Long-Term Care, Verified
The Quest to Preserve
Homecare Benefits
Balancing consumer desires and
carrier risk management needs
Please contact:
Michael J. Gilbert
President
HireFamily LLC
440 Totten Pond Road, Suite 201
Waltham, MA 02451
Web: www.hirefamily.com
Phone: (781) 795-8121
Email: mgilbert@hirefamily.com
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Long-Term Care, Verified
A note about our survey
Survey Disclaimer:
The survey conducted using SurveyMonkey as part of the preparation for this presentation
should be considered anecdotal and unscientific. The survey respondents represent a
cross-section of the LTCI industry, both high-volume and lower volume claims payers. We
will only present aggregated or averaged data, and no specific company or respondent
data will be disclosed.
Companies whose claims, product development or management representatives
responded to some or all survey questions include:
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Ability Resources
Bankers Life and Casualty
CNA
Employers Reassurance Corporation
Genworth Financial
Great American Insurance Group
John Hancock
Lifecare Assurance
Lifesecure
LTC Partners
MedAmerica
MetLife
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•
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Munich American Reinsurance Company
Mutual of Omaha
New York Life LTC
Northwestern Mutual
Penn Treaty Network America
Physician’s Mutual Insurance Company
Prudential
RGA
Senior Health Insurance of Pennsylvania (SHIP)
Teachers Protective Mutual Life Ins. Company
Univita Health
Long-Term Care, Verified
Presentation Credit
Much of the content for this presentation was originally created as a collaboration in
preparation for the 2013 ILTCI conference in Dallas, held in March 2013, by:



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Angie Forsell, Vice President, Clinical Services
Univita Health
Beth Ludden, Senior Vice President, LTC Product Development
Genworth Financial
Mary Lou McGuinness, Senior LTC Specialist
Long Term Care Partners
Michael Gilbert, President
HireFamily LLC
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Long-Term Care, Verified
Presentation Theme: The LTCI
Balancing Act
LTCI consumers/claimants desire to receive care at home, the least restrictive setting
where costs are typically lower. In concept, this is good for both consumer and carrier, but
carriers report higher fraud, waste and administrative cost.
How can we balance consumers’ need for simple, accessible
home care benefits with carriers’ needs to manage risk?
Simple,
accessible
home
care
benefits
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Carrier
need to
manage
risk
Long-Term Care, Verified
Presentation Structure
CURRENT LIMITATIONS
• Current policy language and business practice often limit the
use of desired risk management tools
OPPORTUNITY WITH EXISTING POLICIES
• Despite current constraints, there are ways to balance risk and
offer consumer choice for the 6-10+ million existing
policyholders
STRATEGIES FOR FUTURE POLICY GENERATIONS
• Future product generations must redefine home care benefits to
find the desired balance between priced risk and consumer
choice
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Long-Term Care, Verified
The Quest to Preserve
Homecare Benefits
CURRENT LIMITATIONS
Current policy language and
business practice often limits the
use of desired risk management
tools needed for claimant-desired
care model
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Long-Term Care, Verified
Consumer Wants
Consumers want choice, and want care that is:
 Provided by someone they know
– Plans may offer coverage of independent providers
– Plans usually do not permit paid care by family members
 Provided by a caregiver referred to them by someone they trust
– Plan provisions may not be inclusive enough
 Cost effective
– Unlicensed care is less expensive than licensed care
– Want options to purchase as much care as possible with available
benefit
 Provided at home
– Least restrictive environment
– Lowest barrier to receiving care
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Why focus on home care claims?
Long-Term Care, Verified
Home care claims represent the largest
risk and percentage of fraud and
overbilling within long-term care
(Up to 25% of home care claims may be
fraudulent or inflated)
Fraud Risk (Lack of Oversight)
High Volume Risk
Informal
Providers
Un-managed Risk & Cost
Independent
Providers
Licensed
Home Care
Agencies
Senior
Housing
Self reported claims;
MUCH less regulatory
oversight here; carriers
must pick up the slack
Certified Home Care
Agencies
ALF plus
HH Aide Services
ALF
Nursing Home Care
Low Risk & Cost
Well-managed risk
Cost and Service Intensity
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Home care claim complexity
and lack of oversight leads
to inefficient billing and
claims handling processes
Consumers are increasingly
accessing care from these
providers:
Missing STRUCTURE and
CONTROLS
Lots of regulatory
oversight here
Long-Term Care, Verified
Issues with Home Care Providers
(Agencies and IPs)
Use of a Home Care Provider:
Is preferred by most claimants over facility care
Is typically more cost effective than facility care
Provides some flexibility in care location, times and rates
However, there are issues:
There are no
standardized
invoices across
providers
Providers are
incented to
inflate invoices
Lack of
oversight leads
to potential for
fraud
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Providers and
LTCIs don’t
“understand”
each other
They cause the
largest burden
within claims
processing
There is a
strong potential
for elder
financial abuse
Long-Term Care, Verified
Carrier Experience
Carriers want to offer choice, but need control to:
– Ensure safe and appropriate care
– Minimize potential for fraud and abuse
• By caregivers
• By claimants
• By families
Top 6 LTCI survey responses* to “Name a limitation
your company currently faces when trying to manage
risk from home care claims.”
Can't verify services are provided
Difficult / inconsistent administration
Can't confirm whether benefits are needed
Inability to limit provider use / abuse of policy benefit
Difficult policy specs: Medical Necessity / Restoration of
Benefits
• Inadequate training/certification of IPs
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•
•
•
•
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*Similar responses grouped into categories
Long-Term Care, Verified
Most Prevalent Modes of Home Care
Fraud
Services billed, services not provided
Inflated or padded hours
Seemingly excessive pay rates – but what’s the “right rate?”
Misrepresenting level of deficit, higher incidence under cash
benefits and when care is by Independent Providers
 Documented services don’t reflect actual services provided
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Caregivers who “check all the boxes” and/or report hours not worked
 Records kept by agency staff, not caregivers in the home
 Victimization of vulnerable claimants
–
–
Claimants with cognitive impairment
Claimants without local family/POA
 Care by an undisclosed ineligible provider but billed by an eligible
provider
–
Among the fastest growing forms of fraud
 Caregiver misrepresenting housecleaning or other non-ADL care
 Side deals between claimant and IP or HC agency, e.g. bill for
maximum benefit, claimant retains a portion
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Long-Term Care, Verified
Common Practices / Limitations
Common Risk Management Practices:
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On-site Benefit Eligibility Assessment
Periodic telephonic check-ins to
confirm POC or changes in care need
Verification of Agency licensure
Verification of IP identity, credentials &
ability to work in the U.S.
Approve independent providers under
APOC provision
Disclosure of any provider relationship
to claimant
Require itemized invoice from provider
with daily visit notes
Require proof of payment
Offer or Require 3rd party verification
of services and payment
Allow Assignment of Benefits
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Common Policy/Practice Limitations
(due to policy language or business
decisions/cost/practicality)
 Unable to verify whether services have
actually been provided
 Uncertainty whether one-time BEA is a
true assessment of claimant’s
capabilities
 Does not prohibit caregivers unable to
provide necessary care
–
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No evidence of qualifications to provide
services in the care plan
Treats IPs same as agencies; does not
allow for different management of IPs
Does not explicitly allow for collection
of Proof of Payment prior to
reimbursement
Does not allow carrier to require
verification of services
Cash Benefits plans limit many/all
common risk management practices
Long-Term Care, Verified
Section Summary:
Finding the Balance
 Understand the goal of the benefit
– Choice for the consumer
– Cost effectiveness
– Potential to extend home-based care and delay facilitybased care
 Understand the risks
– Self-reported care (custodial care agency or IP) with
little regulatory oversight
– Difficult to ensure quality and adequacy of care
– Inconsistent, unprofessional record-keeping
– Risk of victimization of vulnerable individuals
 Find the balance
– Change business processes / controls
– Work within current policy language to:
• Mitigate the risk
• Preserve the benefit
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Long-Term Care, Verified
The Quest to Preserve
Homecare Benefits
OPPORTUNITY WITH EXISTING
POLICIES
We are able to make progress within
constraints for the 6+ million existing
policies; to offer insured desired
options but better manage risk
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Long-Term Care, Verified
…and the survey says?*
Question 2: If there were no operational restrictions, name
one thing you’d most like to be able to do (operationally)
to better manage risk from home care claims.
 Want to verify that home care services were actually
provided
 Should require more frequent reassessments
– Not necessarily in person
 Need better assessments of ADL capability
 Want better data integration / interaction with claimants
/ efficiency
 Limit benefits to agreed POC or based on prevailing area
average rates
 Require IP certification/training
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*Similar responses grouped into categories
Long-Term Care, Verified
Current Best in Class Tools
(the “Wish List”)
 Commonly used tools:
–
–
–
–
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Benefit eligibility assessments & CIC
Ongoing care management / periodic reassessments
Require proof of payment (e.g. cancelled checks)
Background checks on IPs
Verify residence and relationship with claimants using on-line
tools
 Newer risk management tools:
– 3rd Party Verification that home care services were provided
– Limit reimbursement based on prevailing area average rates
– A tiered approach to fraud tracking and strategies to maintain
efficiency of processing.
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Long-Term Care, Verified
Carrier A Policies – Pre 2011
 Home care benefit includes:
– Licensed Home Care Agency
– Informal Care Providers
• Allows for family members (even POA) to provide covered services for 365 service
days
 Pre-2011 Provider Eligibility Verification protocols
– Agency verification included confirmation of active licensure
– IP verification included:
•
•
Check photo identification
Accept reported relationship with claimant
 Pre-2011 Claim Risk Management Protocols
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–
–
–
Assignment of Benefits allowed for both Agency + IP
Proof of payment sometimes required
Self-reported service invoices from claimant/Agency/IP
Try to influence caregiver pay rates by informing claimant of
prevailing area average rates
All of the fraud Carrier A identified in 2010 came from claims with IP care;
They suspected but could not prove that there was much more fraud/abuse
that they were not able to identify from BOTH IP and Agency claims
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Long-Term Care, Verified
Carrier A Wish List Item 1:
3rd Party Verification
 Implemented in February 2011 for new IP claims
– Telephonic timecard system
– 3rd part verification of voice/identity, location of care, actual start and
end times
– 3rd party review of claims prior to submission to Carrier A
– Electronic submission of invoices (not hand written from caregivers)
 Desired to make it mandatory for all home care
– Policy language/business decisions did not allow mandatory
– Offered it as optional to IP claimants to start (60% of home
care)
 Changed business practices to make it more attractive to
claimants
– Disallowed AOB for IP
– Enforced Proof of Payment prior to reimbursement
– Implemented scripting changes in intake, care coordination
and claims processing
– Waived Proof of Payment requirement (prior to
reimbursement) if claimant elected 3rd party verification
services
– Tightened caregiver ID and eligibility requirements
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Long-Term Care, Verified
What Worked
 Higher identification of fraud/abuse in the managed population
– Significant fraud or abuse identified in over 20% of cases with 3rd
party verification
– Average projected 1-year savings for these fraud cases: over
$34,600/claim
 Significant drop in billing for a large percent of claims for actual
services render
 Multiple claimants simply went off claim
 Using verification services gave a lot of insight between initial
assessment and annual reassessment leading to earlier recoveries
in multiple cases
 Improved claim processing efficiency
– Reduced time to process – no more hand written invoices
– Allows Claim Processors more time to focus on problem cases
 Multiple cases of claimant financial abuse identified due to
increased oversight
 Identified “adverse selection” cases as red flags
– Able to focus other fraud identification methods on those claims
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Long-Term Care, Verified
What Worked: Example
Log Sheet prior to using timecard
 Claiming 7 AM – 7 PM every day(?)
 Utilizing max benefit every day
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After 4 weeks of using timecard
 Claiming 7.2 avg hours each day
 Billing for 40% fewer hours of care
Long-Term Care, Verified
Primary Business Process Changes
 Create incentives to elect verification services
– Waived Proof of Payment requirement (prior to reimbursement) if
claimant elects 3rd party verification services
 What does Carrier A do when fraud/financial abuse are
identified?
– Deny claims where frequency/amount of timecard issues meets
pre-set triggers
– Require 3rd party verification services for repeat offenders or if
evidence of fraudulent activity
– Disqualify from using certain providers
• Specific informal providers causing abuse; or
• Require formal care providers
– Initiate surveillance / fraud investigation, if appropriate
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Long-Term Care, Verified
Other carrier experience: APOC
claims
 Alternate Plan of Care (APOC)
– APOC arrangements can give more flexibility
– Business and claim process more in LTCI control
 Certain carriers who approve IPs under APOC
arrangements have made 3rd party verification
mandatory for those claims
 Consider business decision to use more APOC
if greater oversight/management is possible
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Long-Term Care, Verified
Section Summary: Making Progress
 Carriers able to make progress within
constraints for existing policies
– Able to offer insured desired options but manage risk
– Initial results showed what was suspected – that
substantial fraud and overbilling exist and are
undetected
 Initial program results allowed Carrier A to
make business process changes
– Relax certain requirements (Proof of Payment)
– Gain certain advantages (3rd party verification)
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Long-Term Care, Verified
The Quest to Preserve
Homecare Benefits
STRATEGIES FOR FUTURE
POLICY GENERATIONS
The industry must redefine the way
home care benefits are accessed
and managed, enabling consumers
to access benefits while staying
within priced risk
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Long-Term Care, Verified
…and the survey says?*
Thinking about the LTCI product, name one thing you’d most like
to change that would allow you to better manage risk from home
care claims:
 Limit benefits available for IP care
 Stricter licensing/qualification requirements
 Require verification of IP services
 Eliminate cash benefits
 Limit benefits to agreed POC or
prevailing area average rates
 Add claim pre-authorization
LIMIT
LIMIT
 Eliminate Medical Necessity Trigger
LIMIT
and Restoration of Benefits
Survey Summary:
Consumers want MORE and EASIER access to home care benefits but
LTCI staff seem to want to LIMIT this benefit!
Page 25
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*Similar responses grouped into categories
Long-Term Care, Verified
Trend towards home and
community-based care
 Original policies were facility-only
– Now prevalence is more comprehensive policies
– When this policy language was developed, Home care / IP care not
envisioned
 Trend is consistent with Public as well as private payer programs
– Medicaid HCBC
– Waiver programs
 Current Situation
– Comprehensive policies
– HHC is the most desired claim site
• About half may have IP involvement*
 Future Situation
– What will be the care model in 20+ years that we can’t imagine now?
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*Varies by carrier
Long-Term Care, Verified
2011 Industry Claim Numbers
Existing Claims
Existing
Home
Health
Claims
Existing
Facility Claims
(NH + ALF)
(~32%)
New Claims Filed
New
Facility
Claims
(NH +
ALF)
New
Home
Health
Claims
(~50%)
“Half of all new individual long term care insurance claims pay for home care services the
Association’s research found… Less than one-third (31%) of new claims begin with the
policyholder receiving care in a nursing home…” – Jesse Slome, 2011 AALTIC Source Book
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Long-Term Care, Verified
Headline News:
Growth of Home Care
“The pie is big enough for all of us and it will only grow.” This is how one
executive with an established home healthcare franchise described the mood of
the marketplace. - www.frandata.com; Feb, 2012
Strong Growth : The home care industry, mainly catering to the elderly,
has seen a dramatic increase in new franchises and startups jumping into
this niche in the greater senior care industry.
New York Home Health Industry Shows Growth Despite High Unemployment
BY ERIN HEGARTY ON SEPTEMBER 18, 2012 IN NEWS
Growth in home health care offers opportunities
BY TERRY SAVAGE savage@suntimes.com June 17, 2012
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Long-Term Care, Verified
Balancing Accessibility with Broad
Appeal
 Lowest cost, least restrictive care environment
beneficial for all parties
– But lends itself to more fraudulent behavior
– Less regulatory oversight
– If policy is easier to access, could generate more claims
 Generous home care benefits sell policies
– But survey results indicate claims folks seem to want to
restrict benefits
 How consumers already view the home care benefit
– Difficult to access
– Unclear boundaries
OVERSIGHT
 Need to have our cake and eat it too
– Offer benefits people want to access
– Manage the risk through oversight and
administrative processes
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ACCESS
Long-Term Care, Verified

Future Policy Generations Suggestions
Draft future policy language that “strikes the balance”
– Enables better access to needed care
– Allow for newer “wish list” items to manage risk
– Contemplate future care models not yet envisioned
• Allow for effective operational management of that risk

Specific Examples:
– Move away from self-reported claims, mandate verification of home care services
• Better definition of Proof of Loss that includes verified evidence that services were provided
• Allow access to independent/informal care, but only with appropriate oversight and verification
– Limit reimbursement to prevailing area average rates for all home care
• Corollary is health care insurance – claimant can always balance bill a preferred provider
– Better define Alternate Plan of Care to enable benefit options while minimizing risk
• Cover additional/alternate/new care models under APOC
• Enable the business to make tradeoffs and implement appropriate oversight
– Reduce limitations on proof of payment in exchange for improved oversight
• Consumers are not used to a reimbursement product anywhere else in health care
• Many cannot afford to pay up front, but are qualified to receive care
– Enable different rules in cases of proven fraud/abuse
• Tighter management or disallow providers
Page 30
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Long-Term Care, Verified
Presentation Summary
CURRENT LIMITATIONS
• Current policy language and business practice often limit the
use of desired risk management tools
OPPORTUNITY WITH EXISTING POLICIES
• Despite current constraints, there are ways to balance risk and
offer consumer choice for the 6-10+ million existing
policyholders
STRATEGIES FOR FUTURE POLICY GENERATIONS
• Future product generations must redefine home care benefits to
find the desired balance between priced risk and consumer
choice
Page 31
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Long-Term Care, Verified
Presentation Summary: The LTCI
Balancing Act
LTCI consumers/claimants desire to receive care at home, the least restrictive setting
where costs are typically lower. In concept, this is good for both consumer and carrier, but
carriers report higher fraud, waste and administrative cost.
To successfully grow our industry, we need to redefine the way
benefits are accessed and managed to better meet the needs
of our customers
Simple,
accessible
home care
benefits
Page 32
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Carrier
need to
manage
risk
Long-Term Care, Verified
The Quest to Preserve
Homecare Benefits
Balancing consumer desires and
carrier risk management needs
Please contact:
Michael J. Gilbert
President
HireFamily LLC
440 Totten Pond Road, Suite 201
Waltham, MA 02451
Web: www.hirefamily.com
Phone: (781) 795-8121
Email: mgilbert@hirefamily.com
Page 33
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Copyright  2013 HireFamily LLC All Rights Reserved.