Advanced Insights

Financial Optimization

Most healthcare products and services – including long-term care – rely upon specific financing depending on who is being cared for and how sick they are. In addition to government regulations concerning healthcare finance, there are a multitude of sensitivities concerning the fairness of pricing services for people who have differing levels of illness either now or in the future. There is great opportunity for long-term care providers to price different products in effective ways among diverse types of consumers. Thus, it is important to integrate complex underwriting analyses with market research. Finally, within the context of long-term care financing, is the loss of huge amounts of money from a variety of types of fraud. Pulse8 provides innovative ways to optimize financial processes.

Underwriting and Premium Setting

Pricing long-term care insurance premiums depends on detailed information about the applicant, and what specific traits, diseases, and behaviors have a high probability of leading to the utilization of long-term care. In the past, underwriters excluded many people with diagnosis such as hypertension and arthritis. With more complex datasets, research is proving that many risk groups are much less risky than assumed. More people can be included rather than denied, and more complex products can be considered.

Pulse8 uses modern analytics and high-quality datasets from Medicare, Medicaid and other sources to provide better estimates of the risks for mortality and long-term care utilization for people with specific diseases or disease subtypes. Pulse8 can calculate accurate estimates for rare diseases and disease sub-types. The benefits will be better risk selection processes in which fewer applicants (with real low risk) are denied coverage. In addition, the Pulse8 risk classifications will help actuaries build and supplement newer models.

Marketing Analysis

Following an optimistic time in the early 2000s, the long-term care insurance industry has recently experienced reduced sales. Research suggests that some policies may be priced incorrectly, and many people continue to believe that government programs will pay for their long-term care needs. Many firms, however, are looking for ways to market their products to different customers such as younger people. In addition, new hybrid products that blend LTC insurance with life insurance can add additional opportunity for increased sales. Pulse8 combines underwriting data with customer preference data to perform a variety of market analyses – results help define new products to new target populations.

Fraud

Given the complexity of the long-term care system and the variation in claim types, it is unsurprising that a substantial percentage of long-term claims are fraudulent. With products already in place to predict costly outliers, Pulse8 was able to create an effective tool to flag potential fraudulent cases based on cost and member attributes. A variety of tools identify outliers, but the most important (yet challenging) algorithms identity more subtle fraudulent activities.

There is great opportunity to bring better financial value to the long-term care market – more people will have access to insurance and less waste can allow firms to further improve services and return value to customers.

Early Detection and Cost Containment

As long-term care costs continue to rise, payers need to identify ways to reduce future high-cost members and events. If high-cost individuals can be found, it is possible to intervene within their disease states and reduce expected costs. Interventions are costly, but the outcomes associated with complications can be 10 or more times costly! Thus, Ben Franklin’s statement rings true – “An ounce of prevention is worth a pound of cure”. Pulse8 has products to detect and contain complications (and costs) associated with a number of specific chronic conditions. Although technically different, on a conceptual level, all of the Early Detection and Cost Containment products share the following attributes:

Input Data

Pulse8 uses a variety of data sources that are required for the stratification process. For initial screens, the products all use member data that were associated with the underwriting process. All medical charts, laboratory results, and health assessments are processed to evaluate particular disease states. For some products, additional assessments are given to potentially high risk claimants to get a better understanding of their risk.

Risk Stratification

The algorithms for each product are designed to use the data to create an estimate of risk (or probability) that a member will experience a long-term care claim for nursing or home care. The probabilities can be assigned to the individuals based on the results of predictive models that Pulse8 runs in its propriety environments. In addition, Pulse8 gains information about how to construct particular models based on published scientific literature. The models work by assigning a weight to each of the possible risk factors that a person has (as shown in the input data) and then computing the risk. In looking at all of the outputted risk scores, the algorithm can then assign individuals into groups or “strata”.

Analysis of Disease Trajectories

Healthcare costs are impacted by disease pathways or how people move in and out of acute medical states. Pulse8 evaluates the risk stratification output using longitudinal tools to compare individuals based on the time since they experienced a sentinel event (e.g., disease complications). The analysis of chronic disease pathways is especially useful to identify high-cost outliers. Examples of common pathways:

• People prefer to live at home, but with loss of ADLs must transition to institutionalized care
• Nursing home residents; keep them from moving into acute hospital care
• Healthy people; keep them out of long-term care in the first place. If they have to go in for a while, get them back at home and living independently
• People will lose ADLs and IADLS; but they can gain some of them back, or manage them so that they do not lose more

Interventions

The risk scores and results from the pathway analyses are used to target specific people for specific interventions. Pulse8 partners with disease management specialists to help individuals with single diseases that had high risk scores. Individuals with high risk scores for multiple chronic conditions are referred to “case managers” who work more on a member by member basis to ensure integrated and high quality care.

Program Evaluation

Pulse8 will collect data associated with outcomes, costs, and independent variables related to cases and controls. Pulse8 is committed to proving the value of its products by conducting sophisticated program evaluations that show the ROI for specific products.

Pulse8 has designed specific assessments and associated analytics to stratify chronic disease risks that are responsible for the majority of long-term care claims. The following lists the highlights some of our product offerings.

Early Detection (Pre-claims)

Early detection of a disease process can be used to create programs to slow down the condition from progressing, and can minimize the effects of disease and disability. For example, if diabetes is properly managed in the home, dangerous and costly complications can be prevented or detected early so that the individual does not require hospitalization or a more costly long-term care facility.

• Fall prevention in the community
• Hypertension
• Lifestyle (Diet, Weight/Exercise, Smoking and Alcohol Counseling)
• Prevention of Dementia, Stroke, and Circulatory Disease

Improvement in Function (2 Years Later) – National Long-Term Care Survey

Cost Containment (Post-claims)

Once a claim is made, there is opportunity to salvage additional loss by shortening the claim or by moving the individual to a less costly facility or care situation.

• Fall prevention
• Alzheimer’s disease and dementia
• Stroke
• Congestive heart failure

• Depression
• Arthritis
• Cancer

Post-Claim Comprehensive Assessment

Early detection and prevention can reduce the incidence and severity of long-term care claims, but it is obvious that many claims will still occur due to chronic diseases that inevitably will progress. Once any type of claim is made, Pulse8 advises that a nurse should visit the member to complete a comprehensive assessment. This assessment is related to the well-known and proven Comprehensive Geriatric Assessment (CGA). There is substantial evidence that CGA’s are a cost-effective strategy to prevent the emergence of chronic conditions and associated complications. These assessments require substantial clinical resources to administer, but previous projects have shown that specialist nurses (and not more expensive physicians) are effective. The CGA’s can be used as an early detection strategy among a group of medium risk members, and there is evidence that CGA used in home care settings is effective in preventing the need for more expensive nursing home care. In sum, CGA is an effective cost containment strategy that includes the following categories of evaluation:

• Identification of all comorbidities such as cancer, heart failure, or dementia
• Discussion of possible mental disorders such as anxiety, depression or feelings of loneliness
• Focus on common geriatric conditions such as dementia, arthritis, functional disability, and frailty syndrome
• Intensity and frequency of healthcare utilization
• Available social networks to provide social and functional support
• Assessment of ADLs and IADLs through time and identification of any previous formal or informal long-term care.

Effective management for specific geriatric problems leads to improved health outcomes and shorter nursing home stays. The ROI will vary by condition, but Pulse8 is confident about the savings that will be achieved by coordinating efforts of the care managers.

Performance Measurement

It is often said that “what gets measured gets done”. Behavioral and organizational change is often impacted by what is measured, and stakeholders seeking quality improvements use quality measures and associated benchmarks to drive change. For example, process measures or care-gap measures evaluate the degree to which physicians provide care as recommended by clinical guidelines.

Cost containment and early detection programs are associated with interventions to improve the quality of care for specific patients. It is important to document a return-on-investment from these interventions, and organizations in general should be held accountable to improve the quality and reduce costs. There are numerous nationally vetted quality indicators that can be used to measure and improve administrative/management process, clinical processes, and health outcomes. Most of these measures are freely available, and using Pulse8 expertise, the measures can be implemented in an inexpensive and effective manner.

Pulse8 can help with the data to ensure accurate measurement and reporting. Some common measures include:

• Commercial and Government Program Quality Measures
• CMS Nursing Home Compare Measures
• RAND ACOVE Measures

Although many high qualityperformance measures are freely available, it can be costly to create data and reporting systems that allow organizations to implement the indicators.

Pulse8 has experience building a variety of low cost performance measurements to minimize implementation costs;

clients can enjoy cost savings and members can experience greater quality of care.