How Home-Based Care Companies Can Minimize Their Insurance Premiums

The health care industry is experiencing an increase in the severity and frequency of insurance claims — and the home-based care sector is no exception.

Despite the threat of increased costs, agencies can drive down their premiums by adding automated systems and implementing periodic caregiver screenings.

“Profit margins are generally not very padded [for home care agencies],” Amy Neuman — director of insurance services for CCO Insurance Solutions, ClearCare’s insurance agency — told Home Health Care News. “Anything they can do and automate so they’re not adding to the overhead or financial burden, they should start adding those things sooner rather than later,”

San Francisco-based ClearCare is a home care technology platform that raised $60 million in growth equity investment capital in 2016. Today, the company has grown to serve more than 4,000 agencies nationwide.

Since launching in 2010, ClearCare has raised $75.6 million overall, according to online fundraising tracker Crunchbase.

While there are a number of factors that go into calculating an agency’s premium — such as where they operate, how large their payroll is and how many claims have been filed against them — the determinants that drive price down are similar across the board, Neuman said.

“Insurance companies [are] focusing on safety practices, such as do you perform background checks?” Neuman said. “Do you perform motor vehicle checks, which is basically a driving record? Do you do drug testing?”

Willis Towers Watson flagged similar touchstones for an HHCN article published in January, in which they identified workman’s compensation and auto claims among the most common in the home care space.

While most home care agencies screen caregivers in some fashion, implementing comprehensive, ongoing screening using an automated software system — thus saving time and resources on paperwork — is the most efficient way to drive down operational and premium costs, Neuman said.

For example, in addition to checking a caregiver’s driving history before they start, doing so annually can further improve premiums.

“It’s really important that the home care agencies implement a policy that anyone driving must notify HR of any change to their driving record and failure to do so can result — this could be language they use — in termination or suspended driving privileges,” Neuman said.

Beyond relying on the honor system, agencies can usually also request annual driver histories from the company that performs its background checks.

Meanwhile, agencies can take similar measures in the workman’s compensation space, which Neuman says is many companies’ second largest expense behind payroll.

“Consider a system that allows caregivers to report at the end of each shift whether they’ve had a safe shift,” she said. “Insurance companies are much more at ease if they know claims are going to be reported in a timely manner and that, technically, claims costs should be less. So then as a result, these insurance companies are likely to give more credits to reduce the cost of the policy.”

Similar programs have yielded additional benefits beyond insurance. For example, the Right at Home location in Sioux Falls, South Dakota, was able to double its 2018 business, thanks in part to implementing a change-of-condition program a few years ago.

At the end of every shift, caregivers report whether a client’s condition has changed at all, with the goal being to get ahead of potential falls or hospital admissions.

Meanwhile, inside the home, caregivers should continually assess safety hazards and fall risks to keep themselves — as well as clients — safe, John Atkinson, managing director at insurance broker Willis Towers Watson, previously told HHCN.

“We instruct our clients to help patients assess the hazards within their own environment and make sure they’re aware of them,” Atkinson said.

As long as agencies take proactive measures, home health premiums should stay down despite increasing risk.

“I would say that overall, if the home health organization has not seen a whole bunch of losses in claims, they should not expect to get premium increases [in this area] just because of [the market’s] transitional state,” Kirsten Beasley, head of health care broking at Willis Towers Watson, previously told HHCN.