Sen. Charles Grassley, R-Iowa, has opened an investigation of the claims-handling practices of long term care insurers.
Grassley, ranking minority member of the Senate Finance Committee, sent a letter on Oct. 1 to 11 LTC insurers seeking detailed information on how they handle claims.
In April, Grassley asked the U.S. Government Accountability Office to review the LTC insurance industry, particularly its claims policies and practices, and also whether state insurance regulators are adequately investigating claim denials. That investigation is continuing.
In the letter to top executives of the insurers, Grassley refers to a New York Times article in March that said some LTC carriers had put burdensome requirements on claimants in receiving coverage.
“For instance, the article notes that many long term care policyholders are confronted with draconian policies that deny claims for minute administrative errors such as failing to submit unimportant paperwork, filling out wrong forms after receiving them from the insurance company, and the company failing to recognize an approved facility,” Grassley stated in his letter.
In addition to the Times article, Grassley said his committee’s investigation was spurred in part by a recent report he received from the National Association of Insurance Commissioners, Kansas City, Mo., showing that LTC complaints nationwide have shown a steady increase.
Complaints rose from 1,467 in 2001 to 2,830 in 2005, the report showed.
In a letter to Grassley, Catherine J. Weatherford, executive vice president and CEO of the NAIC, said much of the increase could be explained by rising numbers of individuals filing claims.
But “the data shows a more troubling trend,” Weatherford stated. “Over the past four years there has been a marked increase in the number of complaints that involve claims denials (from 254 in 2003 to 442 in 2006), and those complaints now make up almost 18% of all complaints.”
On appeal, regulators overturned over 70% of those denials in favor of the insured, she noted. “This is a pattern of error not typically found in other lines of health-related insurance.”
In his letter to insurers, Grassley contended that claim denials could undermine the state LTC partnership programs established in 2005 by the Deficit Reduction Act. The DRA extended the partnership program, which was in effect in only 4 states at the time, to all 50 states.
Partnerships allow states to coordinate private LTC insurance benefits with Medicaid nursing home benefits to help insureds who exhaust their policies save some assets before qualifying for Medicaid nursing home benefits.
“However, if more claims for long term care-related expenses are denied, there could be a substantial and perhaps unnecessary financial burden placed on Medicaid,” Grassley told the insurers.
Recipients of the letter were top executives at CNA Financial Corp., Chicago; Conseco Inc., Carmel, Ind.; Genworth Financial Inc., Richmond, Va.; Life Investors Insurance, Cedar Rapids, Iowa, a unit of AEGON N.V., The Hague, Netherlands; Manulife Financial Corp., Toronto; MetLife Inc., New York; New York Life Insurance Company, New York; Mutual of Omaha Insurance Company, Omaha, Neb.; Penn Treaty American Corp., Allentown, Pa.; Prudential Financial Inc., Newark, N.J.; and Unum Group, Chattanooga, Tenn.
The investigation is the second Congressional inquiry into the industry. In May, the House Committee on Energy and Commerce, headed by Rep. John Dingell, D-Mich., announced it was looking into industry claims-handling practices.
In addition, a committee of the National Conference of Insurance Legislators, Troy, N.Y., announced in July it has opened a probe into whether current LTC insurance regulations protect consumers adequately.
(This article includes additional reporting by Allison Bell.)