Until the end of World War II, home care was the rule rather than the exception for people who were ill or injured. Elderly people seldom spent their golden years anywhere but in their homes; persons with terminal illnesses likewise remained in their familiar home environment. Doctors made house calls; and, with support from neighbors, friends, and fellow members of a family’s religious community, caring for a loved one at home was rarely an undue burden on anyone. Private health insurance was virtually nonexistent, and Medicare and Medicaid were decades in the future.

After World War II, as the nuclear family became the dominant family living unit, a host of social and economic trends spelled the beginning of the end of traditional home care. A key factor was the advent of employer-paid medical insurance, which fueled the growth of hospitals and made institutional care both accessible and affordable. Another significant development was the creation of the Medicare and Medicaid programs, which brought the federal and state governments into the health insurance business and vastly expanded the pool of people who could receive hospital care.

In recent years, however, as health care costs have continued their inexorable rise, in-home care has once again become the preferred choice for many Americans and for the private insurers and government programs that pay for health care.

To meet the growing demand for home health and hospice care, new businesses are springing up all around the country. A leader in insuring these entities is GuideOne Insurance, which recently launched a new insurance product for Medicare-certified home health and hospice agencies.

Based in West Des Moines, Iowa, GuideOne is a niche market insurer that provides coverage for churches and private schools and colleges. It is also one of the top five insurers of senior living communities, including nursing homes, assisted living facilities, continuing care retirement communities, and independent living facilities. GuideOne is licensed in all 50 states and is rated A by Best’s.

GuideOne distributes its products through captive and independent agents. “Because we’re a niche carrier, we look for agents who specialize in writing this class of business,” says Jan Beckstrom, GuideOne’s executive vice president of sales. “We seek agents who either already demonstrate knowledge in this specialty or who are writing closely related classes and are willing to learn about home health and hospice agencies.

“Once an agent obtains an appointment with us, we provide a variety of training and resources to help them understand the class and learn about our coverages and our underwriting process,” Beckstrom continues. “We provide this training at regional meetings with our agents and also via the Internet. Additionally, we give our agents qualified leads from a list we have purchased, and we assist our agents in preparing direct mail solicitations to prospects on that list who are in their territory.”

Home health care encompasses a wide range of health and social services that are delivered at home to recovering, disabled, and chronically or terminally ill persons who need medical, nursing, social, or therapeutic treatment and/or assistance with the essential activities of daily living.

The demand for home health care is being driven by a number of trends, says Lee Pallardy, vice president and chief underwriter at GuideOne.

“First, Medicare and Medicaid are trying to move people out of the institutional mode of health care,” he says. “They’re trying not only to minimize hospital stays but also direct people away from nursing homes and extended care facilities.

“More pragmatically,” Pallardy continues, “the medical community is telling us that people actually heal faster in their home environment than in an institutional setting. As a result, more and more health care services are being provided in the patient’s home.”

Another influential factor, Pallardy observes, is the vast Baby Boom generation. “Boomers are now aging and are far more affluent than their ancestors, so they have options that weren’t available to earlier generations,” he remarks. “Instead of going to a hospital or residential care facility, a Boomer might choose to buy a hospital bed and have it installed at home, and have health care services delivered there.”

Yet another driver of the trend toward home health care is pressure for cost containment, says Beckstrom. “Costs continue to rise for every kind of care, and that’s a huge piece of the move toward home-based care,” she declares.

What kinds of health care services are being delivered in the home, and what home health agencies are eligible for GuideOne’s new product?

“Think of the clinical services that are provided in nursing homes,” Pallardy says. “Our policy is designed for agencies that bring that clinical care to the home. Eligible nursing agencies employ licensed professionals beginning at the LPN (Licensed Practical Nurse) level to RNs and nurse practitioners. We also insure agencies that provide pharmaceutical and infusion therapy; occupational and physical therapy and massage therapy; and other clinical services like changing feeding tubes and intravenous lines, giving injections, and wound care.”

Recent decades have witnessed significant growth in the hospice movement, which allows persons with terminal illnesses to receive palliative care at home or in a hospice center. Medicare-certified hospice agencies also are eligible for the GuideOne policy, Pallardy says, adding, “Principally we’re looking for agencies that deliver hospice services in the home.”

Many agencies provide non-clinical services in the home for which professional education and licensing are not required. These businesses are not eligible for the GuideOne product. “We are not a market for businesses that offer services like cooking, cleaning, running errands, or providing companionship,” Pallardy says. “Our focus is on entities that deliver clinical services.”

GuideOne does offer its home care product to Medicare-certified medical supply companies that are affiliated with eligible home health care and hospice services and whose work includes the delivery, setup, breakdown, and removal of equipment like hospital beds, Pallardy says. “These companies don’t provide clinical care, but they establish the facilities for providing that care in the home.”

Within the home health care segment, GuideOne will accept both nonprofit and for-profit agencies. Agencies must be in compliance with all applicable state laws and regulations, including licensing regulations. “We’re looking for those organizations that principally serve adult patients,” Pallardy says. “Less than 10% of our business is pediatric.

“We are not offering this product in Alabama, Arkansas, Florida, Louisiana, or Mississippi,” he continues. “The legal environment in those states as it relates to regulation of nursing homes and clinical care is not the best.”

As was noted earlier, the GuideOne product is available only to Medicare-certified home health agencies. To obtain Medicare certification, agencies must employ licensed professionals and comply with other strict standards established by the federal government to ensure the quality of care that is delivered to eligible recipients. Agencies must be recertified by Medicare every year.

GuideOne estimates that there are approximately 83,000 home health providers in the United States, of which about 12,000 agencies are Medicare certified.

“In a sense, Medicare certification is one of our most powerful underwriting tools,” Beckstrom asserts. “Of course, we underwrite each risk individually, but a Medicare-certified agency has already satisfied many of our underwriting criteria. The certification process really helps us analyze the quality of personnel in an agency because Medicare conducts background checks and verifies credentials, and that gives us a level of comfort with the personnel in an agency that we’re going to insure,” Beckstrom says.

“Also, the Medicare certification process takes a considerable amount of time,” she comments. “A home health agency must have the financial wherewithal to continue operating throughout the process. That’s a good indicator of an agency’s financial stability.”

The exposures faced by home health agencies in many ways mirror those that confront nursing homes, Pallardy says. “Agencies have the same issues in terms of wound care, slip and falls, and helping patients transfer safely in and out of bed, a wheelchair, or a bathroom. Often a home health employee trains the patient and the family how to do those transfers safely. It’s important that these employees know and teach the correct procedures.”

This points to a key difference between the nursing home and the home health agency, Pallardy comments. “In home care, employees don’t have the direct supervision that exists in nursing homes,” he explains. “You don’t have a director of nursing there to make sure that procedures are being performed correctly and that clinical issues are being addressed effectively.”

For this reason, Pallardy says, “We require a much higher level of documentation from a home health care agency. Every time a nurse touches a patient, whether it’s to give an injection or change a dressing, it’s documented. That gives us as the insurer a much clearer documentation path so we know what’s happening and why.”

In some home health agencies, services are provided by salaried employees; in others, the professional service providers are independent contractors; and some agencies use a combination of employees and contractors.

“In every case, we require the agency to provide certificates of malpractice insurance in adequate amounts for the agency itself and each service provider,” Pallardy explains. GuideOne does not write medical malpractice coverage; it simply verifies that appropriate coverage is in place for each applicant.

Although the exposures faced by home health agencies are predominantly on the liability side, they also confront other kinds of risks.

“Home health agencies can have a substantial exposure in non-owned auto,” Pallardy says. “Employees typically are not provided autos, so they’re driving their own vehicles to and from patients’ homes. We can write non-owned auto coverage up to a $1 million combined single limit.”

The GuideOne product offers a combination of property and general liability coverages, along with optional coverages like employee benefits liability, sexual misconduct liability, and business auto. General liability limits are available up to $1 million per occurrence/$3 million aggregate, and umbrella limits can be written up to $5 million. The minimum premium is $5,000.

GuideOne’s risk management department provides an array of loss control and safety services, Pallardy says. “Our senior risk manager, Linda Williams, is a registered nurse, and she was instrumental in developing our home care product. She has created a checklist of questions to ask agency owners about their hiring and documentation practices and the level of clinical care they provide.”

Because home health agencies deliver services in the home and not in a clinical setting, Pallardy says, Williams reaches out to agencies by phone. “Using the information obtained in those calls, Linda and other members of the risk management staff can develop safety or loss control plans to deal with any issues they identify.”

Adds Beckstrom: “Linda provides on-site training to the agencies we insure. As we do on the senior living side, we bring together groups of agency directors of nursing and present a seminar on a subject like appropriate documentation that satisfies legal requirements and meets the needs of patients and families.”

“We also provide a full menu of loss control and safety services in the risk management segment of our Web site,” Pallardy says. “Insureds can download and print out materials on topics from preventing pressure ulcers to developing care plans, from advertising guidelines to managing the non-owned auto exposure. We also have videos available for download, and our risk management specialists have created procedural manuals on a number of different topics.

“A key focus of our risk management effort is helping our insureds manage their clients’ expectations,” he says. “For most people, receiving home health or hospice care is a new experience, so they either don’t know what to expect or have certain expectations that are beyond what the agency can provide. Our materials are designed to guide our insureds in managing expectations on the part of both the patient and the family, so that everyone understands what services will be provided and when and how they will be delivered.”

Every segment of the health care industry is certain to feel the impact of the health care reform legislation that was passed earlier this year, and that definitely includes home health agencies and their insurers. As various provisions of the new law begin to take effect, GuideOne is committed to keeping its insureds informed and appropriately covered for the risks they will be facing.

For more information:
GuideOne Insurance
Web site: www.guideone.com