The Growth and Challenges of Home Health Care Agencies Part 1
Part 1: Be a part of the growth of long-term care insurance
You have worked hard to establish your home care agency. Every day you recruit and train caregivers, provide quality care to your customers, and look for ways to grow your business. If you are like most agencies, clients pay for care either directly or with help from their family.
There is a growing new source of revenue for your agency and it covers over 7.2 million people who either use care now or will very soon. That payment method is long-term care insurance (LTCi). Understanding the LTCi market and its products could improve the growth of your agency by diversifying your revenue mix, accessing new payer sources, and providing a valuable service to prospective clients.
The LTCi market
Long-term care insurance, originally referred to as nursing home insurance, has been sold in the United States for over 30 years. Over that time, LTCi market has seen rapid growth, more than quadrupling since its inception. Buyers of LTCi policies are generally more affluent with higher than average incomes and assets.
From the perspective of insurers, more than $8 billion is being put aside to pay new LTCi claims in the next year alone. About $2.5 billion of that would be flagged for potential payment for home care. That works out to $34,000 reserved for home care per claimant.
Given the size of the LTCi market, accessing and servicing this market can provide an opportunity for further growth.
Although there is plenty of opportunity, accessing this market can be a challenge for many agencies. PayRight has data on over 1,800 clients of LTC carriers from the past two years. Some of the issues an agency and their clients must deal with in using LTCI to pay for care include:
1. The average LTCi payer takes over 45 days to pay their claims
LTCi carriers take between 35 and 60 days to pay their claims. About 15% of these payments have an error, often due to incorrect billing or an error in calculating the benefits. In these cases, the agency either must balance bill the customer or rebill the agency.
2. Policies have many features that can affect payment
Nearly all policies include either coinsurance, elimination periods, daily max limits, or other coverage limits and cost-sharing. This can often make it very confusing for the client as to what coverage they will receive and will affect the reimbursement that you get directly from the carrier.
3. It can be difficult for clients to access and understand their benefits
There is a lack of standardization in benefit design and structure. This can make it hard for a consumer to understand the specifics of what they have purchased.
4. LTCi is not the core business of the carriers
LTCi insurers are indemnity insurance companies. They insure all kinds of things including life insurance, accident, umbrella, and other kinds of insurance in addition to LTCi. In addition, many carriers outsource the administration and payment of LTCi policies to a third party, since the structure is different than the rest of their insurance and requires a lot more processing effort.
As you can see, there are many challenges and opportunities you will face when accepting long-term care insurance. Continue to Part 2 to help you better prepare your agency for these challenges.
Jim is a career health care executive with a focus on developing and growing health care markets and services. He has spent over 20 years working in the insurance industry. Jim is the CEO of PayRight Health Solutions, LLC, a technology company focused on improving payment education and management for home care and health care providers.