Nursing Home Professional Liability Insurance Crisis An Update
Nursing Home Professional Liability Insurance Crisis - An Update Ruth Kilduff CAS Annual Meeting November 9, 2002
State of the Market • • • 1 or 2 insurers willing to quote all 50 states Rigorous underwriting Retentions 25 K to 2 MM no aggs Rate increases 100 to 1000% Claims Made Exclusions punitive damages, physical and sexual abuse • State and financial covenant requirements for coverage
What Keeps Me Up at Night? Many Drug Errors at Nursing Homes Dosing mistakes are biggest concern, researchers say. . . Reuters BOSTON, Aug. 10 — An estimated 350, 000 medication errors happen in U. S. nursing homes each year and more than half of them can be prevented, according to a study released on Thursday.
The Climate • • Graying of America Value on elders Fragmentation of families Insurers missed the boat Reimbursement ($4. 25 hr) Least costly site of service Redefinition of the continuum
Independent Living • Ranch style (single level) or condo style apartments • Residents pay entrance fee • Residents pay monthly rent • Communal meals and activities • Medical outpatient “wellness” services on premises • No clinical or regulatory oversight • No required or benchmark resident to FTE ratio
Assisted Living • Studio or 1 bedroom without cooking facilities • Resident needs assistance with 1 or more ADL’s (bathing, dressing, etc. ) • Resident pays monthly rent ($2, 000 to 4, 500) plus additional for level of care • 1 RN oversight non licensed 24 x 7 • Little, if any, regulation • Generally 7 resident to 1 FTE ratio
Skilled Nursing Home • • 1, 2 or 3 beds per room 24 x 7 RN supervision Dependent on most ADL’s Private pay $5, 000 to 7, 200 month Medicaid rate $4. 25/hr Second in regulation only to nuclear power. Annual turnover rate of staff 102% 1: 1 resident to FTE ratio
Let’s compare our priorities • Hyatt Wichita, KS - 303 rooms 300 employees • Hyatt Coconut Point, FL - 456 rooms 600 employees • Ritz, Boston - 193 rooms 300 employees • How many ADL’s do you need help with?
Priorities • Average Medicaid payment per hour for skilled nursing care $4. 25 • Average payment per hour for dog walker - $22. 50 ($7. 50 per dog per 20 minute walk)
Very Large ALF Fla and Tx • Exp PL GL 2 nd yr CM 1. 4 MM • Renewal 3. 0 MM • Retentions from 250 K aos 500 K Fla Tx to 500 K all states • XS 10 MM premium from 770 K to 1. 99 MM
50 SNF 5 ALF • • • Pacific north with 10% California 1/3/15 claims made 1 MM deposit 1. 05% conversion factor LOC to the agg max premium on retro 15 MM
Recent Renewal SNF 49 locations • • • Some Fla exposure 2 MM retention no aggregate Claims made 25 MM limit Deposit premium 3. 5 MM Each loss above 2 MM and 3. 5 MM paid $ for $ plus 4% to max of 22. 5 MM
Underwriters are looking at: § § § 5 year loss history Admission agreements Staffing ratios Discharge protocols Cognitive assessments/ elopement prevention § Risk management programs
- Slides: 13