Insurance Administration How Guaranty Associations Can Manage - - PowerPoint PPT Presentation

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

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Long Term Care Insurance (LTCI) At A Glance

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• 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

Source: American Association for Long Term Insurance, 2013.

$6.6 Billion $34 Billion 2012 2032

Projected LTCI Claims Payments

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Complexity of LTC Insurance Administration

• Nursing home only
• Nursing home plus home care rider
• Comprehensive benefits with pools
• f dollars
• Cash benefits
• Multiple riders and

variable features

• Challenging benefit provisions
• Restoration of Benefit
• Alternate Plan of Care
• Coverage of Independent Providers

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• Tax qualified vs. non-tax qualified
• Medical necessity under older forms
• Vague policy language on:
• Cognitive impairment
• Chronic Illness
• Provider Eligibility
• Fraud

30+ years of policy design evolution resulting in tens of thousands of policy forms Benefit triggers and eligibility

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

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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

Challenges of a Conversion

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

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Peter Goldstein

CEO of LTCG linkedin.com/pub/peter-goldstein/5/a97/bb7 Peter.Goldstein@LTCG.com

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