Is it still home sweet home care? - financing home care

Patrick Holcomb was born in May 1989 with spina bifida, a congenital defect characterized by imperfect closure of the spinal column. Before leaving the hospital, he had undergone a tracheostomy, in which a breathing tube was inserted into the trachea. He also had a gastrointestinal tube inserted for feeding. In October, he went home, although he needed 24-hour nursing care. After three years, Patrick still needs a nurse for 16 hours a day and remains dependent on a ventilator.

Patrick's father, Jeffrey Holcomb, a vice president and part owner of Enecotech, an environmental consulting firm in Denver, saw dramatic increases in his company's insurance premiums as a result of his son's health care needs. Enecotech, with about 200 employees, had several standard Blue Cross and Blue Shield health plans in effect in different locations when Patrick was born.

Today, the Minnesota branch of the company contracts with Medica, a Minneapolis-based third-party administrator and managed care company, which manages its home health care cases.

Enecotech's Holcomb says, "It's hard to factor in the increased productivity and savings in time home care can provide. I was driving 20 miles to the hospital twice a day for the first six months of Patrick's life. Now, I just go home."

The combination of high technology and skilled nursing care is allowing sicker patients to be treated at home. In Patrick's case, it was $30,000 cheaper to treat him at home, according to a case manager at Medica. However, cost savings are not always a given.

In many cases, home care is more cost effective only when the patient's family can help provide care, says Carolyn Clemens, an analyst and case manager at the Principal Financial Group, a financial services company in Overland Park, Kan., that offers insurance and financial products. The firm administers claims and provides case management services for Payless Cashways Inc., in Kansas City, Mo. The company is a retail building materials supplier, with 18,000 employees in 195 locations.

In one case that Clemens managed for Payless Cashways, a child was receiving intravenous antibiotic therapy in the hospital. The family wanted to bring the child home so he could continue to receive therapy there for two weeks. Because the family was uncomfortable administering the medication, which the child needed three times daily, the cost of a nurse for each visit was higher than it would have been for room and board at the hospital.

"The company paid for the therapy because it was provided for in the benefits and that was what the family wanted," says Clemens. Rather than steer the patient toward the most obvious cost effective choice, Payless Cashways works with its vendor to manage home health care costs when that type of care is appropriate to the patient's treatment.

Although the amount Payless Cashways spends on home health care had almost doubled between late 1989 and 1992, it was still a small percentage--less than 3%-- of the company's total health care expenditures, says Clemens.

Not a panacea

As advances in home infusion therapy, neonatal and pediatric treatments, and ventilators, for example, allow patients to be treated in their homes, employers are more closely managing their home health care costs.

"I used to think home health care was the answer," says Karen Agnitch, administrator of contracted services for Parker Hannifin, a manufacturer of motion control products, in Cleveland, with 25,000 employees. "I still think it's the answer for many of our patients, but we have to manage it every day."

Agnitch notes that without negotiated contracts with home health care agencies and medical equipment suppliers, home health care in many cases would be comparable to or more expensive than hospital care.

For example, the company paid for treatment for an employee with cancer. When the family wanted to continue his care at home, Parker Hannifin priced one of the drugs he was taking and found it would be more expensive to administer the drug at home.

So, the company purchased the drug from a vendor with which it had a contract and saved 50% to 60% off the price of the drug. In addition, because of contracted services, the price for home care nurses fell from approximately $1,200 per day to $358 per day, says Agnitch.

In one instance, a 22-year-old with a history of craniotomy was to have been readmitted for a postop infection. (Craniotomy is a surgical operation that requires opening the skull, as in brain surgery.)

Through case management, Parker Hannifin was able to avoid $13,072 in hospitalization costs. The company also negotiated the home health care fees. The hospitalization costs were estimated at $11,200 for 14 days. Followup home health care was estimated at $5,744 for nursing and IV therapy. The final negotiated price was $3,872 for home care.

Agnitch says vigilant case management is necessary because the number of at-home cases the company is paying for has doubled in recent years. In addition, Parker Hannifin, a self-insured company, maintains a staff of four nurses that conduct utilization review and case management. "There are no established reasonable and customary fees in the home health care industry, so prices can vary widely," says Agnitch.

A growth industry

The high cost of taking care of sicker people at home is probably inevitable. "As our population ages, we're going to see even more dramatic advances in the area of home health care," says Patricia Wiley, a managing consultant with benefits consultants A. Foster Higgins & Co. Inc., New York. "And it's not going to be cheap," she adds. "But there's no doubt that as far as quality of life goes, home care is better."

The growth of home health care services is documented by the National Association for Home Care, a home health care provider group, in Washington. The number of Medicare-certified home health care agencies rose from 1,753 in 1967 to 6,129 in 1992. The association estimates that the home care market grew at an annual rate of 10% between 1987 when $11.8 billion was spent on home care, and 1991, when payers spent approximately $17.1 billion on home care. NAHC further estimates that the home care market will grow at the rate of 12% from 1991 to 1996.

Although Southern California Edison believes home health care can be better for the patient, the company manages its costs closely. "There are some cases for which home care is becoming equal to the cost of hospital care," says Maureen Cadogan, a case manager in patient care services at the Rosemead, Calif., utility that employs more than 17,000 people.

"When you get to the point where you need the services of a registered nurse for 24 hours, combined with some high-tech services, home care can be more expensive," Cadogan continues. "In that case, we would review all aspects of care and determine how to provide quality care in the most appropriate setting. We haven't had to do that yet, though we have one or two cases where the costs are about equal."

SCE has seen increases in home health care in specific cases. Some AIDS cases that require more home health care also demand more supportive care from qualified medical personnel. "We're also finding that to be true with cancer patients and hospice care," Cadogan says.

Since the inception of the company's self-insured Healthflex program in January 1989, SCE has seen the home health care portion of its total benefits costs increase about 20%. "It is difficult to pinpoint exactly how much of that increase is due to rising prices and how much is due to the increasingly complex procedures we are able to perform in the home," Cadogan explains.

Still, through case management, employers such as SCE are able to reap savings from keeping employees out of the hospital or shortening their lengths of stay through home health care.

SCE has continued its heavy emphasis on home health care. The program relies on a PPO network to manage cases. "In our case management program for employees with catastrophic or chronic health problems, we certainly rely very heavily on home health care," says Cadogan.

"The new technologies that have become available in the last few years are staggering, and in most cases they reduce our costs dramatically," she continues. "Home blood transfusions, for instance, cost about one-third of what they would in the hospital," Cadogan says. Some technologies that have reduced costs for SCE include home-based chemotherapy and AIDS-related services. "It's becoming easier for patients to receive these services in their homes," Cadogan says.

Cadogan estimates that the company saves $30,000 to $50,000 per case when an AIDS patient is treated at home. "Allowing our AIDS patients to receive frequent blood transfusions at home has resulted in significant savings from potential hospital costs."

Not only is it cost effective, but it's convenient for the patient. "Patients can receive transfusions at home and receive medications that are specific to their own time schedules," says Cadogan.

One of the ways SCE balances the high costs of home care with hospital costs is through its preferred provider network.

"Our criteria for choosing a particular home care provider depends upon the procedure. For very high-tech cases like treating people at home after they've had transplants, there are relatively few choices and they're well known. In other areas, we depend upon accreditations, doctor referrals, and the provider's reputation in the community," Cadogan says.

Integrated care

Another important element to keeping home health care costs down, is making sure that the services provided are well integrated with the rest of a company's health care benefits, consultants say.

Rick Dorazil, corporate director of benefits at Motorola inc., a consumer electronics manufacturer in Schaumburg, Ill., says the company saved twice as much as it spent in the first year of a prenatal educational, assessment, and home-based care program.

The program, which was instituted two years ago, cost $275,000 in the first year. But Dorazil notes that the savings in eventual costs by preventing premature births and birth defects far outweigh the program's expense.

The company identifies high-risk pregnancies and encourages pregnant women to sign up for the program early in their pregnancies. Any high-risk characteristics revealed through a survey of the program's participants are shared with the patient's physician to help determine how each case should be handled. The patient receives a follow-up survey 20 weeks into her pregnancy to gauge her progress.

While Dorzail notes that the company has seen a shift from hospital to outpatient stays, he doesn't attribute the shift entirely to home health care; the fact that more types of surgery can be performed on an outpatient basis is also a factor.

Motorola uses the Comprehensive Maternity Risk Management Program, provided by Tokos Medical Corp., in Santa Ana, Calif. Tokos is a provider of home health monitoring and hydration therapy for high-risk mothers.

"There are certainly high-tech applications that are saving us hospitalization costs, including home uterine activity monitoring, and tocolytic infusion therapy, which is used to treat preterm labor contractions. But what's even more important is the component that allows us to identify potential problem pregnancies before they become expensive problems," says Dorazil.

For Motorola, which insures 127,000 employees and dependents, using home health care was worth the expenditure. "In 1991, nine high-risk mothers were hooked up to uterine monitors, with modems that relayed the information directly to Tokos and the employee's physician. That's not cheap, but it's tens of thousands of dollars less expensive than an early birth, and the mother is allowed to remain at home, rather than being hospitalized," Dorazil says. Uterine monitoring for 30 days costs $3,000. A 30-day course of monitoring plus home infusion therapy costs about $7,000.

In 1989, the last year before Motorola introduced the Tokos program, the company had 42 high-risk pregnancies. Each cost the company an average of $50,000 for complicated births or hospitalization to prevent a premature birth. 1n 1991, the company had nine high-risk pregancies, all of which went to term and were delivered at a cost of about $6,000 each.

Kim Anderson's last story for B&H WAS "Do you know what treatments your health plan covers? November 1992.

[TABULAR DATA OMITTED]

COPYRIGHT 1993 A Thomson Healthcare Company
COPYRIGHT 2004 Gale Group