House Panel Starts Probe Of LTC Insurers' Claims Practices

The Times article raised legitimate questions and restirred an emotional issue, he says. "But if the companies that are requested to supply information do that, I think Congress will regain confidence."

Waite insists that Penn Treaty looks at each claim and related information as fairly and quickly as possible to determine eligibility. "Our own records show that once the requested information is submitted on eligibility requirements, 80% are paid within 20 days, and 75% within 15 days," he says.

The company has showed consistent improvement on claims paying against its own benchmarks, Waite adds.

"We go to great lengths to assure claims are paid promptly and properly," he says. "We receive between 8,000 and 10,000 claims every year. Generally, those claims will require medical records to help us determine the kind of care needed, often requiring additional information from doctors."

Part of the disparity in data reported by different states about LTC claim denials lies in the different ways denials are counted, he says.

There has been a "disconnect" between how one company or another reports its experience, Waite says. For example, Penn Treaty may list a simple inquiry from a customer as a denial if the customer merely asked if he were covered and was told he was not. Or it might list an application as denied when the customer had simply not yet met the elimination period stated in the policy.

"The industry as a whole has not worked hard to define what is a denial," he says.

Companies such as Penn Treaty and Conseco, which have been in the LTC business longer than most other competitors, may also have skewed denial figures because many of their policies are decades old, he says. "To compare an older block of business to a company with a substantially new business is not a proper comparison."

Anne Eowan, vice president of government affairs for the Association of California Life and Health Insurance Companies, Sacramento, says her group recently reviewed data it reported to the state Department of Insurance and concluded some of the data was erroneous.

"The department agrees with that assessment," Eowan says.

Part of the problem stemmed from lack of clarity on what the definition of a claim was, she adds.

"We hope to have better figures available soon," she says. "The 24% figure [of denied LTC claims, which the ACLHIC had originally reported for 2005] is extraordinarily high and well beyond what has been seen in earlier years," she says.

A spokeswoman for the state's DOI says the department has opened its own examination on the issue. Preliminary evidence shows the 1-in-4 figure was perhaps skewed by reports of a few large companies, says the spokeswoman, Jennifer Kerns.

"There is anecdotal evidence that the actual denial rate is 8% to 10%," says Kerns.

The DOI will probably issue a report on its findings in the fall, she says.