Medigap Policy Benefit Misinterpretation
Medicare supplement coverage has often been confusing to the elderly and their caregivers. Should one choose to join an HMO or PPO? Should one purchase one of the 10 standardized policies? Once the final decision is made, the Company assures the senior citizen that he or she has made a judicious choice and that the Company will provide the needed security when a health problem arises. That was not the case for an elderly woman convalescing in a Connecticut nursing home.
Dorothy E. Morrison, a 90-year-old woman, has been continuously convalescing in the Lord Chamberlain Nursing and Rehabilitation Center in Stratford, Connecticut since May 1997. She possesses two insurance policies from the Bankers Life and Casualty Company. One is an indemnity policy paying $50 per day when an insured is confined in a nursing home. The other is a pre-standardized Medical supplement policy. Bankers had been paying the indemnity benefit continuously since 1997 and had been paying the appropriate Medicare supplement benefits. The pre-standardized policy included benefits in addition to the basic supplemental coverage. This was to be paid after an insured exhausted Medicare’s limit for Skilled Nursing Home care benefits. It was listed separately from the Basic Coverage of the plan and was to be paid per Calendar Year.
Neither Mrs. Morrison nor any of her caregivers had noticed this particular benefit. In June 2001, I was asked to review Mrs. Morrison’s policies. I immediately identified this compensable benefit and proceeded to file the claim. Bankers’ response was to pay the benefit for calendar year 1997. It was Bankers’ position that this additional skilled nursing home benefit was based on a “benefit period” even though the wording of the coverage specifically referred to “calendar year”. An appeal of Bankers’ decision to deny additional benefits began. What transpired during this appeal process affects both Bankers’ policyholders’ plan of care and the nursing homes where those policyholders are residents.
Before writing the formal appeal letter to Bankers, I contacted the Connecticut State Department of Insurance. The Insurance Department’s Associate Examiner agreed with my position and instructed me to appeal the claim with Bankers and initiate a formal inquiry with the Insurance Department. Bankers’ claim department responded to the appeal by once again reiterating its position that the benefit was to be paid per “benefit period”. Bankers then responded directly to the Insurance Department’s inquiry. After being so supportive of my position, the Insurance Department’s Associate Examiner agreed with Bankers’ determination of benefits. Needless to say, I was shocked; however, I felt that the only alternative was to contact Bankers’ legal department.
My initial contact with Bankers’ legal department was simply to ask for a review of the policy as well as all of my correspondences with the Company. Bankers’ Managing Attorney was receptive to my request. He, however, reiterated the previous position stated by the claims’ department and again denied the additional benefits, but said he would consider any information that I might provide. With that opportunity, I formulated a hypothetical case based upon my position regarding the benefit. When the Managing Attorney responded to this hypothetical case by essentially agreeing with my original position, I contacted the Executive Offices of Bankers.
The Assistant Vice President of Claims for Bankers reviewed the entire appeal file. She then concluded that the additional skilled nursing home benefits should be paid. A payment was sent to the Lord Chamberlain Nursing Home in the amount of five additional years of benefits. The corresponding explanation of benefits, however, reflect payment for three months in 2002.
How significant is Mrs. Morrison’s case? There were 12-14,000 of these policies sold in Fairfield County alone. It’s conceivable that several of these policies were converted to the lesser standardized Plan “F”. How many of Bankers’ policyholders either were not made aware of this benefit thereby curtailing their plan of care or were simply denied the benefit when they did file the claim? How many Bankers’ policyholders currently residing in nursing homes have never even filed a claim for this benefit?