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Eternal Reviews, Incontestability Are Sticking Points In LTC Model Revision

By Jim Connolly

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Chicago

Revisions to an existing long term care model regulation continue to raise issues on external reviews and incontestability as was evidenced by a discussion among state insurance regulators attending the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo., here.

Robert Glowacki, vice president-government relations with Aegon, Bedford, Texas, said that external reviews result in companies having to pay for benefits that are not triggered by at least two activities of daily living, as was planned when the product was developed. Consequently, he said, if these reviews were imposed, insurers could face price stability issues.

Wisconsin Commissioner Jorge Gomez responded that external reviews in his state had not caused a big increase in claims paid out. The evaluation looks at the contract language, he explained.

External reviews can be important because not all companies will look at triggers in the same way, according to Bonnie Burns, an NAIC funded consumer and representative of California Health Advocates, Scotts Valley, Calif. Burns said that whether benefits are approved by a carrier also can depend on when during the day the carrier’s representative assesses the contract holder and whether a person, at that particular point during the day, cannot do all or enough to accomplish a task. External review is “an important right that people have on this type of insurance. Any review, either internal or external, is still based on contract requirements.”

Incontestability was the second discussion point on the model during the meeting of the senior issues task force. Insurers maintain that fraud remains fraud, even after a two-year period. Insurers should be allowed to deny a claim if fraud is involved, industry representatives said.

Amanda Mathiesen, legislative director with America’s Health Insurance Plans, Washington, proposed that rescission statements, which track when the number of contracts rescinded, could become quarterly rather than annual documents so that regulators could more quickly ascertain a problem.

However, Burns responded that this would in effect create an unlimited right to rescind these policies. And, she noted that the wording of some of the questions being asked in an application is very broad: ‘Have you ever…?’; ‘Within the last 10 years, have you had any condition that we haven’t asked you about?’

Phil Stano, a partner with Jorden Burt, Washington, said that if a person was not making fraudulent responses on an application but was at some stage of Alzheimer’s disease, there would be no contract. Legally, he continued, a person must be of a sound mind in order for a contract to exist.

Insurers maintain that fraud remains fraud, even after a two-year period