october 2001long term care monitoring1 abcd 2001 healthcare conference keeping health on track 21-23...
TRANSCRIPT
October 2001 Long Term Care Monitoring 1
2001 Healthcare Conference Keeping Health on Track
21-23 October 2001
Scarman House
October 2001 Long Term Care Monitoring 2
Experience Analysis in Long Term Care
• Presented by Ian Sissons• Based on the work of Stephen Holland
October 2001 Long Term Care Monitoring 3
Experience Analysis in Long Term Care
• Based on US experience• Longer experience• Greater depth of data• Lessons for the UK
October 2001 Long Term Care Monitoring 4
Extracted from the presentation:
• An Introduction toLong Term Care Insurance in the US
Policy and Delivery Environment for Long Term Care in the US
– Stephen K. Holland, M.D.– Senior Vice President & Medical Director
– The Long Term Care Group, Inc.
October 2001 Long Term Care Monitoring 5
The Emerging Need forLong-Term Care Services & Insurance
Socioeconomic Trends in the US
– More women working – Geographic dispersion of families– Increased elder spending power– Emphasis on self-reliance
October 2001 Long Term Care Monitoring 6
The Emerging Need forLong-Term Care Services &
Insurance
• Dwindling Feasibility of Public Programmes
– Birth dearth creates workforce shortage – Future payment ability of government
programmes– Political aspects to any new social programme
October 2001 Long Term Care Monitoring 7
The Emerging Need forLong-Term Care Services &
Insurance
Lack of LTC Coverage– Medicare has only limited long-term care cover
– Private medical insurance focuses on acute care
– Medicaid as a LTC payer of last resort
October 2001 Long Term Care Monitoring 8
Changing Service Environment
Significant LTC cut-back in Medicare State Medicaid cut-backs Intensely regulated environment Insolvency of nursing home and home health care
providers Service providers scrambling for staff Lack of consumer knowledge of existing services
October 2001 Long Term Care Monitoring 9
The Long-Term Care Dilemma
Risk of Needing Care Cost of Care Who Pays Impact on workplace productivity
October 2001 Long Term Care Monitoring 10
Risk of Needing Long-Term Care
60% of the 65+ will require some type of long-term care 43% of all people 65+ will spend time in a nursing home Average nursing home stay for people 65+ is 2.6 years
0
10
20
30
40
<3 mos 3-13 mos 1-4 years >5 years
26% 19%34%
21%
Source: New England Journal of Medicine, 1991 Project Report Prepared for HIAA
Nursing Home LOS
October 2001 Long Term Care Monitoring 11
LTC Need can Occur at any AgePercent of Persons Who
Need Long-Term Care by Age: 1997
Age 65+58%
Age 18-6438%
Age 0-174%
Source: 1997 SIPP, 1997 Census, NUMH,
University of Minnesota
October 2001 Long Term Care Monitoring 12
LTC Costs can be Significant Average Cost of Nursing Home in the United
States is $45,000. . . And Rising!
Sources: Health Insurance Association of
America (HIAA), LTCG Survey, 1996
Near Average Below Average Above Average
October 2001 Long Term Care Monitoring 13
LTC Costs can be a Burden
Sources: Center for Health & LTC Research, 2001 and NEJM, 1991
Nursing Home Costs Average Nursing Home Costs: $125/day One year stay: over $45,000 Average Stay of 2.6 years: over $118,000 20% stay 5+ years: over $228,000
Assisted Living Facilities Average in US: $75/day Average yearly: $27,000
October 2001 Long Term Care Monitoring 14
LTC Costs can be a Burden
Sources: Report Prepared for HIAA, 2000
Home Care
Average in the US
-Skilled Nursing visit: $98
-Home Health Aide visit: $98
-Chore service and ADL assistance: $12 - $18/hour
Yearly home-based ADL assistance (36 hrs/wk): $25,000
Average duration of home care: 2.5 years
Average cost of care: over $62,000
Extended care needs: over $125,000
October 2001 Long Term Care Monitoring 15
Who Pays for LTC?
Medicare18%
Medicaid39%
Out-Of-Pocket30%
PrivateInsurance
7%
Other6%
Source: Department of Health and
Human Services, 2000
October 2001 Long Term Care Monitoring 16
Private Sector Response
October 2001 Long Term Care Monitoring 17
Private Sector Response
• Managed Care Organizations’ Initiatives
• Alternative Service Options
– Continuing Care Communities
– Assisted Living Facilities
– Specialized Care Units (Alzheimer’s)
– Home-care Focused Manpower Agencies
October 2001 Long Term Care Monitoring 18
Private Sector Response
• Private Long Term Care Insurance
• Specialized LTC products
– Annuities-based service products
– Reverse Mortgages
– Private Care Management
October 2001 Long Term Care Monitoring 19
The Evolution ofLong Term Care Insurance
SupplementalMedicareInsurance
1970’s1970’s
October 2001 Long Term Care Monitoring 20
The Evolution ofLong Term Care Insurance
SupplementalMedicareInsurance
Nursing HomeCoverage
1980’s1980’s
October 2001 Long Term Care Monitoring 21
The Evolution ofLong Term Care Insurance
SupplementalMedicareInsurance
Nursing HomeCoverage
ComprehensiveLong-Term Care
Coverage
1990’s1990’s
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Long Term Care Insurance
Enhanced Marketing,Comprehensive Products,
Tax Advantages,Care Managed Products
3rd Generation Underwriting
Evidence-Based Criteria,Rapid UW – Less Reliance on APSImproved Phone and Assessment
of Function and Cognition, ADL & Cognitive Triggers,
Complex Medical
Care Management,Full Spectrum of Care
Settings, Respite Care, Support
Groups,Targeted Benefit
Reassessment,Extensive Data Collection
Acceptance Claimed EventPay Claim
Network with Fee ScheduleQuality Control
October 2001 Long Term Care Monitoring 23
Private Long Term Care Insurance
Private insurance coverage to protect against the potentially catastrophic costs of LTC.
Group and Individual LTC insurance
Underwritten. Guaranteed issue for employees (GI)
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Private Long Term Care Insurance
Benefit Trigger: ADL Dependency or Cognitive Impairment
Benefits:• Custodial Care: NH, ALF, HHC, Adult Day Care,
Board & Care• Independent Provider, Respite Care, Care Giver
Support, Safety Equipment• Indemnity Payment after a Deductible Period to a
maximum• Care Management• Many other bells and whistles
October 2001 Long Term Care Monitoring 25
Growth ofLong Term Care Insurance
Policies
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Source – HIAA 2000
October 2001 Long Term Care Monitoring 26
Companies SellingLong Term Care Insurance
75
105118
143 135 135118 121 125 120 119
020406080
100120140160
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
October 2001 Long Term Care Monitoring 27
Leading U.S. LTC Insurers
Conseco 678,000
General Electric Capital Assurance 454,000
Aegon 230,000
C.N.A. 228,000
Penn Treaty 212,000
IDS 168,000
October 2001 Long Term Care Monitoring 28
Private Long Term Care Insurance
Average Age at Purchase: 67 years of age
Married: 70%
Education: 47% College graduate and above
Income: 42% over $50,000
Assets: 71% over $100,000
October 2001 Long Term Care Monitoring 29
Private Long Term Care Insurance
• Average Annual Premium: $1,677
• Policy types: 77% Comprehensive
• Average Daily Benefit: $109
• Inflation Protection: 41%
• Reason Purchased: Insure Adequate Care & Preserve Assets
October 2001 Long Term Care Monitoring 30
Why People BuyLong Term Care Insurance
Protect Savings
30%Not be Burden
25%
Freedom of Choice
5%
Peace of Mind15%
Protect Lifestyle
10% Likely to Need5%
Guarantee Afordability
10%
Source: Department of Health and Human Services, 2000
LTCG UnderwritingExperience
Long Term Care Monitoring
October 2001 Long Term Care Monitoring 32
LTCG Underwriting ExperienceCarrier ACarrier A• 150,000+ members covered for 6+ years
• 59% female, 41% male
• 71% married, 29% single
• Average rated age: 55.4 years
• Average covered months: 38.3 months
• Average annual premium: $1250
• Cumulative acceptance rate: >84%
October 2001 Long Term Care Monitoring 33
Actual Claims ExperienceActual Claims Experience
• 0.197 claims per 1000 covered months
• 45% of expected for program
• 33% of SOA Study experience
• Disability rates < 25% predicted
• Extremely favorable Loss Ratios
Based upon over more than 6 years of experience
Recent Actuarial Study:LTCG Underwriting Results
October 2001 Long Term Care Monitoring 34
Actual Claims ExperienceActual Claims Experience• Lower than expected cognitive claims• Lower than expected nursing home and home care
claims• Higher than expected ALF claims• Acceptable underwriting decision rates
Recent Actuarial Study:LTCG Underwriting Results
Based upon over more than 6 years of experience
LTCG Underwriting Findings
Most early claims are unpredictable
Experience to date is extremely favorable in
comparison to predicted utilization
LTCG Underwriting Criteria work well
Underwriting process is reasonable
October 2001 Long Term Care Monitoring 36
Industry-wide ExperienceActual to Expected Loss Ratios
TIAA-CREFF 23.4%
Travelers (now GE Capital) 67.8%
Conseco 95.3%
IDS 98.1%
FORTIS (now John Hancock) 126.7%
Aegon 131.5%
Conning 1997
Long Term Care Monitoring
LTCG Claims andCare Management
Experience
October 2001 Long Term Care Monitoring 38
LTCG Claims Experience
• Over 150,000 members covered for over 6 years
• 59% female, 41% male
• 71% married, 29% single
• Average rated age: 55.4 years
• Average covered months: 38.3 months
• Approximately 1,850 claimed episodes
• 67% female, 33% male
• 50% married, 50% single
• Average rated age: 70.2 years
• Average covered months: 49.2 months
October 2001 Long Term Care Monitoring 39
LTCG Claims Experience
Carrier A – Comprehensive Policies
• Approximately 1,110 claimed episodes
• 638 paid LTC claims
• 461 currently in benefit and deductible
• 101 closed after recovery
• 76 closed by death
• 378 non-paid claims
• 264 closed after recovery
• 114 closed by death
• 85% in payment and 15% in deductible
October 2001 Long Term Care Monitoring 40
LTCG Claims Experience
• Approximately $1,050,000 in monthly benefits
– 52% Home Health Care and Personal Care
– 24% Assisted Living Facility
– 16% Nursing Home
– 8% Alternative Benefits
• Benefit Eligibility Determination: Av. 2.2 days
• Care Plan Completed: Av. 2.5 days
• Approximately 8.5% of benefit requests did not qualify for benefits
October 2001 Long Term Care Monitoring 41
LTCG Care Management Philosophy
• Proactive Management of Care
• Provide Options and Choice
• Promote Independence and Dignity
• Improve Coordination with Acute Care
Provider(s)
• Support Caregivers
• Lower Claims Costs
Disabling Event and Claims Initiation
• Caring & compassionate intake
• Claim Initiated by LTCG
• In-person Assessment
• Preliminary Care Plan
• Immediate Response
Care Plan Developed
Care Plan Shared with Claimant &
Family - Care Plan Sign-off
Care Plan Implemented
Coordinate w/ Acute
Care
Care Delivered
Monitoring, Management & Refinement of
Care Plan
Long Term Care GroupClaims and Care Management
• Claim Adjudicated• POA Obtained• Quality of Providers Assessed• Deductible Days Documented• Coordination with Medicare
Claim Paid
DYNAMICLTCG CARE PLAN
Care Management Impact
Severe Cognitive Impairment - Setting of CareSevere Cognitive Impairment - Setting of Care ADLS Deficits: 0-1 2-3 3 4+
Assisted Living 212 211 441 30 Home Care 176 - 145 160 Nursing Home 59 - 145 1294+ ADLs: 40% NH, 9% ALF, 50% HHCOverall: 19% NH, 52% ALF, 28% HHCOverall: 19% NH, 52% ALF, 28% HHC
LTCG Claims Study after 5 years of experience
Care Management Impact4+ ADL Deficits + Mod-Severe Cognitive Impairment
0%
10%
20%
30%
40%
50%
60%
70%
Onset of Claim At 9 Months
% In Nursing Home
% In Community Care
LTCG Claims Study after 5 years of experience
Independent Provider Impacton Care Management
4+ ADL Deficits with no Cognitive Impairment
0%
10%
20%
30%
40%
50%
60%
Onset of Claim 9 Months Later
% In Nursing Home
% In Assisted Living
% In Home Care
72% of In-Home 72% of In-Home Care provided by Care provided by Independent Independent ProviderProvider
LTCG Claims Study after 5 years of experience
Care Management ImpactHome Care: Paid versus Maximum Daily Benefit
49%
51%
Actually Paid
Care Coordination Impact
Daily Benefit Maximum
Paid
Not used
LTCG Claims Study after 5 years of experience
October 2001 Long Term Care Monitoring 47
Public Sector Response
October 2001 Long Term Care Monitoring 48
Public Sector Response
• HIPPA – State and Federal Tax Policy
• State Employee Sponsored LTC Insurance
• Federal Employee Sponsored LTC Insurance
• State Partnership LTC Insurance Programs
• Social HMO and PACE
• Dual Eligible Programs
October 2001 Long Term Care Monitoring 49
Long-Term Care Challenges in the U.S.
Custodial Care needs span all age groups
Custodial Care is mostly unfunded & uncoordinated
Disabled and cognitive impaired individuals use a disproportionate amount of Acute Care Services
Retrenchment of Medicare and Medicaid from LTC
October 2001 Long Term Care Monitoring 50
Long-Term Care Challenges in the U.S.
Public attitudes and denial
Staffing crisis for LTC providers
Lack of acute care and LTC integration
Federal and State barriers to integration
October 2001 Long Term Care Monitoring 51
Long-Term Care Opportunities in the U.S.
Affluence of Senior Market
Awareness of the need for LTC coverage improving
Federal & State incentives for private sector programs
October 2001 Long Term Care Monitoring 52
Long-Term Care Opportunities in the U.S.
Growth of LTC insurance provides a needed new LTC revenue base: New funding source for Custodial Care New source of funded Care Management Opportunity to coordinate Acute & Chronic
Care Services Early warning system for ADL & Cognitive
Deficits Another tool to better manage acute care
utilization
October 2001 Long Term Care Monitoring 53
Experience Analysis in Long Term Care
• What are the lessons for the UK?• Please discuss!
October 2001 Long Term Care Monitoring 54
2001 Healthcare Conference Keeping Health on Track
October 2001