The Check's in the Mail?

Elderly and seriously ill patients frequently rely on private long-term care or disability insurance to pay for their home care. More and more, however, these patients are being denied benefits as insurers rigorously scrutinize claims to determine the extent of coverage. Many patients turn to their caregivers to help deal with insurers or handle the paperwork, which is usually confusing and so filled with "legalese" it requires a lawyer to comprehend it.

Typically, a patient should be able to submit copies of all applicable medical records and a physician's certification of the necessity for care. Many carriers will not pay benefits without viewing copies of the caregiver's daily care notes or diary. The notes must adequately document that the patient needed the level of assistance the policy required or that the policyholder has a cognitive impairment.

The good news is that denials tend to fall into five main categories. If you fill out and submit claims forms with these pitfalls in mind, you can reduce costly waiting periods, and possibly avoid benefit denials.

Issue #1: Activities of Daily Living

The most common reason insurance coverage is denied is because the policyholder did not satisfy the “activities of daily living” (ADL) requirements. ADLs are commonly recognized as bathing, dressing, toileting, eating, and transferring (that is, moving from a bed to a chair and back). To trigger benefits, many policies require the policyholder to need assistance for three or more ADLs. If the patient needs daily assistance with only one or two ADLs, it's likely coverage will be denied.

Issue #2: Facility Type

The second main reason benefits are denied is because the policyholder is not in the correct type of facility. If the insured brings a caregiver into their home, but has a policy that provides benefits only for licensed facility care, policy benefits could be denied. Policies differ widely, and patients should review their policy carefully with their agent or family before making arrangements.

Issue #3: Care Type

The third most likely reason for denial is that the insured did not receive the right "type" of care under the policy. Most long-term care is "unskilled care," meaning it isn't provided by a doctor or nurse. "Skilled" care is already covered by Medicare or supplemental insurance. Thus, policies that cover only skilled care are essentially worthless when the policyholder needs in-home care or admission into a nursing home but does not need skilled care.

Some policies require an insured to receive a visit from a registered nurse, physical therapist, or speech therapist each week in order to receive benefits for care with basic ADLs. Additionally, some policies leave it to the carrier's discretion whether or not to pay for an "alternate plan of care." Unskilled in-home care could easily fall into the insurer's definition of "alternative plan" and leave the patient struggling to pay for care from their savings.

Issue #4: Gatekeeper Provisions

The carrier may determine that the facility does not meet other fine-print policy requirements, and this is the fourth most common reason benefits are denied. Specifically with regard to California policies, prior to 1990, insurers placed so-called "gatekeeper" provisions in long-term care policies. In other words, they acted as gatekeepers preventing insureds from meeting policy requirements for benefits.

A classic example of a gatekeeper provision is a home care policy that only pays if the insured has first spent 30 days in a nursing facility before returning home and needing home health care. Such standards are nearly impossible to meet, and the insurers knew this when the policies were written.

In 1990, the California Legislature took steps to prohibit such provisions in LTC policies. Thousands of the pre-1990 policies are still in force, however, and policyholders are currently trying to get make claims under these policies. Insurers are strictly enforcing these requirements.

Other gatekeeper provisions relate to the type of facility for which coverage will be provided. For example, some policies require a facility to have a minimum number of beds (occupancy), 24-hour nursing services under supervision of a registered nurse, and/or specific licensing requirements. Explore these options prior to purchasing your policy, especially if you have a specific facility in mind. Also, some policies pay substantially more (or perhaps only) for care in a nursing facility; as a result, the policyholder may lose the choice to remain in their own home.

Issue #5: Caregiver notes

Finally, benefits are frequently denied because caregiver notes were insufficient. This is an example of form over substance driving the claims process. The more detail the caregiver provides in daily care notes, the better. Be sure to provide information on specific ADLsd, as well as the dates and times care was provided, and the daily amount paid to the caregiver.

Communication is Key

The best way for policyholders to communicate with insurers is in writing, with letters and documents sent by certified mail. It is also a wise idea for the policyholder to keep her own journal to document symptoms and limitations on daily activities. Policyholders should also be prepared for scrutiny and possible surveillance by insurers attempting to curtail fraud.

Under California law an insurer investigating a claim has a duty to diligently search for evidence that supports its insured's claim. If it seeks to discover only the evidence tending to defeat the claim, or selectively evaluates the evidence in order to bring about such a result, it impermissibly elevates its own interests above those of the insured. California also protects the elderly with specific legislation. A jury is permitted to triple punitive damages an insurer must pay for unfair business practices leveled against a senior citizen.

Glenn Kantor, founding partner of Kantor & Kantor, LLP in Northridge, California, represents policyholders in insurance disputes regarding denial of long-term-care benefits. He can be contacted at (818) 886-2525, or by e-mail at gkantor @ kantorlaw.net. www.kantorlaw.net, www.californiainsurancelawyerblog.com