In the face of several investigations of alleged denials of long term care insurance claims, a new survey finds about 3.3% of such claims are rejected.
Data from 39 LTC insurers for both group and individual business in 2005, compiled by America’s Health Insurance Plans, also shows just one of every 160,000 LTC policies are rescinded by carriers.
In 2005, carriers reported over 519,000 claims received out of more than 5.9 million policies in force, according to AHIP.
Among companies accounting for claims on a per-payment basis, as suggested by the National Association of Insurance Commissioners, 94% of claims were deemed eligible and paid, reports AHIP. Roughly 5% were turned down because of policy limitations, such as waiting periods following a qualifying event.
Looked at on a per-person basis, as required by California and some other states, 90% of claims were counted as eligible. Counting on a per-person basis means that once an individual files a claim, later claims submitted by the same person are not considered new.
Of submitted claims counted on a per-person basis, about 8% were not paid because of benefit limitations specified in the policy, according to AHIP.
Susan Coronel, author of the report, observes that per-payment reporting is the faster way to collect claims information because insurers have the information readily on hand.
When claims are counted per payment, 12 monthly nursing home bills submitted for one person would count as 12 claims, Coronel notes. Counted per person, those same 12 payments would count as a single claim.
Of the 38 companies reporting data, 24 reported information on a per-person basis, representing 63% of in-force policies and 9% of the number of claims reported to AHIP for 2005.
Using the NAIC or per-payment definition, about 3.1% of claims were denied, while using claims counted on a per-person basis, 6.2% were denied. By weighting the data to account for differences between the 2 methods, AHIP came up with the 3.3% rejection rate.
Many claims were turned down because policy terms had not been met. Of all claims not considered eligible, about 40% of those counted on a per-person basis and 47% of those counted on a per-payment basis had not met the policy’s elimination period.
Almost no claims were rejected due to a pre-existing condition, AHIP found.
Other common reasons for denied claims were:
oRequested LTC services were not covered by the policy.
oThe provider was unlicensed or otherwise not qualified.
oBenefit triggers (such as inability to perform specified activities of daily living) had not been met.
The study was at least in part a response to recent investigations of LTC claim practices, an AHIP spokesman admits.
In March, a New York Times article alleging abuses in LTC insurance claims handling led to an investigation by the House Committee on Energy and Commerce, headed by Rep. John Dingell, D-Mich.
In addition, Presidential candidates Sen. Barack Obama, D-Ill., and Hillary Clinton, D-N.Y., called for investigations by the Government Accountability Office.
Recently, a committee of the National Conference of Insurance Legislators, Troy, N.Y., opened a probe into whether current LTC insurance regulations adequately protect consumers. Committee members also attributed that investigation to questions raised by the Times article.
In addition, Iowa Attorney General Tom Miller announced in mid-July that his staff is investigating the sale of LTC policies in the state. The probe will focus on allegations of unfair claims denials, says a report in the Des Moines Register.
AHIP spokesman Mohit Ghose says there’s broad recognition in the industry and LTC carriers need to provide accurate information. When the Times article quoted the California Dept. of Insurance as stating that almost on in four LTC claims in the state were denied, there was considerable disbelief in the industry, he says. “Our members said this isn’t us, so how did they get this number?” Ghose says.
Since then, the California DOI announced it is taking another look at its numbers, he points out.
“We are very confident of our data,” Ghose says. AHIP plans to share those numbers with Congress, state regulators and the GAO as well as the staffs of Sens. Clinton and Obama, he adds.