View from The Helm

Long Term Strategies for Short Term LTC Challenges

Long Term Strategies for Short Term LTC Challenges

Let’s face it – given what we’re dealing with today, taking stock of anything pre-2020 may seem irrelevant at this point. Many of us are rightly worried about the future as we continue to deal with the impacts of the pandemic. However, as we hit pause on the normally frenetic pace we all operate at in the business world, I believe it would be a missed opportunity not to reflect on some important themes and trends we’ve observed in the Long Term Care (LTC) industry over the past year (yes, even back in the days when we attended in-person events.)

For those ready to gaze backward in time with me, I’ll prepare you with some context: this blog summarizes not only information learned through SALT’s work with long term care carriers, but also from conversations and participation at industry events last year, including:

  • Long Term Care International Forum
  • LIMRA Supplemental Health, DI & LTC Conference
  • LTC Anti-Fraud Forum
  • RGA Fraud Forum

Related to the discussions we’ve had with various long term care professionals over the past several months, four main themes arose:

  • Strategic Growth
  • Declining Expertise
  • Eligibility Requirements
  • Anti-Fraud Efforts

While the events of 2020 have shifted many claim leaders’ gaze to other immediate priorities, these four topics will remain relevant and still need to be addressed in the future.

Strategic Growth

Challenges include:

  • Many carriers have to navigate expense challenges. These typically arise from the natural conflict between expense/unit cost goals that are expected to be flat or reduced despite a growing claim block.
  • Technology continues to lag behind other industries particularly for advanced workflow, digital service, and automation.  Carriers continually are repurposing systems designed for disability or life products while combining them with outdated workflow without case management capabilities.
  • The industry deals with unavailable or difficult to predict actual to expected claim incidence volumes, lengths of duration, and termination rates.  This is particularly challenging for decisions surrounding technology and workforce investments.

Solutions being evaluated by claim leaders:

  • Most are either involved with or are evaluating partnering with a TPA or BPO arrangement.  They are looking to outsource either part or all of the process to reduce internal expenses and partner with industry expertise. The most common approach is sending their administrative processes, including payments, to a third-party while retaining eligibility decisions in-house.
  • Carriers that are growing are beginning to take advantage of process segmentation to create pockets of efficiency inside the overall process.  By grouping similar functions and creating sub-scale processes they can reduce cycle time or improve accuracy.  
  • New and old technologies related to automation are of interest.  This could be a cascading level of technology starting with rules-based automation and robotic process automation and moving up to machine learning. However, while long term care carriers are discussing this, few are piloting automated solutions, and there have yet to be demonstrated wins vs. cost to implement. The most frequent barriers cited are technology expertise in-house and the lack of clean LTC data in legacy systems.

One could argue that if you don’t have a plan for claim growth, then none of the other challenges matter. However, the following topics are issues that still need to be considered.

Declining Expertise

Challenges include:

  • A generation of LTC experts is retiring.  Many of the industry experts became so because of the growth in the product in the 1990s and 2000s. Twenty to thirty years later, many of them are reaching retirement age.
  • Several carriers have exited the business.  Even though their claim block will continue to grow, these carriers have moved valuable LTC talent to other products or areas of their organization. 
  • Block consolidations, reinsurance agreements, and expanding TPAs began to consolidate talent either with the TPAs or consulting firms. In turn, this is centralizing the expertise in a small number of 3rd party partners making the carriers more reliant on external assistance.

Solutions being evaluated:

  • There is a continued drive to send processes to TPA/BPO. However, these decisions must be made strategically with the long-term strategy in mind.
  • Contracted resources (recent retirees or consulting firms) are being used more often to train and consult newer claims staff. Again, the balance should be maintained by using partners while continuing to develop internal talent.
  • Over-compensation of internal resources for retention.  This inevitably has an impact on unit cost, but it is important not to lose the core strength of the internal talent.

*Important post-COVID-19 update*  

In 2019, many LTC claims departments were hesitant to hire remote claims examiners. 

Many allowed remote work, but only by employees that were once in the office or that lived locally. In 2020, these carriers have begun to reconsider, and in our opinion, remote hiring will be used in the future to help mitigate this expertise gap.

Eligibility Requirements

Challenges include:

  • Carriers are looking for more efficiency in the nursing home eligibility process.  This process has the most opportunities for streamlining and automation given the availability of Medicare information.
  • Concerning medical records, the fees for collection of these requirements are a significant input to expense targets and cycle times.  Fees for collection of these requirements are a significant input to expense targets and cycle time.
  • Relating to Cognitive Impairment, carriers are talking to vendors that offer enhanced cognitive testing. SALT continues to monitor this innovation but has yet to see implementation success.

*Important post-COVID-19 update*

  • Certainly, onsite assessments became a challenge in 2020. This has led to significant innovation in virtual assessments and caused many carriers to reconsider phone assessments. These are decisions that are being done out of necessity now but must be closely examined moving forward with the proper risk/efficiency balance. SALT is recommending significant eligibility audits to its clients for this cohort of claims.

Solutions include:

  • Many carriers are using phone calls by LHCPs for ongoing eligibility verification in Nursing Homes.  Some are beginning to forego ordering the nursing home records altogether in favor of collecting the information by phone. 
  • Carriers are starting to replace assisted living facility records and are working with vendors to create enhanced onsite assessments.  Medical records that are ordered are from specialists, agencies, and therapist, not from the primary physician.
  • Carriers continue to look to vendors that offer online Cognitive questionnaires.  However, these tools continue to be tested and evaluated to determine their effectiveness.

Anti-Fraud Efforts

Challenges include:

  • Differing philosophies exist among long term care carriers. Some use very little surveillance and rely on red flag identification. An increasing number are using social media investigations (internal and vendor). A small number are getting very aggressive with surveillance and there is a newer trend of carriers pursuing civil legal remedies.

 Solutions being evaluated:

  • Electronic Visit Verification: This has gained a lot of industry traction. Carriers are partnering with vendors, while some carriers are attempting to build their own.

In Summary

Hopefully, this blog has helped you better understand some of the core issues affecting the LTC claims world. Certainly, many carriers have been focused on the current challenges and issues that have arisen due to COVID-19, but those that continue to recognize and make strides toward the future will find the long-term goals aren’t easily derailed by short-term challenges.

SALT is always here to discuss these topics with you and help our clients navigate these uncertain waters. If you have any questions, please reach out to me directly at