long term care insurance claimsaaimedicine.org/annualmeetingpresentations/documents/ltc... ·...

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Company Confidential ©2013 Genworth Financial, Inc. All rights reserved.

Long Term Care Insurance Claims

An Overview

September 23, 2013

Company Confidential ©2013 Genworth Financial, Inc. All rights reserved.

Agenda

Distribution of LTC claims by diagnosis

Comparative cost and length of LTC claims

Policy claim eligibility triggers

Reimbursement vs. Indemnity

LTC claimant demographics

Sample policy provisions

The LTC care continuum

Claims processing overview

Opportunities for Fraud

Summary

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Distribution of LTC Claims by Diagnosis


25.5%

13.0%

10.2%9.5%

8.4%

7.1%

6.2%

4.9%

4.4%

10.8%

Nursing Home Claims by Diagnosis

Alzheimer's

Stroke

Circulatory

Injury

Arthritis

Cancer

Nervous System

Respiratory

Mental

Other

37.2%

9.3%8.6%

8.6%

8.1%

6.7%

5.7%

3.5%3.6% 0.9%

Assisted Living Claims by Diagnosis

Alzheimer's

Mental

Arthritis

Stroke

Circulatory

Nervous System

Injury

Cancer

Respiratory

Digestive

14.6%

14.4%

14.2%

11.4%

9.3%

8.8%

8.2%

6.0%

1.9%

11.4%

Home Care Claims by Diagnosis

Cancer

Arthritis

Alzheimer's

Injury

Stroke

Circulatory

Nervous System

Respiratory

Digestive

Other

SOA LTC Experience Intercompany Study 1984-2007;

June 2011

Comparative Cost/Length LTC Claim


610

550 549 544

511

432

391

340319

179

$101$75

$94 $93 $91 $85 $79 $79 $83 $83

Ave Days

Ave Pay/Day

SOA LTC Experience Intercompany Study 1984-2007; June 2011

Nursing Home – Average Days and Payments

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560 557535 526 519

508490

468444

315

$95 $92$107 $99 $99

$88 $96 $91 $94 $97

Ave Days

Ave Pay/Day


Assisted Living– Average Days and Payments



454 453

381

336321

260 253232

139

362

$89 $84 $91$72 $67

$76 $74 $74 $82 $74

Ave Days

Ave Pay/Day


Home Care – Average Days and Payments

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Policy Claim Eligibility Triggers Health Insurance Portability and Accountability Act of 1996 (HIPAA)

– “Chronically Ill Individual” (Annual re-certification required)

• Activities of Daily Living (ADL) trigger – The individual is unable to perform (without “substantial assistance” from another individual) at least 2 activities of daily living for a period of at least 90 days due to a loss of functional capacity. Activities of daily living are: bathing, dressing, continence, eating, toileting, transferring. At least 5 ADLs must be used in tax-qualified policies.

– Substantial assistance means both hands-on and standby assistance. Hands-on assistance means the physical assistance of another person without which the individual would be unable to perform the ADL. Standby assistance means the presence of another person within arm’s reach of the individual which is necessary to prevent, by physical intervention, injury to the individual while the individual is performing the ADL.


Policy Claim Eligibility Triggers Health Insurance Portability and Accountability Act of 1996 (HIPAA)

– “Chronically Ill Individual” (Annual re-certification required)

• Cognitive Impairment – the individual requires “substantial supervision” to protect such individual from threats to health and safety due to “severe” cognitive impairment.

– Severe cognitive impairment means a loss or deterioration in intellectual capacity that is (a) comparable to Alzheimer’s disease and similar forms of irreversible dementia, and (b) is measured by clinical evidence and standardized tests that reliably measure impairment in the individual’s short-term or long-term memory; orientation as to person, place, or time; and deductive reasoning.

– Substantial supervision means continual supervision (which may include cueing by verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect the individual from threats of his/her health or safety.


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Reimbursement vs. Indemnity Reimbursement

– Policy reimburses insured for covered services

– Benefits paid up to the daily or monthly benefit limit

– Policy may allow a pool of money

– Design less expensive and less risk to company than indemnity

Indemnity

– Policy pays a flat dollar amount per day or month as long as:

• Insured meets benefit eligibility criteria

• Services are being rendered

• Services are covered under the policy

– Claimant may receive benefit payment in excess of their cots of care

– Claimant manages pool of money

– Higher risk to insurer


LTC Claimants – Who and When


0

1

2

3

4

5

6

7

8

9

Claim Incidence Rates by Attained Age


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Claim Incidence Rates (%) by Issue Age and Policy Duration


Duration <50 50-59 60-69 70-79 80+

1 0.03 0.05 0.15 0.77 2.63

2 0.02 0.06 0.21 1.00 3.18

3 0.02 0.08 0.27 1.26 3.85

4 0.03 0.09 0.33 1.54 4.62

5 0.03 0.10 0.39 1.79 5.19

6 0.03 0.12 0.47 2.09 5/74

7 0.04 0.13 0.56 2.37 6.18

8 0.04 0.15 0.65 2.65 6.55

9 0.04 0.16 0.75 2.89 7.02

10 0.04 0.19 0.86 3.12 6.70*

*<25,000 exposure years



0

20

40

60

80

100

120

140

160

Ratio of Female/Male Claim Incidence Rates by Attained Age


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Sample Policy Provisions Waiver of Premium

– Insured does not have to pay premiums while

Alternate Plan of Care

– Allows for flexibility in services covered

Respite Care Coverage

– Provides for hiring paid caregiver to allow a break for an unpaid caregiver

Informal Caregiver

– Allows payment to an untrained, unlicensed caregiver

Homemaker Services

– Pays for services such as housekeeping, meal preparation, laundry

Bed Reservation Benefit

– Will pay to hold facility bed while insured is away (e.g., hospitalization)

Care Coordinator

– Works with insurer to coordinate best care at best price

Restoration of Benefits

– Restores benefit pool if insured goes off claim for specified period of time. Any subsequent claim must be a distinct event from the prior claim.


The LTC Care Continuum


Home

Home health care

Community-based

services

Home care

Adult day care

Homemaker services

Board and care home

Assisted living facility

Nursing home

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Claims Process Overview

Notification of desire to file a claim

Often involves centralized call center

Call made by insured, family member or power of attorney

Begins process of claim

Provides information/answers questions


ClaimInitiation

IntakeCare

Coordination

InitialBenefit

Eligibility

OngoingBenefit

Eligibility /Management


Details of insured’s current situation/diagnosis

Review of coverage and policy provisions

Review of claims process

Discuss current care needs and services in place

Offer assistance in finding care/services/facilities


ClaimInitiation

IntakeCare

Coordination

InitialBenefit

Eligibility

OngoingBenefit


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Local Care Coordinator (field)

– In-home or facility assessment

– Medical, physician, medication information

– Evaluation of environment and current support system

– Assessment of ADLs, IADLs, cognitive status (cognitive screening test)

– Review current care situation

Care Coordination Supervision (vendor or in-house)

– Develop plan of care (services needed and level of intensity)

– Deliver referrals to local services

– Monitor ongoing needs

– Update plan of care periodically or as insured’s status/situation changes


ClaimInitiation

IntakeCare

CoordinationInitial

BenefitEligibility

Ongoing Benefit



On-site assessment as a tool to help determine benefit eligibility

[Minimum Data Set (MDS) for nursing home residents]

Information from health care providers

Medical records as needed

Benefit eligibility determined (various models)

– Benefit analysts

– Nurses

– Medical director

Eligible services matched to plan of care


ClaimInitiation

IntakeCare

CoordinationInitial

Benefit Eligibility

OngoingBenefit


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Periodic review of current status and care needs

Assist claimant and family in maintaining continuity of care

Revision of plan care as needs change – increase or decrease

Timely payment of claims

Management of policy provisions related to claim


ClaimInitiation

IntakeCare

CoordinationInitial

BenefitEligibility

OngoingBenefit


Facility Eligibility

Policy defines

– Home care services (licensed, unlicensed, informal, formal)

– Assisted living facility

– Nursing home

States define care services and facilities differently

– For example, facility definition may include assisted living as well as nursing home

States license home care providers and facilities differently

– Licensure may or may not be required and requirements for licensure vary


Service Providers and Facilities Must Meet Policy Definitions for Benefit Eligibility

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Opportunities for Fraud Claimant

– Misrepresentation of Loss

• Existence of loss

• Severity of loss

• Inflated home modification benefit

Caregiver

– Ineligible provider presenting as eligible provider

– Services billed, but not provided

– Inflated/padded hours

– Excessive hourly charges

– Broad/weak documentation

– Victimization of claimant

Claimant-Caregiver Collusion

– Side deal between claimant and provider to share reimbursement


Summary Dementia, cancer and musculoskeletal disorders account for a large

portion of LTC insurance claims

Majority of claimants are elderly women receiving care at home

Tax qualified policy benefit trigger language based on HIPAA

language

LTC claims processing is multi-faceted

Claimant must qualify under contract language as well as the provider

Care coordinators create plan of care

Covered services must fall within the plan of care

Carriers must be aware of the potential for fraud


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QUESTIONS?

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