Long-term care liability costs are on the rise due to a 4% annual increase in the average claim size, according to a new study conducted by Aon Corp. and the American Health Care Association.
Liability claims jumped from $125,000 in 2005 to $153,000 in 2010 on average, according to the study, which is the “2011 Long Term Care General Liability and Professional Liability Actuarial Analysis.” The report tracked severity and frequency of liability claims, the loss rate (liability cost) as a percentage of the Medicaid per diem reimbursement rate, and the overall loss rate per bed, all to assess risk for long-term care providers. Nationwide, though liability costs are going up, the frequency of liability claims has gone down, from 1.1% percent in 2003 to 0.9% in 2010. Frequency is expected to drop more in 2011, the report finds.
But investigators warn that the jump in size of the claim outweighs the reduction of claim frequency. This presents an issue for long-term care providers who are already grappling with dwindling Medicaid payments.