Insurer Says Its Home Health-Care Pilot Program Cut Costs Sharply
Reducing needless hospitalization has long been recognized as a prime area for containing health care costs, and a pilot program in California focusing on 50 chronically ill patients has documented the potential savings.
A six-month project of Los Angeles-based Transamerica Occidental Life Insurance Co. resulted in savings of more than $200,000 to the insurer, said Ron Moreland, executive vice president. Though a drop in the bucket for Transamerica, the savings averaged $4,000 per account.
Savings resulted from having a Transamerica nurse-consultant review diagnoses and treatment plans with the attending physician and patient before hospitalization in an effort to draw up an alternative care plan by showing how insurance coverage can be used to best advantage.
The patients in the pilot project all suffered from continuing medical conditions, including cancer, chronic pulmonary obstructive disease and diabetes, conditions that often mean prolonged or periodic hospitalization, said Bevlyn Matthews, the registered nurse-consultant for the project.
“Research surveys show that patients recover faster at home than in the hospital,” Matthews said. “For this reason, we are encouraging our insureds and the medical community to consider home health care whenever possible. We are now able to provide highly skilled nursing procedures, including intravenous therapy, chemotherapy, use of respirators and other types of technical treatment, in the home setting. When you compare the savings of home care to an $850-a-day hospital stay, the savings can be tremendous,” Matthews said.
Ironically, insurance companies themselves have often discouraged more cost-effective care by providing better coverage for inpatient treatment than outpatient. That mind-set appears to be changing rapidly, however, according to the Health Insurance Assn. of America, a trade group, which last year found that while only 5% of the 57 largest health insurers covered home health care 10 years earlier, 81% now do.
The key to success, Matthews said, lies in educating the patient about advances in technology and coordination that have improved the delivery of health care in the home.
Based on the success of the six-month pilot program, Moreland said, Transamerica Occidental Life intends to expand the home-care cost-containment program to about 1,500 West Coast accounts covering 150,000 persons whose policies call for preadmission review of hospitalization. The company, Matthews said, has made the commitment to pursue home health care as cost effective and a worthwhile option for its customers, and expects that doing so will save it $1 million in claims payments this year.
“This type of program is cost effective for everyone--businesses, employees and insurance companies,” Moreland said.
Transamerica Occidental, with more than $110 billion of life insurance in force, says it is one of the nation’s 10 largest life-insurance companies.
