Its Time To Start Proactively Managing LTC Claims

The long term care market is in a state of uncertainty. Poor investment results combined with low interest rates have combined to squeeze insurers profits.

In this tough environment, LTC carriers also are being hit with lower lapse rates (which impacts pricing) and the increased claims brought on by poor underwriting results.

How to approach managing those claims is the topic here. The message is, carriers can take a proactive approach and see results improve.

For some LTC insurers, the heat in the kitchen is getting too hot, and they are exiting the business.

Others that are committed to staying the course are looking at their business and taking corrective action. Besides the obvious pricing adjustments, an area many companies are beginning to focus on is the claims process.

LTC insurance claims tend to be long episodes with many chapters. They are high touch with the claimants, and services are delivered by a myriad of providers, including informal caregivers.

The LTC claims processes are not organized or codified in nearly the same fashion as are those processes at institutions that deliver acute care (such as hospitals and doctors).

Many an agent has received a nighttime call from a panicked policyholder regarding a claim. What should they do? Whom should they call? Where should they go? The policyholders and their families often just dont know.

As insurers re-examine their processes, they are discovering an important component has been missing. They are finding that a more upfront, proactive approach to claim management will yield better outcomes and higher customer satisfaction–a true win-win.

Part of the current problem is that the original approach to LTC claims developed from the medical claim model. That is, receive bills and send checks. The physician was the one who made the determination as to whether someone was eligible for LTC insurance benefits, based on “medical necessity.”

The consequence of using this approach with LTC insurance claims is that claims are paid on people who are not eligible, based on policy language.

On tax-qualified policies, for example, the claimant must be either ADL-dependent (ADL refers to activities of daily living) or cognitively impaired. When a claimant is not confined to a skilled facility, the only sure way to determine this is with a face-to-face assessment.

Relying on diagnosis of doctors notes is not enough–because most doctors are not trained to determine ADL deficits.

Furthermore, without a benchmark of the claimants condition, it is hard to monitor effectively whether the person is improving or declining. Either situation will have impact on the claims dollars paid.

For the agent, if the carriers adopt a more proactive approach, this will reduce personal agent involvement at time of claim. It also will give the agent confidence that the client will be cared for professionally.

From the carrier perspective, being more hands-on will reduce overall claims incidences and also keep people in lower priced care settings. In this venue, the old adage, that there is truly “no place like home,” takes on new meaning.

Now that the LTC claims have started arriving in greater numbers, it would be prudent for producers to explore their primary companys approach to this part of the administration, and make sure their clients will be fairly treated.

Peter M. Goldstein is executive vice president of Long Term Care Group Inc., Segundo, Calif. His e-mail is pgoldstein@ltcg.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.