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LTC Overview

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2010 ICA Annual Education Conference

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LTC Overview

  1. 1. 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 Lori Watson, CLTC, LTCP Genworth Financial San Rafael, California Robert R. Pohls, Esq. Pohls & Associates Los Angeles, California 1International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  2. 2. LTC OVERVIEWWhere It’s Been & Where It’s Going 2 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 RequirementInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  3. 3. LTC OVERVIEWWhere It’s Been & Where It’s Going 3 The Evolving Long Term Care Insurance Product 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)International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  4. 4. LTC OVERVIEWWhere It’s Been & Where It’s Going 4 The Evolving Long Term Care Insurance Product 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 DevelopmentInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  5. 5. LTC OVERVIEWWhere It’s Been & Where It’s Going 5 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 ProcessInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  6. 6. LTC OVERVIEWWhere It’s Been & Where It’s Going 6 Budgeting, Staffing and Constructing an Effective Claim Operation 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 ReviewInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  7. 7. LTC OVERVIEWWhere It’s Been & Where It’s Going 7 Budgeting, Staffing and Constructing an Effective Claim Operation Claim Department 2000 – Present ◦ 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 PlansInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  8. 8. LTC OVERVIEWWhere It’s Been & Where It’s Going 8 Budgeting, Staffing and Constructing an Effective Claim Operation Claim Department 2000 – Present ◦ 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 ImplementedInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  9. 9. LTC OVERVIEWWhere It’s Been & Where It’s Going 9 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 (Insureds 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 CareInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  10. 10. LTC OVERVIEWWhere It’s Been & Where It’s Going 10 Decision Making: Efficiency v. Effectiveness Claims Adjudication vs. Claims Processing ◦ Recognize uniqueness of each claim ◦ Motivational Factors ◦ Situational Factors ◦ Co-MorbidsInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  11. 11. LTC OVERVIEWWhere It’s Been & Where It’s Going 11 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 PlanningInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  12. 12. LTC OVERVIEWWhere It’s Been & Where It’s Going 12 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 OrganizationInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  13. 13. LTC OVERVIEWWhere It’s Been & Where It’s Going 13 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.”International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  14. 14. LTC OVERVIEWWhere It’s Been & Where It’s Going 14 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-specificInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  15. 15. LTC OVERVIEWWhere It’s Been & Where It’s Going 15 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 reliedInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  16. 16. LTC OVERVIEWWhere It’s Been & Where It’s Going 16 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 motionInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  17. 17. LTC OVERVIEWWhere It’s Been & Where It’s Going 17 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)International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  18. 18. LTC OVERVIEWWhere It’s Been & Where It’s Going 18 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 conditionInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  19. 19. LTC OVERVIEWWhere It’s Been & Where It’s Going 19 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.”International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  20. 20. LTC OVERVIEWWhere It’s Been & Where It’s Going 20 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.”International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  21. 21. LTC OVERVIEWWhere It’s Been & Where It’s Going 21 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.”International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  22. 22. LTC OVERVIEWWhere It’s Been & Where It’s Going 22 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 ADSAInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  23. 23. LTC OVERVIEWWhere It’s Been & Where It’s Going 23 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 costsInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  24. 24. LTC OVERVIEWWhere It’s Been & Where It’s Going 24 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 servicesInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  25. 25. LTC OVERVIEWWhere It’s Been & Where It’s Going 25 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”International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  26. 26. LTC OVERVIEWWhere It’s Been & Where It’s Going 26 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/LTCFInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  27. 27. LTC OVERVIEWWhere It’s Been & Where It’s Going 27 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)International Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010
  28. 28. LTC OVERVIEWWhere It’s Been & Where It’s Going 28 QUESTIONS? Judy Bass, LTCP, MHP, FLMI, Lori M. Watson, CLTC, LTCP Robert R. Pohls ACS, ALHC, HIA Claims Practices and Managing Attorney Senior Claims Analyst Quality Assurance Leader Pohls & Associates Long-Term Care Claims LTC Claims Services 10940 Wilshire Boulevard State Farm Mutual Genworth Financial Suite 1600 Automobile Insurance 1650 Los Gamos Drive Los Angeles, California 90024 Company San Rafael, California 94903 Telephone: (310) 694-3092 One State Farm Plaza Phone: (415) 492-7916 Fax: (310) 694-3093 Bloomington, Illinois 61710 Fax: (415) 492-7113 rpohls@califehealth.com Phone: (309) 766-4542 lori.watson@genworth.com Fax: (309) 735-6200judy.bass.a013@statefarm.comInternational Claim Association – 2010 Annual Education Conference – Austin, Texas – October 5, 2010

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