Thought Leadership

2019 Actuarial Liability Benchmark for Long Term Care Providers

2019 Aon Professional and General Liability Benchmark for Long Term Care Providers

Professional and general liability claims costs for long term care providers are projected to increase by 5.0% in 2020

The seventeenth published edition of the Aon Professional and General Liability Benchmark for Long Term Care Providers estimates ultimate loss rates, or the cost of liability claims for skilled nursing providers per occupied bed, to be $2,300 in 2020.

Statewide Results
Aon continued to analyze loss cost by state. A total of fifteen states, including two states that were analyzed for the first time, were presented. Claim costs continue to vary considerably by jurisdiction with West Virginia continuing to be the most expensive state and Massachusetts the cheapest state.

A study of claims with arbitration agreements yields that most arbitration agreements are valid. The presence of such agreements results in time and cost savings.

Provider Size
An analysis was conducted by provider size for the first time and it concludes that small providers experience the lowest costs and large providers the highest costs.

Closure Lag
Also new to this year’s analysis, is a study of claims by closure lag. Our analysis shows that most claims close within seven years of occurrence. Claims also cost more the longer they stay open.

CMS Five-Star Ratings
Claim costs were analyzed by Five-Star Rating per ratings released by the CMS in February 2019 as well as in June 2019. The impact of CMS’s change in ranking methodology has been a decrease in four star rated facilities and an increase in one and three star rated facilities in our database. In comparison to the loss rates per the February 2019 rankings which were per the old methodology, the loss rates per the June 2019 ratings are higher for three-star facilities, lower for four star facilities and the same for the other categories.

Thirty four long term care providers participated in this year’s study and contributed 17,000 non-zero claims in total. The exposure base comprised 192,100 long term care beds, consisting primarily of skilled nursing facility beds but also a number of independent living, assisted living, home health care and rehabilitation beds. The database represents approximately 15 percent of the beds in the United States.