State long term care insurance Partnership programs, brewing since President Bush signed the Deficit Reduction Act in February 2006, are poised to make an impact on the market, panelists agreed at the Intercompany Long Term Care Insurance Conference here last month.
Though only Idaho has received federal approval so far for its Partnership program in the year since Bush signed the DRA, industry groups are working with the states to create uniform requirements for such mandates as inflation protection for Partnership policyholders and training for producers selling the products, according to panel members.
States are struggling to figure out how to handle inflation protection, said panel member Rod Perkins, senior government relations manager, Genworth Financial.
“In the absence of guidance from the Department of Health and Human Services, states are looking at a variety of formulas,” he said. “The idea is to get as much uniformity as possible so you don’t get 50 different sets of rules.”
He noted that the DRA does not mandate a specific inflation percentage for policies, so that some have specified a minimum of 5% annual inflation be built in to the policy benefits.
Panelists agreed that differences in inflation-protection provisions for Partnerships could be a problem, particularly among those states considering reciprocal agreements to honor other states’ Partnership policies, as some are. lackaidaisically
So far, 16 states have signed on to reciprocity, said Paul Strebe, partnership director for Minnesota.
Under the DRA, all states are allowed to adopt a qualified LTC Partnership program, which is tied to Medicaid rules, if certain requirements are met. Among its key provisions is asset protection from Medicaid to the insured, up to the amount of their policy, in the event they ultimately need LTC and exhaust their benefits.
Until the DRA was enacted, only California, Connecticut, Indiana and New York permitted Partnership policies for LTC because they were the only states to have approved such policies before Congress stopped them in 1993.
One of the questions states are wrestling with now is whether to allow existing policies to be converted to Partnerships, Perkins said. He thought it would be unlikely that many would do so because it would be potentially costly to state Medicaid programs.
“States are trying to figure out how to work with carriers for a reasonable approach, looking back in time,” he said. The trouble is, states are looking at a variety of different approaches, he noted.
Strebe said Minnesota is trying to develop guidelines that would allow people with existing LTC policies to convert to Partnership policies with little penalty.
“We shouldn’t be penalizing people by not allowing them to convert, when they did the right thing in buying a policy,” he said.
The lingering question is how far back in time the state should allow older policies to switch, Strebe said.
“We recognize that’s an issue,” he said. “But conversion would be in the carriers’ best interest.”
Sentiment for allowing conversions is gaining momentum in Virginia as well, reported Suzanne S. Gore, a senior policy analyst for Virginia’s Department of Medical Assistance Services.
Perkins said sales of Partnership policies in Idaho began almost immediately after the program’s effective date of Nov. 1, 2006. That state took the approach of issuing its rules in the form of a bulletin from its insurance department, he noted. Other states may take a more formal approach to making the rules, he noted.
Another panelist, Amanda Matthiesen, policy director for long term care for America’s Health Insurance Plans, reported that Florida is on the verge of introducing its own program, while Minnesota, Nebraska, Virginia and Colorado already have had their Partnership applications approved by CMS. In addition, Georgia and Colorado are currently waiting approval.
Matthiesen reported that according to AHIP’s count, other states considering adopting Partnerships are Delaware, Illinois, Iowa, Kansas, Maryland, Massachusetts, Michigan, Montana, Missouri, Mississippi, New Jersey, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Washington and Wisconsin.
To help states and carriers design programs that meet federal requirements, carriers and industry groups have collaborated to issue an Administrative Guidance Manual, which Matthiesen referred to as a “model playbook.” Its goal is to share with interested states suggestions on how to develop their state Partnership applications for HHS approval.
Representatives of a number of LTC carriers helped develop the guide under the aegis of America’s Health Insurance Plans and the American Council of Life Insurers, explained Marie Roche, director, long-term care contracts and legislative services, John Hancock Financial Services Inc.
Both state officials on the panel appeared to make light of the manual, however.
Minnesota’s Strebe called the playbook “legalistic and insurance-y,” while Virginia’s Gore said she had not even known the industry guide existed when she helped develop the state’s application.
On the other hand, Gore acknowledged that the industry guide might have been helpful to her had she seen it while she was helping to write Virginia’s application. “CMS didn’t approve it” on the first try, she said. “They don’t give you much wriggle room.”
Strebe acknowledged that despite his problems with the lawyer-like prose of the guide, Minnesota regulators found it generally helpful.
“We kept the guts but rewrote it,” he said. “We wound up adopting most of it.”
Gore said she thinks her state of Virginia needs to make clear to consumers that Partnership policies are not “the golden road to Medicaid.” There are other qualifications for Medicaid in the state, including an income limit of no more than 3 times the poverty level, she noted.
She also said she was concerned that for those that ultimately do go on Medicaid, providers such as nursing homes might discriminate against those who ultimately exhaust their benefits, despite state requirements prohibiting such discrimination.
“They can send you to the hospital on some pretext once you’re on Medicaid, then when you’re released may declare they are unable to find a bed for you,” she said.
During the question period after the panel discussion, John Greene, vice president of congressional affairs for the National Association of Health Underwriters, played down the importance of ambiguities in the DRA, such as on the inflation-protection requirements.
Greene, who said he helped write the parts of the DRA establishing Partnership programs, explained that the law’s writers tried to avoid mandating a strict 5% requirement.
“We wanted carriers to compete. We didn’t want to dictate, so we left it open,” he said. “People in the industry always complain about being constrained by government. I brought us some flexibility.”