cancer claims in long term care insurance should we be concerned? stephen k. holland, md senior vice...
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Cancer Claims inCancer Claims inLong Term Care InsuranceLong Term Care Insurance
Should we be concerned?Should we be concerned?
Stephen K. Holland, MDSenior Vice President & Medical
DirectorLong Term Care Group, Inc.
Long Term Care International Forum, May 2007
LTCI Cancer Claims - Should we be LTCI Cancer Claims - Should we be ConcernedConcerned??
AgendaAgenda Amen to underwriting
How common are LTCI Cancer claims?
Compression of Morbidity
Claims experience
Can Cancer Claims be managed?
Conclusions
Cancer Claims in Long Term Care Insurance
Cancer can be Successfully Underwritten
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
All Claims All Claims w/Cancer at UW
Cancer Claims w/history of Cancer
History of Cancer as a LTCI Risk Factor
Cancer Claims per 1000 Covered MonthsUnderwrittenUnderwritten
Based upon 12 years of Claims ExperienceLTCG Claims Experience: CancerLTCG Claims Experience: Cancer
History of Cancer as a LTCI Risk History of Cancer as a LTCI Risk FactorFactor
Cancer Claims per 1000 Covered Months
0.00
0.20
0.40
0.60
0.80
1.00
1.20
All Claims w/history of
Breast Cancer
Cancer Claimsw/ Breast CA
at UW
All Claims w/history ofProstateCancer
Cancer Claimsw/ ProstateCA at UW
Based upon 12 years of Claims ExperienceLTCG Claims Experience: CancerLTCG Claims Experience: Cancer
UnderwrittenUnderwritten
Cancer Claims in Long Term Care Insurance
Cancer will be a Common Claimed Event
Cancer Incidence Rates*, All Sites Cancer Incidence Rates*, All Sites Combined Combined
All Races, 1975-2002All Races, 1975-2002
*Age-adjusted to the 2000 US standard population and adjusted for delay in reporting.Source: Surveillance, Epidemiology, and End Results Program, 1973-2002, Division of Cancer Control and
Population Sciences, National Cancer Institute, 2005.
0
100
200
300
400
500
600
700
1975 1978 1981 1984 1987 1990 1993 1996 1999 2002
Both Both SexesSexes
MenMen
WomenWomen
Rate Per 100,000Rate Per 100,000
Source: NCHS and NHLBI 2004
Dea
ths
Dea
ths
All Ages
<85
85+
Leading Causes of Death: Both Sexes (United States: 2004)
Cancer and DisabilityCancer and Disability
Overall cost of Cancer: $206.3 billionOverall cost of Cancer: $206.3 billion
$72.9 billion for direct medical care
$17.9 billion in lost productivity due to illness
$110.2 billion in lost productivity due to death
Greater recovery – return to work after LT Greater recovery – return to work after LT
disabilitydisability
Breast cancer: 14% increase
Colon cancer: 24% increase
Prostate Cancer: 36% increase
Cancer and DisabilityCancer and Disability
UNUM Long Term Disability ClaimsUNUM Long Term Disability Claims
1.1. Cancer Cancer 12.1%12.1%
2.2. Complications of pregnancyComplications of pregnancy 11.7%11.7%
3.3. Joint/muscle/connective tissueJoint/muscle/connective tissue 10.1%10.1%
4.4. Back InjuriesBack Injuries 8.1%8.1%
5.5. Cardiovascular diseaseCardiovascular disease 8.0%8.0%
Unum Corporate Disability Data Base, 2006
Carrier A LTCI Claims Experience
(60,000+ Insureds)
Most frequent paid claimed events*1. Dementia, Cognitive Impairment 32.5%2. Cancer 21.1%3. Cardiovascular, CHF, Stroke, etc. 16.0%4. Neurological Disorders 8.9%5. Musculoskeletal Disorders 6.8%6. Fractures 4.6%7. Respiratory disease 3.0%8. Trauma 2.5%
Carrier A LTCI Claims Data Base Carrier A LTCI Claims Data Base 4/20074/2007
*Accounts for 95.4% of Paid Claims
Carrier A LTCI Claims Experience
Average Paid per Claim1. Dementia, Cognitive Impairment$53,1532. Respiratory disease $31,037 3. Cardiovascular, CHF, Stroke, etc.$28,5174. Neurological Disorders $27,9605. Trauma $21,0756. Musculoskeletal Disorders $8,3087. Fractures $8,7758. Cancer $6,714
Carrier A LTCI Claims Data Base Carrier A LTCI Claims Data Base 4/30/20074/30/2007
Cancer Claims in Long Term Care Cancer Claims in Long Term Care InsuranceInsurance
Compression of MorbidityCompression of Morbidity
The Emerging Need for Long-Term Care
Increasing Life Expectancy
65.2
73.1
80.779.578.877.4
74.974.171.8
70
60.8
66.6
606264666870727476788082
1940 1960 1980 1990 2000 2005
Female Male
Source: U.S. Census Bureau
Compression of Morbidity (Disability)
Live longer, delayed morbidityLive longer, delayed morbidity
PresentPresent
Live longer, same onset morbidityLive longer, same onset morbidity
Life is longer, morbidity compressedLife is longer, morbidity compressed
After Fries; Ann Intern Med. 2003. 139(5):456After Fries; Ann Intern Med. 2003. 139(5):456
Disability
COMPRESSION OF MORBIDITYCOMPRESSION OF MORBIDITY
Compression of Morbidity
Definition: As life expectancy increases there is a relative decrease in the number of years of disability at the end of life. That is, as life expectancy increases there is a corresponding decrease in overall lifetime disability.
Conundrum of Underwriting
Live longer, delayed morbidityLive longer, delayed morbidity
Community experience Community experience without underwritingwithout underwriting
Live longer, same onset morbidityLive longer, same onset morbidity
Life is longer, morbidity compressedLife is longer, morbidity compressed
Less mortality, longer duration of disabilityLess mortality, longer duration of disability
What is the Effect of LTCI Underwriting?
Less mortality, no effect on duration of disabilityLess mortality, no effect on duration of disability
Less mortality, shorter duration of disabilityLess mortality, shorter duration of disability
CAD
OA, RA
CANCER
Compression of Morbidity: Compression of Morbidity: DriversDrivers
Improvement in lifestyles – smoking, diet, exercise Aggressive treatment of cardiovascular disease
Lipids, hypertension, diabetes PTCA, CABG, valve replacement Rate control, stroke prophylaxis, LV function
(pacemakers)
Medications designed to lessen effects of osteoporosis
Arthritis – joint replacement, remitting medication
Dementia – new medications (potential cure?) Advances in treatment of infectious hepatitis,
multiple sclerosis and spinal cord injuries; immunizations
Advances in the Treatment of Cancer
Cancer survivors Significant advances in chemotherapy and surgery More remissions, longer remissions Common at time of underwriting (21% of applicants >65
yrs)
Potential positive impact on future LTCI claims?
Fewer cancer claims, claimants older at time of claim
Recurrent cancer embodies compression of morbidity
Long term effects of treatment unknown
Understanding LTCI Claims Understanding LTCI Claims ExperienceExperience
Cancer Claims in Long Term Care Insurance
LTCG Claims Data Base
Risk Pool: >240,000 insuredsTQ Group and Individual, Comprehensive, 90
day EP
LTC Claims: >9,780 Approved LTCI Claims $344 million benefits paid, >$8
million/month 43% paid for dementia and stroke
Disability profileDisability profile 25% Cognitive Impairment (CI)25% Cognitive Impairment (CI) 45% 2+ ADL deficits45% 2+ ADL deficits 30% Combined ADL & CI30% Combined ADL & CI LTCG Claims Data Base 4/2007LTCG Claims Data Base 4/2007
LTCG Claims Experience
As of 4/2007: 9,786 Approved LTCI Claims
1,836 Cancer claims1,836 Cancer claims Age at issue: 66.6 yearsAge at issue: 66.6 years Age at time of claims: 72.5 yearsAge at time of claims: 72.5 years $14,532,093 paid to date$14,532,093 paid to date $3,750 average claim payment$3,750 average claim payment
7,950 Claims other than cancer7,950 Claims other than cancer Age at issue: 71.1 yearsAge at issue: 71.1 years Age at time of claims: 77.6 yearsAge at time of claims: 77.6 years $318,918,398 paid to date$318,918,398 paid to date $54,054 average claim payment$54,054 average claim payment
LTCG Claims Data Base 2007LTCG Claims Data Base 2007
Cancer 18.8%
Other than Cancer 81.2%
LTCG Claims Experience
Most frequent paid claimed events*
1.1. Dementia, Cognitive ImpairmentDementia, Cognitive Impairment 24.8%24.8%2.2. CancerCancer 18.8%18.8%3.3. Stroke with complicationsStroke with complications 10.8%10.8%4.4. Fractures/Injuries/Falls/Gait problemsFractures/Injuries/Falls/Gait problems9.3%9.3%5.5. Arthritic diseasesArthritic diseases 4.4%4.4%6.6. Parkinson’s disease Parkinson’s disease 4.1%4.1%7.7. Respiratory diseaseRespiratory disease 3.9%3.9%8.8. CHF, Cardiomyopathy CHF, Cardiomyopathy 3.1%3.1%9.9. Back disordersBack disorders 2.7%2.7%10.10.Diabetic complicationsDiabetic complications 1.8%1.8%
*Accounts for 84.6% of Paid Claims
LTCG Claims Data Base 2007LTCG Claims Data Base 2007
Top Claimed Events Top Average Payments1. Dementia Stroke2. Cancer Dementia3. Stroke Falls/gait abnormalities4. Arthritis Osteoporosis5. Fractures/Injuries ALS6. Respiratory disease Cardiac disorders7. Joint replacement Other CNS disorders8. Parkinson’s disease Joint replacement9. CHF, Cardiomyopathy Parkinson’s disease10.Diabetic complications Failed back surgery
LTCG Claims Data Base - 2007
LTCG Claims Experience
Principal Disabling Diagnosis Avg Payment/Claim
1. Stroke $62,2982. Dementia $60,1083. Parkinson’s disease $58,1214. Other CNS disorders $52,5445. Back Disorders $45,9376. Falls/Fractures/Gait Abnormalities $45,1907. Fractures/Injuries $44,7338. Arthritic diseases $44,660
. . . . . . . .
. . .27. Cancer $3,750
LTCG Average Claim Payment(Underwritten)
LTCG Claims Data Base 2007LTCG Claims Data Base 2007
Claimed Events* Total Payments
1. Dementia $96,967,8442. Stroke with complications $45,564,4613. Fractures/Injuries $28,150,4444. Parkinson’s disease $18,832,6675. Arthritic diseases $15,733,9656. All Cancers $14,532,0937. Respiratory diseases $10,556,8178. Back Disorders $ 9,616,5649. CHF, Cardiomyopathy $ 8,137,64310. Diabetic complications $ 5,509,566
LTCG Claims Data Base 2007LTCG Claims Data Base 2007
LTCG Total Claims Payment
*Accounts for 75% of total claims *Accounts for 75% of total claims paymentspayments
0%
10%
20%
30%
40%
50%
60%
70%
80%
0-49 years 50-64 years 65-85 years 85+ years
Cancer ClaimsNon Cancer
Age DistributionAge DistributionCancer versus All Other DiagnosesCancer versus All Other Diagnoses
LTCG Cancer Claims Experience
Based upon the 12th year of exposure
GI Tract 24.1%Lung & Bronchus 18.8% Lymphoma, Leukemia 11.4% Brain/CNS 9.1% Breast Cancer 8.4%Female Reproductive 6.1%GU Tract 4.5%Prostate 4.3%Head/Neck 1.5%Melanoma of skin 1.4%Metastatic CA (unknown 1°) 8.2%All Other Sites 2.1%
LTCI Cancer ClaimsDistribution by Type of Distribution by Type of
TumorTumor
LTCG Claims Data Based 2007
Breast Cancer 31% 14.1%Lung & bronchus 12% 18.7%GI Tract 11% 23.1%Female Reproductive 9% 10.3%Lymphoma, Leukemia 4% 8.9%Melanoma of skin 4% 1.3%GU Tract 5% 2.7%Brain/CNS 2% 8.5%All Other Sites 22% 20.1%
NewNewACS CasesACS Cases
LTCILTCIClaimsClaims
LTCI Cancer Claims Versus Cancer Cases
FemalesFemales
Source: American Cancer Society, 2006; LTCG Claims Data Based 2007
LTCI Cancer Claims Versus Cancer Cases
Prostate Cancer 33%10.6%
Lung & bronchus 13%18.9%
GI Tract 10%25.6%
GU Tract 9%7.2%
Melanoma of skin 5%1.6%
Leukemia, lymphoma 7% 15.1%
Oral cavity 3%2.0%
Brain/CNS 2%10.1%
All Other Sites 18%8.7%
Source: American Cancer Society, 2006; LTCG Claims Data Based 2007
NewNewACS CasesACS Cases
LTCILTCIClaimsClaims
MalesMales
Hospice44.9%
IP12.7%
Home Health 23.2%
ALF8.5%
SNF9.7%
Location of CareLocation of Care
LTCG Cancer Claims Experience
Based upon the 12th year of exposure
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Hospice Home Health IP ALF SNF
Cancer ClaimsNon Cancer
Cancer versus All OtherCancer versus All OtherLocation of CareLocation of Care
LTCG Cancer Claims Experience
Based upon the 12th year of exposure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Open Recovered Deceased Exhausted
Cancer ClaimsNon Cancer
Compression of MorbidityCompression of MorbidityCancer versus All Other DiagnosesCancer versus All Other Diagnoses
LTCG Cancer Claims Experience
Based upon the 12th year of exposure
Hospice52.7%
IP10.6%
Home Health 19.2%
ALF6.1%
SNF10.1%
Terminal ClaimTerminal ClaimLocation of CareLocation of Care
LTCG Cancer Claims Experience
Based upon the 12th year of exposure
0%
10%
20%
30%
40%
50%
60%
Hospice Home Health IP ALF SNF
Cancer ClaimsNon Cancer
Terminal Claim: Cancer versus All OtherTerminal Claim: Cancer versus All OtherLocation of CareLocation of Care
LTCG Cancer Claims Experience
Based upon the 12th year of exposure
LTCG Cancer Claim Experience
Typical cancer claim: 71 years of age, metastatic colon cancer 2+ ADL dependencies 4 months, $10,120 paid, Home Hospice
Most costly claim to date: 69 years of age, cardiomyopathy from chemo 3-4 ADL dependencies 49 months and counting ; $219,000 (ALF)
Cancer Claims in Long Term Care Cancer Claims in Long Term Care InsuranceInsurance
Can LTCI Cancer Claims be Can LTCI Cancer Claims be Managed?Managed?
LTCG’s Early Cancer Claims Experience
Circa 1999
Close to 85% presented with terminal cancer Severe and rapidly progressive disability
Significant compression of morbidity
Many request benefits at incipient ADL dependency
Most die before end of deductible period
Few accessed benefits
Less than 50% out live deductible period
Average claim payment less than $2,500
The Spectrum of Benefit Eligibility
Benefit EligibleGrey Zone
Ineligiblefor
Benefits
6/6 ADLDependencies
Coma
Three or More ADL
Dependencies
Severely Cognitively
Impaired
Two ADL Dependencies;Cognitively Intact
Moderately Cognitively Impaired;
ADL’s Intact
ADLIndependent
Mild Cognitive
Impairment
CANCER
Special Handling Rules: Recognize rapid downhill disease course
New LTCI Benefit: Hospice BenefitCirca 2000
New LTCI Hospice Benefit was introduced Waive deductible if benefit eligible and in
hospice
Certificate of Terminal Illness required
Special Handling Rules developed
Early care management support critical
Provide custodial care to supplement hospice
Provide respite to family caregivers
47% more cancer claimants receive benefit payments
0%
10%
20%
30%
40%
50%
60%
70%
Pre-Benefit Post-Benefit
% of Approved Cancer Episodes with Payments
Proactively Managing Cancer Claims
LTCG Claims Experience: CancerLTCG Claims Experience: Cancer
$1,300 more benefits paid per cancer claim
$0
$500
$1,000
$1,500$2,000
$2,500
$3,000
$3,500
$4,000
Pre-Benefit Post-Benefit
Average Payments per Paid Cancer Episode
Proactively Managing Cancer Claims
LTCG Claims Experience: CancerLTCG Claims Experience: Cancer
New significant care resources available to those with terminal cancer
Major incentive to call sooner than later
Care management impact much earlier in a claimant’s disease process
New processes required to deal with outlier
Very high claimant and family satisfaction
Other diseases are potential candidates for this benefit
Lessons Learned: New LTCI Hospice Benefits
LTCI Cancer ClaimsLTCI Cancer Claims
ConclusionsConclusions
Cancer is a common LTCI claimed event Most claims are brief (compression of
morbidity) Early intervention is important Service day deductibles thwart many cancer
claims Hospice Benefits provide real value Care Management can be very effective
Support end of life care, respite Very high claimant and family satisfaction
Cancer care is a model for other diseases at end of life
Conclusions
Cancer Claims inCancer Claims inLong Term Care InsuranceLong Term Care Insurance
Questions and DiscussionQuestions and Discussion
Stephen K. Holland, MDSenior Vice President & Medical
DirectorLong Term Care Group, Inc.
Long Term Care International Forum, May 2007