ltc overview

LTC OVERVIEW Where It’s Been & Where It’s Going

Judy Bass, LTCP, MHP, FLMI, ACS, ALHC, HIA State Farm Mutual Automobile Insurance Co. Bloomington, Illinois

Robert R. Pohls, Esq. Pohls & Associates Los Angeles, California

International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010

Lori Watson, CLTC, LTCP Genworth Financial San Rafael, California

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The Evolving Long Term Care Insurance Product

The Early Years – 1970’s – early 1980’s

◦ Nursing Home Only Policies ◦ Medical Necessity Trigger determined by Admitting

Physician ◦ Indemnity-Based Benefit Structure ◦ Prior Hospital Stay Requirement

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1980’s – early 1990’s

◦ Comprehensive Policies (Nursing Home, ALF, Home Care, etc.)

◦ Introduction of: ◦ Expense Reimbursement Benefit Structure ◦ Care Coordination ◦ Intake Process

◦ First Partnership Policies Sold in 4 State Pilot (CA, IN, NY, CT)

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Mid 1990’s – Present

◦ Comprehensive Policies (Nursing Home, ALF,

Home Care, etc.)

◦ HIPAA Impact and NAIC Influence on Policy Language

◦ Chronically Ill Benefit Trigger ◦ Qualified Long Term Care Services Defined ◦ Non-duplication of Coverage

◦ Increased Claims Department Involvement in New Product Development

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Budgeting, Staffing and Constructing an Effective Claim Operation

Claim Department 1970’s – 1990’s

◦ Staff ◦ Smaller Team ◦ Basic Claim Processing Skill Set Required ◦ Informal On-the-Job Training Program ◦ Basic Caseload Distribution Model

◦ Infrastructure / Technology ◦ Manual processes ◦ Paper Claims Environment ◦ Limited Reporting Capability ◦ Rudimentary Quality Assurance Process

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Claim Department 2000 – Present

◦ Staff ◦ Significant Growth ◦ Understanding Policy Variations – 35+ years of LTCi ◦ Complex Claims Adjudication Skills Required

◦ Understanding Functional and Cognitive Incapacity ◦ Knowledgeable in Medical Terminology and

Medical Record Review

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◦ Staff (Cont’d)

◦ Plan of Care Appropriateness ◦ Understanding the Impact of Co-Morbidities on

Functional/Cognitive Impairment ◦ Ability to Reconcile Benefit Eligibility

Documentation ◦ Formal Foundation and Ongoing Training Programs ◦ Formal Quality Assurance Process ◦ Performance Development Plans

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◦ Infrastructure / Technology Calypso – Paperless Environment

◦ IMAGE-Based System ◦ Automation of Benefit Payments and Letters ◦ Electronic Transmission of Assessment Data ◦ Metrics and Reporting Capability ◦ Dedicated Compliance Resource ◦ Dedicated Practices Resource ◦ Formal Referral Matrix Developed and Implemented

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Decision Making: Efficiency v. Effectiveness

Claims Adjudication vs. Claims Processing

◦ Reactive vs. Proactive Approach

◦ Early involvement in Claim Process

◦ Obtaining Quality Information in a Timely Manner

◦ Setting appropriate expectations

◦ Managing claims beyond initial decision (Insured's do Recover/Regain Independence)

◦ Reconciling Conflicting Benefit Eligibility Information

◦ Managing Suspect Claim Activity

◦ Relying on Care Coordination Suppliers to Gather and Provide Chronically Ill Certifications and Appropriate Plans of Care

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Decision Making: Efficiency v. Effectiveness

Claims Adjudication vs. Claims Processing

◦ Recognize uniqueness of each claim

◦ Motivational Factors ◦ Situational Factors ◦ Co-Morbids

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Appropriate Resource Utilization

◦ Segmenting Caseload Appropriately

◦ Accessing Highly Skilled Technical Resources

◦ Continually Developing, Revising and Training on Claims Adjudication Practices

◦ Developing and Maintaining Functional Care Provider Database

◦ Addressing Media and Consumer Concerns

◦ Hiring, Developing, and Retaining Skilled Staff

◦ Appropriate Succession Planning

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Legal and Regulatory Compliance

◦ Understanding and Applying Variations in State Laws and Regulations

◦ Growing Media, Departments of Insurance and Consumer Interest

◦ Impact of Market Conduct Examinations on Claims Organization

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Litigation Report -- Compliance

Continental Casualty Co. v. Lontz No. 281183 (Mich.App. 3/26/2009)

◦ Insurer sold tax-qualified and non-tax-qualified policies ◦ Non-tax-qualified policies had “exchange privileges” ◦ Insurer stopped selling long term care insurance altogether -- Initially concluded the “exchange privilege” need not be honored -- After 6 weeks, concluded the “exchange privilege” had to be honored ◦ Held: Plaintiffs lacked standing because they offered no evidence that they “suffered an injury in fact.”

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Litigation Report -- Compliance

Yoder v. American Travellers Life Insurance Co. 2002 Pa.Super. 398 (PAS, 2002)

◦ Policy provision requiring 3-day hospitalization was not affected by later changes in law ◦ Insurer had no duty to advise policyholder of changes in law

Haley v. AIG Life Insurance Co. A2-01-49 (D.N.D. 1/24/2002)

◦ Same issue and holding ◦ Insurer was required to defend fraud claim based on alleged misrepresentations that were non-specific

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Litigation Report -- Premiums

Rakes v. Life Investors Ins. Co. of America 582 F.3d 886 (8th Cir. 2009)

◦ Named plaintiffs in putative class action bought “guaranteed renewable” LTC policies ◦ Knew premiums could increase ◦ When premiums did increase, claimed the insurer always meant to increase them ◦ Held: ◦ Plaintiffs were guaranteed the right to renew their policies, but not guaranteed a level premium ◦ No fraudulent statement by insurer on which plaintiffs relied

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Litigation Report -- Premiums

Newman v. Dinallo 2009 NY Slip.Op. 50422(U) (N.Y.Sup.Ct. 2/10/2009)

◦ Consumers sought information offered to justify insurer’s premium increase ◦ Held: “The variables that factor into pricing premiums constitute trade secrets and need not be disclosed.”

Rose v. United Equitable Insurance Co. 2001 N.D. 154 (ND, 2001)

◦ Policy allegedly priced and underwritten improperly ◦ Allegations of a “death spiral” ◦ Held: Trial court improperly denied class certification motion

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Litigation Report -- Rescission

Metropolitan Life Insurance Co. v. Conger 474 F.3d 258 (6th Cir. 2007)

◦ Contestable investigation revealed pre-application problems and treatment for undiagnosed progressive disorder

◦ Held: No duty to disclose undiagnosed symptoms or medical history not specifically requested in application

Smith v. AF&L Insurance Co. No. ED 83685 (MO 8/24/2004)

◦ Held: Rescission for undisclosed use of Aricept improper because part of treatment for depression (not forgetfulness)

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Litigation Report -- Rescission

Derbridge v. Mutual Protective Insurance Co. 963 P.2d 788 (Utah App. 1998)

◦ Innocent misrepresentations do not justify rescission

◦ Utah statute contemplates at least some level of knowledge or awareness of the misstatement to make it a misrepresentation

Kirsh v. Unum Life Insurance Co. of America, Inc. 2002 CA 5412 (Cal.App. 2002)

◦ Held: Applicant must disclose all material changes in his or her medical condition

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Litigation Report -- Post-Claim Underwriting

Derbridge v. Mutual Protective Insurance Co. 963 P.2d 788 (Utah App. 1998)

“Insurers can, to some degree, avoid being surprised by claims stemming from conditions that would have led to denial of an application in the first place. No law requires insurers to limit the source of their information to the insurance applicant. Specifically, insurers can require applicants to release their medical records or have a physical examination. This case is a prime example.”

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Litigation Report -- Post-Claim Underwriting

Smith v. AF & L Insurance Co. No. ED-83685 (Mo. 8/24/2004)

The “contrast between the post claims review process and all its rigidity with the looseness of the underwriting process . . . when the application was reviewed is remarkable.”

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Litigation Report -- Pre-Existing Conditions

Wickland v. American Travellers Life Insurance Co. 513 S.E.2d 657 (W.Va. 1998)

◦ Periodic complaints of symptoms, without a health care provider’s medical advice or recommended treatment for the underlying condition, do not establish a pre-existing condition

◦ Ruling otherwise could prompt insureds to “keep all of their complaints to themselves to prevent … a denial of coverage.”

◦ The result would be “the camouflaging of “the early signs of illnesses and diseases that otherwise might have been curable, preventable, or treatable.”

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Litigation Report -- Nursing Homes

Gregg v. IDS Life Ins. Co., 592 NYS2d 182 (N.Y.A.D. 3 Dept. 1999)

◦ NY home care services agency is not a Nursing Home

Gillogly v. GE Capital Assurance Co.. 430 F.3d 1284 (10th Cir. 2005)

◦ OK residential care facility is not a Nursing Home

Geary v. Life Investors Ins. Co., 508 F.Supp.2d 518 (N.D. Tex. 2007)

◦ TX assisted living facility is not a Nursing Home

Musick v. AF & L Ins. Co., No. 2007-CA-168-MR (Ky.App. 11/21/2007)

◦ KY assisted living facility is not a Nursing Home

Wash. Health Care Ass’n. v. Arnold-Williams, 601 F.Supp.2d 1224 (2009)

◦ WA boarding home must be licensed by DSHS and/or ADSA

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Litigation Report -- Other Facilities

Healing Place, Ltd. V. Farm Bureau Mutual Ins. Co. of Michigan No. 286050 (Mich.App. 2010)

◦ Adult foster care facilities serve “adults who . . . require supervision on an ongoing basis but who do not require continuous nursing care.”

◦ Held: Unlawful to operate an unlicensed adult foster care facility

Empire State Association of Assisted Living, Inc. v. Daines 887 N.Y.S.2d 452 (N.Y.Sup.Ct. 2009)

◦ DOI regulations require adult care facilities to have RN on duty and on site 8 hours/day and 2 days/week

◦ Held: DOI cannot impose requirements that will inflate costs

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Litigation Report -- Home Health Care

Bell Care Nurses Registry, Inc. v. Continental Casualty Co. 20 So.3d 13 (Fla.App. 2009)

◦ Policy covered “secondary services” only if received in a week during which at least one “primary service” was received

◦ Primary services include those of an RN

◦ Secondary services include those of non-professional providers (e.g., home health aides)

◦ Insured received secondary services, but primary services were unnecessary

◦ Held: Insurer may not require that insured receive unnecessary primary services as a condition to coverage for secondary services

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Litigation Report -- Alternate Plan of Care

Roland v. Transamerica Life Insurance Co. No. 08-10941 (5th Cir. 2009)

◦ Insured proposed an APC; insurer proposed a different APC

◦ No agreement reached

◦ Held:

◦ APC provision was not ambiguous, merely an option that required mutual agreement

◦ No legal barrier to requiring a separate agreement to “contractual alternatives”

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Litigation Report -- Alternate Plan of Care

Mansur v. PFL Life Insurance Co. 589 F.3d 1315 (10th Cir. 2009)

◦ APC provision covered services outside of nursing home/LTCF if insured, physician and insurer all agreed

◦ Insurer offered to pay for home care services at 40% of daily benefit for services provided in nursing home/LTCF

◦ Insured objected, then sued for “cost of all services agreed to in the APC, subject only to the Policy maximum benefit”

◦ Held: 1) No enforceable APC without insurer’s agreement

2) No benefits payable since not in a nursing home/LTCF

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Litigation Report -- Fraud

United States v. Bryant No. 09-2532 (8th Cir. 6/4/2010)

◦ Insured’s son submitted claim forms for home care provided to his mother

◦ After caregiver stopped providing services, son asked him to sign 20 blank forms to seek reimbursement for unbilled services

◦ Son submitted claim forms for later period (11/2005-1/2007)

◦ Insured discovered when insured moved in with other son, hired a new care provider, and submitted separate claim forms

◦ Held: Guilty of mail fraud (18 months in prison; ordered to pay $29,444 in restitution)

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QUESTIONS? Judy Bass, LTCP, MHP, FLMI,

ACS, ALHC, HIA Senior Claims Analyst

Long-Term Care Claims State Farm Mutual

Automobile Insurance Company

One State Farm Plaza Bloomington, Illinois 61710

Phone: (309) 766-4542 Fax: (309) 735-6200

[email protected]

Lori M. Watson, CLTC, LTCP Claims Practices and

Quality Assurance Leader LTC Claims Services Genworth Financial

1650 Los Gamos Drive San Rafael, California 94903

Phone: (415) 492-7916 Fax: (415) 492-7113

[email protected]

Robert R. Pohls Managing Attorney Pohls & Associates

10940 Wilshire Boulevard Suite 1600

Los Angeles, California 90024 Telephone: (310) 694-3092

Fax: (310) 694-3093 [email protected]

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ltc overview

Documents

ltc overviewwhere

suspect claim activity

home care

s early

claims processing

care coordination suppliers

early years

quality information