Best Practices in Long Term Care Insurance Administration How Guaranty Associations Can Manage Inevitable Insolvency Challenges October 9, 2014
Agenda • Long term care (LTC) insurance industry overview • Complexity of LTC administration • Key differences between LTC insurance and health insurance claims processing • Challenges of a conversion • Takeaways 2
Long Term Care Insurance (LTCI) At A Glance 7.7 million active LTCI policies representing billions in liabilities • 55% of LTCI policies (4+ million) in closed blocks • Carriers are struggling with losses • Regulatory environment not friendly to LTC insurers • Claims currently growing at over 10% per year • Insurers moving towards more outsourcing • Projected LTCI Claims Payments $34 Billion $6.6 Billion 2012 2032 3 3 Source: American Association for Long Term Insurance, 2013.
Complexity of LTC Insurance Administration 30+ years of policy design evolution resulting in tens of Benefit triggers and eligibility thousands of policy forms • • Tax qualified vs. non-tax qualified Nursing home only • • Nursing home plus home care rider Medical necessity under older forms • Comprehensive benefits with pools • Vague policy language on: of dollars • Cognitive impairment • Cash benefits • Chronic Illness • Multiple riders and • Provider Eligibility variable features • Fraud • Challenging benefit provisions • Restoration of Benefit • Alternate Plan of Care • Coverage of Independent Providers 4
Processing LTCI vs. Health Insurance Claims • Age of claimants • A three year “episode” as opposed to a “transaction” • Paper versus electronic claims submissions • Lack of standardized forms and coding • Minimally regulated providers and networks • Medical community doesn’t understand LTCI • Imprecise policy language • Increasing scrutiny from regulators and plaintiffs’ attorneys 5
Challenges of a Conversion Legacy systems • Few were designed to manage LTC • Lack of claim and care management functionality • Poor data quality Scarcity of LTC expertise within carriers • Carriers’ key resources redeployed to other lines of business Reduced capital investment in closed blocks Multiple policy forms with state variations Poorly documented business practices 6
The Main Takeaways Improvement in LTC performance requires bending the claims curve through claims best practices • Clinical protocols and support • Manage claims based on potential for recovery • Analytics • Fraud and claim leakage • Provider strategy • Scalability and automation 7
Stay Connected Peter Goldstein CEO of LTCG linkedin.com/pub/peter-goldstein/5/a97/bb7 Peter.Goldstein@LTCG.com 8
www.ltcg.com www.ltcg.com
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