Home is where the care is
As more health and social services are delivered in home settings, GuideOne launches a product for Medicare-certified home health agencies
By Elisabeth Boone, CPCU
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
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
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
“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
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
For more information:
Web site: www.guideone.com