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Regulation and Compliance > State Regulation

Regulators Defend Record On LTC Oversight

By Jim Connolly

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Asked for their reaction to a March 26 New York Times article that said long term care insurers are denying thousands of claims of elderly policyholders, state regulators say they do protect LTC insurance policyholders, but are also promising to review assertions made in the article.

The National Association of Insurance Commissioners, Kansas City, Mo., will put the issue on the agenda of its senior issues task force, according to Eileen Mallow, assistant deputy commissioner with the Wisconsin insurance department. A discussion will be held, and, if needed, changes will be made to the NAIC’s Long Term Care Insurance model act, she says. Mallow declined to comment on whether the issue would be looked at by the Wisconsin department, saying “it is a regulatory issue.”

Pennsylvania regulators also addressed the issue. Pennsylvania was one of the states contacted by the Times for the article.

Randy Rohrbaugh, the new acting commissioner, says Pennsylvania always responds to LTC questions that surface and points to a department on-site investigation of an unnamed LTC insurer that is currently underway. “Where there is noise, we look.”

Among the potential red flags Pennsylvania watches for, he says, are companies with rapid growth in the business. However, he adds, this, in and of itself, would not necessarily indicate a problem.

Ron Gallagher, Pennsylvania deputy commissioner-office of consumer and product services, says LTC is an important issue to Pennsylvania regulators because the state has the third largest population of senior citizens in the nation.

One of the tools that has helped the department is the NAIC’s market analysis program, which, Rohrbaugh says, was partially responsible for helping to identify the LTC company it is currently investigating.

Rohrbaugh says the NAIC data referenced in the article was actually aggregate data across all business lines, not just data for LTC insurance, and the complaints cited included all types, not just LTCI claims complaints.

The NAIC’s complaint database system registered 190,572 consumer complaints to states in 2006–a 7.8% decline over 2005, according to the NAIC. The information is voluntarily submitted by state insurance departments. The NAIC does not collect all complaint data from all states.

Claims delays ranked number one among complaints tracked in 2006, with a total of 41,647 complaints, representing 21.9% of the total. Denial of claims complaints ranked second, with 35,601 registered–an 18.7% share.

In addition, a market analysis pilot program that has been developed by the NAIC is also considered by many regulators to be a concrete way to address market conduct problems.

In addition to data, Rohrbaugh says the Pennsylvania department is currently working on LTC consumer protections with the state’s legislature, but that those protections are not yet in bill form.

Gallagher urges consumers to come to regulators with LTC problems, because that is one way “we gauge if there is a market conduct problem going on.”

Gallagher says the training the current amended LTC model will require for producers is important, as is better consumer education.

The amended model requires a one-time, 8-hour training course before selling LTC products and an ongoing 4-hour training requirement thereafter. The training covers LTC insurance, as well as information about Partnership programs and their relationship to the Medicaid program.

Washington Insurance Commissioner Mike Kreidler says, “Without question, we will be looking at this at the NAIC.”

It is important that regulators be able to ensure that consumers have an LTC product that is predictable, particularly with the growing importance the federal government is placing on LTC as a way to provide care for seniors, he says.

Certain companies have entered the LTC market without a sound understanding of the underwriting that is needed, Kreidler says. Many LTC complaints are not claims issues but issues of rate increases, he notes.

Also, some companies’ managements are not aware of how the product is being sold by their sales forces, he says. Currently, Washington is in “heartfelt discussions” with one such LTC carrier, he adds.

As chair of the NAIC’s Market Regulation and Consumer Affairs “D” Committee, Kreidler says regulators will be able to “play an active role in reassuring that what is promised will be delivered at the price promised.” The issue of the cost of LTC to consumers will continue because of anticipated increases in the cost of health care, Kreidler says.

Kreidler says he believes the “D” committee’s market analysis program is helpful to regulators.

And, he continues, he also believes that multi-state reviews are helpful and more efficient than having individual states send out their own teams of examiners to a company headquarters.

Kreidler says there needs to be more consistency in how states report market conduct data both in terms of the information collected and how that information is collected. But, in order to do this, answers to problems such as maintaining confidentiality need to be determined.

The Times article indicated that data shows “in California alone, nearly 1 in every 4 long term care claims was denied in 2005, according to the state.” Calls to the California department went unanswered.

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