CNA logoHome Care Industry Trends from an Underwriting Perspective

by Roberta Edelman, AVP Underwriting, Healthcare Segment, Aging Services, CNA Healthcare

According to the Census Bureau, more than 40 million Americans are 65 years of age or older, a number expected
to more than double by 2050. Encouraging aging individuals to remain in their homes increases personal freedom while reducing healthcare expenses, as a stay at a skilled nursing facility costs on average approximately three times more than home care.

An estimated 18,000 organizations provide an array of home care services for approximately 11 million adults in
America who need them, according to the American Association of Retired Persons (AARP). These organizations—including the 60 or so companies selling franchised home care services—face many challenges in a rapidly shifting business, regulatory and liability environment. This issue of Home Care Briefing® examines some of these challenges and suggests strategies to increase quality and client satisfaction while minimizing risk.

Staffing resources:
As the economy begins to improve and the job market becomes more competitive, employment options for caregivers broaden, potentially resulting in higher turnover rates. In order to recruit and retain honest, competent and qualified staff, home care providers must implement sound, consistent hiring and personnel policies. (See Home Care Briefing® #5, “Hiring Practices: Enhancing Employee Selection and Orientation.”) By devoting sufficient time to orient and train employees on procedures and protocols, home care providers can significantly lessen their professional liability exposure, while enhancing their future insurability, reputation and bottom line.

As home care companies proliferate and organizations find it ever more difficult to differentiate themselves and attract customers, advertising and marketing efforts tend to increase. Marketing messages should be reviewed by legal counsel to ensure that they contain no superlative phrases, implied promises or warranties, or statements that could generate unrealistic client expectations and lead to litigation or regulatory sanctions.

Patient confidentiality:
In 2013, the U.S. Department of Health and Human Services (HHS) released its Omnibus Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations, affecting home care providers who work with HIPAA-covered entities. The new regulations extend HHS enforcement authority to business associates who create, receive, maintain and/or transmit protected health Information (PHI), holding them directly liable under HIPAA privacy and security rules and making them subject to penalties and fines for PHI-related breaches.

Home care providers that enter into business associate agreements should seek the advice of legal counsel to ensure that policies and procedures comply with HIPAA requirements. In addition, home care providers should consult with their insurance broker or carrier to determine whether they may benefit from the purchase of cyber liability insurance, in addition to general and professional liability coverage.

Healthcare reform:
The Hospital Readmissions Reduction Program, a component of the Affordable Care Act of 2010 (ACA), requires the Centers for Medicare & Medicaid Services to reduce payments to hospitals for certain conditions when patients are readmitted within 30 days of discharge. (See Title III, Section 3025 of the ACA.) Hospitals, as well as patients and their families, may increasingly ask home care providers to assist with the transition from inpatient to home-based care, with the emphasis on improving outcomes and reducing avoidable readmissions. How this trend will affect the liability of home care providers is not yet clear. Nevertheless, organizational leaders should review their coverage on an ongoing basis as their needs, services and patient populations evolve.

The home care industry is growing and changing, and providers face a wide range of existing and emerging risks. By working with a knowledgeable broker and an insurance carrier with industry experience, providers can obtain the guidance and products they need to ensure that their unique exposures are identified and adequately addressed.

The information, examples and suggestions presented in this material have been developed from sources believed to be reliable, but they should not be construed as legal or other professional advice. CNA accepts no responsibility for the accuracy or completeness of this material and recommends the consultation with competent legal counsel and/or other professional advisors before applying this material in any particular factual situations. Please note that Internet hyperlinks cited herein are active as of the date of publication, but may be subject to change or discontinuation. is material is for illustrative purposes and is not intended to constitute a contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. Use of the term “partnership” and/or “partner” should not be construed to represent a legally binding partnership. CNA is a registered trademark of CNA Financial Corporation. Copyright ©2013 CNA. All rights reserved.