October 2001Long Term Care Monitoring1 abcd 2001 Healthcare Conference Keeping Health on Track 21-23...

October 2001 Long Term Care Monitoring 1

2001 Healthcare Conference Keeping Health on Track

21-23 October 2001

Scarman House


Experience Analysis in Long Term Care

• Presented by Ian Sissons• Based on the work of Stephen Holland



• Based on US experience• Longer experience• Greater depth of data• Lessons for the UK


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.


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


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


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


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


The Long-Term Care Dilemma

Risk of Needing Care Cost of Care Who Pays Impact on workplace productivity


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


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


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


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


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


Who Pays for LTC?

Medicare18%

Medicaid39%

Out-Of-Pocket30%

PrivateInsurance

7%

Other6%

Source: Department of Health and

Human Services, 2000


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



• Private Long Term Care Insurance

• Specialized LTC products

– Annuities-based service products

– Reverse Mortgages

– Private Care Management


The Evolution ofLong Term Care Insurance

SupplementalMedicareInsurance

1970’s1970’s




Nursing HomeCoverage

1980’s1980’s




Nursing HomeCoverage

ComprehensiveLong-Term Care

Coverage

1990’s1990’s


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


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)



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


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


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


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



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



• Average Annual Premium: $1,677

• Policy types: 77% Comprehensive

• Average Daily Benefit: $109

• Inflation Protection: 41%

• Reason Purchased: Insure Adequate Care & Preserve Assets


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


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%


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


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


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


LTCG Claims Experience

• Over 150,000 members covered for over 6 years





• Approximately 1,850 claimed episodes







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



• 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


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


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


Care Management ImpactHome Care: Paid versus Maximum Daily Benefit

49%

51%

Actually Paid

Care Coordination Impact

Daily Benefit Maximum

Paid

Not used



Public Sector Response


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


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


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


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


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



• What are the lessons for the UK?• Please discuss!


2001 Healthcare Conference Keeping Health on Track

October 2001

October 2001Long Term Care Monitoring1 abcd 2001 Healthcare Conference Keeping Health on Track 21-23...

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