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Actuarial

LTC Claims ManagementSession #17

Monday, March 4 3:30pm

• Joe Furlong, RGA • Joan Stear, PennTreatyJoan Stear, PennTreaty• Dawn Helwig, Milliman

1

Actuarial Measurement

Use service

Set standards for PoC

The Continuum of Claim Management

Accept Doctor’s

certification and Plan of Care (PoC)

Use service that

arranges discounts Send nurse

to do care assessment

for PoC, based on diagnosis Provide

wellness benefits

100% Claim Management

0% Claim Management

Review cert for

reasonability Review PoCfor

Provide care coordinator to help with

creating PoC Make services available (fally for

reasonabilityavailable (fall prevention,

etc.)

2Session 17: LTC Claims Management 2

Claims Management

• Claims Management Strategies

Joe FurlongAssociate Director, ClaimsAssociate Director, Claims RGA Reinsurance Company

3Session 17: LTC Claims Management

Claims Management Strategies

• Claims Intake Process– Fact Gatheringac Ga e g

• Care Setting• Reason for Care

– Setting Expectations• Explain Policy Requirements• Benefit Triggers

P li B fi Li i• Policy Benefit Limits• Potential Recovery

4Session 17: LTC Claims Management

Claims Management Strategies

• Plans of Care– Externale a– Internal

• Length of Stay BenchmarksThe Challenge of Co Morbidities– The Challenge of Co-Morbidities

• Diabetes• Depression• Depression• Arthritis

5Session 17: LTC Claims Management

Claims Management Strategies

• Providers of Care– Facility Based Careac y ased Ca e

• Nursing Homes• Assisted Care Facilities

– Home and Community Based Care• Certifying Independent Caregivers• Adult Day Care

R i C• Respite Care

6Session 17: LTC Claims Management

Claims Management Strategies

• Managed Care Networks– Database of Providers a abase o o de s

• Licensing• Care Provided• May Shorten “Approval” Time

– Provider Discounts• Pre-arranged savings

7Session 17: LTC Claims Management

Claims Management Strategies

• Quality Assurance– Random Auditinga do ud g

– Over Authorization ReviewsOver Authorization Reviews

– Initial Claim Decision Reviews– Initial Claim Decision Reviews• Payments• Denialse a s

8Session 17: LTC Claims Management

Claims Management Strategies

• Managing Challenging Policy Provisions– Restoration of Benefitses o a o o e e s

• Care Based Trigger – Older Policies• Recovery Based Trigger – Newer Policies

– Alternate Plans of Care• Home Modifications• Alternative Care Arrangements• Going “Out of Contract”

9Session 17: LTC Claims Management

Claims Management Strategies

• Situations Which May Warrant Additional Review– Younger Claimants

• Could mean shorter claims or longer claimsg

– Cash Benefits• Possible incentive to remain on claim

– Recovery• No longer benefit eligible

10Session 17: LTC Claims Management

Claims Management Strategies

• Fraud – Red Flagsed ags

• Investigations• Investigations– S.I.U.

I M E s– I.M.E.s– Surveillance

11Session 17: LTC Claims Management

Claims Management

• Measures of Success

Joan StearSVP Claims ManagementSVP Claims ManagementPenn Treaty Network America Insurance

CompanyCompany

12Session 17: LTC Claims Management

Measures to Success

If the elevator to success is out, take the stairs one step at a timestep at a time.

Author Unknown

13Session 17: LTC Claims Management

Measures of Success

• Questions to Consider – How Do You Define Success?o o ou e e Success

• Operational Transactions• Policyholder Satisfaction• Thresholds

– What level are you willing to accept as an acceptable threshold?threshold?

– How Will You Measure it?• Claims AuditClaims Audit• Customer Satisfaction Survey• Other Opportunities that may not Involve Audit, but

14Session 17: LTC Claims Management

Provide Valuable Feedback

Measures of Success

• How Will You Evaluate it?– Establish Transactional Metrics and Monitors ab s a sac o a e cs a d o o– Complaint and Appeal Tracking– Policyholder Satisfaction SurveysPolicyholder Satisfaction Surveys

15Session 17: LTC Claims Management

Measures to Success

• Getting From Point A to Point B– Identify Areas of Riskde y eas o s– Evaluate Tools Currently Used to Measure

Effectiveness– Revise or Create New Tools To Measure– ImplementImplement– Monitor– Evaluate EffectivenessEvaluate Effectiveness

16Session 17: LTC Claims Management

Measures to Success

• Areas of Claim Risk– Payment of Benefitsay e o e e s– Eligibility Determinations– Plans of CarePlans of Care– Complex Products– Restoration of Benefits– Restoration of Benefits– Communication of Information

17Session 17: LTC Claims Management

Measures of Success

• Claims Audit• Transactional Audit

– How extensive do you want the audit to be?» Current Payment, Last 3 Payments

• Determinations• Determinations– Benefit Eligibility– Provider Eligibility– Restoration of Benefits– Medical Necessity Determination

• Adherence to Claims Protocol• Adherence to Claims Protocol• Focused Audits

– Complex Products

18Session 17: LTC Claims Management

– By Examiner

Measures to Success

• Plan of CareOne of the Most Challenging Areas to Measure and

Quantify Effectiveness– Obstacles

• Co-morbidities• Plan of Care Development is Based on Subjective

Information Provided by the PolicyholderInformation Provided by the Policyholder.– Evaluate Tools Utilized

– Face to Face Assessment vs. Medical RecordsFace to Face Assessment vs. Medical Records– Development of Assessment Tool Geared to Company

Needs

19Session 17: LTC Claims Management

Measures to Success

• Plan of Care– Areas of Riskeas o s

• Type of a Claim• Acuity of a Claim

– Plan of Care Development• Establish Threshold• Plan of Care Guidelines• Benchmarks

– Measuring Effectiveness• Audit of Plans Of Care Against Guidelines and

Benchmarks

20Session 17: LTC Claims Management

Benchmarks• Reduction of Claim Dollars Paid Based on Dx.

Measures to Success

• Restoration of Benefits– ChallengesC a e ges

• Policy Language• Ending a Claim Just Prior to Benefits Exhausting

– A New Approach• Proactive vs. Reactive

21Session 17: LTC Claims Management

Measures to Success

• Proactive Approach– Development of 90% Benefits Paid Reporte e op e o 90% e e s a d epo– End of Care Assessment– Validation of Assessment Findings withValidation of Assessment Findings with

Policyholder by Phone– Letters to Policyholder and Physician NotingLetters to Policyholder and Physician Noting

Assessment Findings• Measuring EffectivenessMeasuring Effectiveness

– Claims Audit– Monitoring of Appeals Received for ROB

22Session 17: LTC Claims Management

Monitoring of Appeals Received for ROB

Measures of Success

• Intake Process– Area of Risk

• Accuracy of Information Provided• Compliance with State Regulations

ff– Measuring Effectiveness• Claims Audit

C t S ti f ti S• Customer Satisfaction Survey

23Session 17: LTC Claims Management

Measures to Success

• What is the End Result?– Better Claims Management Supported by e e C a s a age e Suppo ed by

Meeting Identified Thresholds– Improved Customer Satisfactionp– Identification of Areas Requiring Retraining– Improved Communication with OperationalImproved Communication with Operational

DepartmentsSuccess is the sum of small efforts, repeatedSuccess is the sum of small efforts, repeated day in and day out.

Robert Collier

24Session 17: LTC Claims Management

Measures to Success

And RememberAnd Remember…..

The road to success is always under constructionThe road to success is always under construction.

Lily Tomliny

25Session 17: LTC Claims Management

Claims Management

Actuarial Measurement

Dawn HelwigConsulting ActuaryConsulting ActuaryMilliman, Inc.

26Session 17: LTC Claims Management

Actuarial Measurement

Actuarial evaluation of new care management services• An actuarial evaluation is essential• Some changes in claim practices or new “care

management” services could actually increase net costs

• Examples – care coordinator could be more customer-focused and could recommend MORE care than would have been selected by claimantcare than would have been selected by claimant or could approve paying for some informal care, which would increase awareness and thereby

27Session 17: LTC Claims Management

yincrease claims

Actuarial Measurement

Different services could affect different components of cost

Claims management could change:• Claims frequencyClaims frequency• Length of claim• Utilization of services (# of days/week)Utilization of services (# of days/week)• Mix of services (NH/ALF/HHC)• Cost of claimCost of claim• Claim expenses

all of which affect product profits

28Session 17: LTC Claims Management

…all of which affect product profits

Actuarial Measurement

Randomized controlled trial two random

Traditional formal testing methods

• Randomized controlled trial – two random groups established. One receives the test, the other doesn’t.other doesn t.

• Risk profile matched control group – create two risk-matched groups. One receives the test, the g pother doesn’t.

• Population pre/post experiment – look at PMPM claim results in population before test and after.

29Session 17: LTC Claims Management

Actuarial MeasurementChallenges of randomized control and risk profile-matching methods with LTC

Many items drive LTC claim costs, including at least:• Age and duration• Gender• BP/EP selected• BP/EP selected• Marital status• Underwriting methodg• Geographic area• Risk classification

30Session 17: LTC Claims Management

• Etc.

Actuarial Measurement

Therefore, creating a control group and a test

Challenges, cont.

Therefore, creating a control group and a test group with identical risk characteristics is almost impossible with LTC!

In addition, care management technique being added might take a long time to show any impact…

31Session 17: LTC Claims Management

Actuarial Measurement

• Traditionally, compares claim cost before and after test

Population pre/post method

is applied. Challenge is that this claim cost is expected to change, due to mix of population and aging.aging.

• Modification: use detailed actual to expected testing to determine whether change has expected effect

• Basis of expecteds for A to E study must be “robust” enough to capture all material variances, so that a change in distribution does not affect the resultschange in distribution does not affect the results

• Apply past, validated claim costs to actual post-experiment demographics to get expected

32Session 17: LTC Claims Management

frequencies, claim costs, etc. Compare to actual.

Actuarial Measurement

• Should show actual to expecteds separate by

A to E studyp p y

frequency, utilization and length of stay• Ideally, should be done for facility separate from

home care, and in total• A to E study should be available with high

d f “d ill d ” bilitdegree of “drill down” capability• A to E should also be performed on claim

termination rates at a high level (# of claimstermination rates, at a high level (# of claims remaining after 3 months, 6 months, etc.)

33Session 17: LTC Claims Management

Actuarial Measurement

• For mature block of business, probably need at

Length of time needed to evaluate

, p yleast a year to see impact on incidence rates or on utilization rates

• Look at population size times expectedLook at population size times expected frequency to get expected # of claims and use Longley-Cook credibility table to get number of claims needed for desired confidence Howclaims needed for desired confidence How many years of experience does it take to get to that claims level?

• Length of stay impact could take longer though• Length of stay impact could take longer, though earlier results could be seen by looking at claim continuance before and after

34Session 17: LTC Claims Management

Actuarial Measurement

• Reductions in incidence rate A to E’s and/or

For favorable impact, look for:educt o s c de ce ate to s a d/o

utilization rates and costs, or increases in claim termination rates

• Need to make sure total impact results in reduction in agregate A to E’s

• Some claim initiatives might focus on certain diagnoses (falls, cognitive), so may need to be able to compare frequencies for that diagnosisable to compare frequencies for that diagnosis, before and after

35Session 17: LTC Claims Management

Actuarial Measurement

• Can’t offer a claim management technique on an

Experiment that probably does not workCan t offer a claim management technique on an optional basis and expect to be able to measure # of claims in group from people who selected technique vs. those who didn’t

• Those that select the technique might have been t t i k th t f th l tiat greater risk than rest of the population

• Example – offering a cognitive tool on an optional basis Those at greatest cognitive riskoptional basis. Those at greatest cognitive risk are likely to be the ones who select. Alternately, those who select might be the healthier and

36Session 17: LTC Claims Management

gmore risk-adverse.

Actuarial MeasurementExample – wellness program…early identification of claim Care coordinator avoids a later nursing home stay and starts person in HHC at earlier date• NH frequencies will go down (but not initially)• NH frequencies will go down (but not initially)• HHC frequencies will go up (immediately)• NH lengths of stay may go down and HHC e gt s o stay ay go do a d C

lengths of stay may go up (less severe NH conditions are the ones moved, but they might be more severe than the average HHCbe more severe than the average HHC condition)

• Average HHC utilization may go upWhat is the impact on total claims costs?

37Session 17: LTC Claims Management

• What is the impact on total claims costs?

Actuarial Measurement

Hypothetical Example of Possible Impact of Care Management

Nursing Home Home Health Care Unmanaged Well Managed Unmanaged Well Managed

Frequency

.0246

.0184

.0220

.0264

# Months Disabled Cost/Service % Using Services

20.1

$120

100%

22.1

$120

100%

18.4

$47

66%

20.1

$50

80%g # Services/Month Annual Claim Costs

30.4

$1,804

30.4

$1,483

27.8

$349

29.6

$628

Total Cost: Unmanaged = $2,153 Managed = $2,111 2% savings

38Session 17: LTC Claims Management

Actuarial Measurement

• Changes from prior slide can only be measured

Evaluating…

Changes from prior slide can only be measured in aggregate

• For wellness program example, measurement p g pwould have to take place over longer period of time, to “catch” the avoided NH stay

• A to E’s on total block gives a way to look at the aggregate impact

39Session 17: LTC Claims Management

Actuarial MeasurementComplicating factor with short evaluation timeframe• There is natural variance in the frequency,

length of stay and utilization in any block of LTC businessbusiness

• Average standard deviation for a block of LTC business:business:– 15-20% per year for smaller blocks– 5% for larger blocks5% for larger blocksNatural morbidity improvement?

40Session 17: LTC Claims Management

A i i l i i h fActuarial Measurement

A statistical variance in the year of measurement could lead to an erroneous conclusion

• May need to expand the testing timeframe to get number of claims for needed for credibilityy

• May need to drill down further…any other factors that have changed and affected the results?

• May need to rely on specific observations of the claims department, based on individual claims (e.g., claimant A moved to HHC…services cost 80% of what NH would have cost)

41Session 17: LTC Claims Management

80% of what NH would have cost)

Actuarial Measurement

• Measuring impact of claims initiatives takes time

Bottom line…

Measuring impact of claims initiatives takes time and could be difficult to do

• Would likely only be done for very extensive or y y ycostly claims initiative

• Use caution in building any assumed savings into pricing or gross premium valuation until they’re confirmed

42Session 17: LTC Claims Management