benefit beginning at age 18. Coverage is provided for younger populations depending on risk and need. Screening Initiation and Interval Screening may be conducted at every clinical encounter.

Tobacco Cessation Counseling

Covered Counseling Brief counseling (in-person) and intensive counseling (in-person or over the telephone) are covered benefits for tobacco cessation treatment. Counseling Initiation and Interval Beneficiaries who meet criteria are eligible for two courses of six counseling sessions per calendar year, for a total of 12 sessions per calendar year.

Tobacco Cessation Treatment Covered Treatment All FDA-approved nicotine replacement products and tobacco cessation medications (over-the-counter and prescription) are covered. Treatment Initiation and Interval Medications are covered as prescribed by a clinician. Treatment Services Not Covered Neither hypnosis nor acupuncture has been demonstrated to be effective for tobacco cessation; therefore, these services are not covered.

Carrots and Sticks

Some charge smokers more for health insurance as an incentive to quit.

Thanks in part to the inclusion of generous smoking cessation coverage in its health benefits package, Navistar has been a pioneer in wellness for more than 15 years. In the last few years the company has upped the ante in helping employees break the habit.

Through independent analysis of claims data by the University of Michigan, Navistar found that relative to nonsmokers, smokers cost the company an average $300 more per year for doctor visits and $1,000 more per year for inpatient and outpatient hospital services. As a result, the company, which manufactures commercial and military vehicles, decided it was only fair that nonsmokers pay less for health insurance premiums. In 2005, Navistar began charging smokers an additional $50-per-month “smoking premium.” The financial incentive applies to a subset of employees based on labor contracts and local practices, and it seems to be working.

The combination of the smoker premium and smoke-free workplace policies has led to a 25% drop in the number of non-union smokers, says Dawn Weddle, the company’s wellness and behavioral health manager.

The smoking premium is based on what employees report on the company’s annual health risk assessment, so the program relies on the honor system. For its part, the company pays for ongoing support, including telephone counseling and free nicotine replacement therapy. In select locations, onsite medical directors offer one-on-one and group consultations and can prescribe smoking-cessation medications.

Quest Diagnostics so far hasn’t moved toward charging smokers more for health insurance. Raising premiums might make coverage unaffordable or invite a shell game in which smokers could enroll in smoking cessation programs to avoid the surcharge then drop out until renewal time, says Fred Williams, director of health benefits management. For now the company is focused on getting more workers to quit for the long term through a combination of education about the health effects of tobacco use on the smoker and, through secondhand smoke, on others; no-smoking policies; generous smoking cessation benefits; and lots of support in local offices and from top management.

The issue of charging smokers more is off the table for 2009. “It’s a close call,” Williams says, “and we continue to discuss it and debate it.”

Smoking surcharges on health insurance may be illegal in some states, so a legal review should be conducted before taking that route.