Liability costs drop slightly for long-term care operators, though regional variances exist

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Long-term care operators have seen liability costs drop slightly over the last year, while the percentage of daily Medicaid funding used to pay those costs has steadily declined over the last decade, a new analysis shows.

 In 2009, the average loss cost per occupied bed was $1,270 per year, down $10 from 2008. The overall loss cost has been trending downward over the last decade. The average loss cost was $1,710 per bed in 2001.

The “Aon Risk Solutions' 2010 Long-Term Care General Liability and Professional Liability Actuarial Analysis” tracks the claim costs to the long-term care industry. According to this year's report, which was released Thursday, long-term care loss costs—“the ultimate loss projection per occupied bed equivalent”—have remained steady overall.

The percentage of per diem Medicaid reimbursements used to pay these costs has dropped noticeably. Last year, the percentage fell to 2.09%, down from 4.07% in 2001. In states where loss costs have decreased as a percent of the Medicaid per diem reimbursement rate, more of this funding can be applied to patient care, AON report authors noted.

Liability costs nonetheless varied significantly from state to state. Arkansas was highest with a loss cost of $3,990 and a per diem Medicaid cost percentage of 7.63%. Massachusetts had among the lowest costs with a loss cost of just $380 and a per diem Medicaid cost percentage of 0.54%. The report is available online at the Aon website.