2016 Long Term Care - Kentucky Association Long Term Care Benchm… · Indemnity and Expense Statistics ..... 4. Claim Lag Statistics ... relief to prevent this part of the rule from

Risk. Reinsurance. Human Resources.

2016 Long Term CareGeneral Liability and Professional Liability Actuarial Analysis

November 2016

Aon Risk Solutions

Table of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Liability and the Long Term Care Profession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Advisory Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3State Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Indemnity and Expense Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Claim Lag Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Occurrence to Closing Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Reporting Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Report to Closing Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Countrywide Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Illinois – Cook County. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

Illinois – Excluding Cook County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Massachusetts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45

West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

All Other States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

Database and Collection Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Actuarial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

Conditions and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

About Aon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

Introduction

Purpose

Aon Global Risk Consulting’s (Aon) Actuarial and Analytics practice conducted an actuarial analysis of general liability

and professional liability (GL/PL) claim costs for the long term care profession in the United States .

Scope

The specific objectives of this study are to:

§ Identify the overall trends in the cost of GL/PL claims for long term care

§ Identify state specific trends in the cost of GL/PL claims for long term care

§ Identify trends in frequency and severity overall and on a state by state basis

§ Present closed claim statistics related to claim lag and expense versus indemnity

An overview of the findings can be found in the Executive Summary section of this report .

Please contact us if you have any questions regarding this report .

Respectfully submitted,

Christian Coleianne, FCAS, MAAAAssociate Director and Actuary 1 .410 .309 .0741christian .coleianne@aon .com

Meredith Huskey, ACAS, MAAAConsultant and Actuary1 .410 .381 .1876meredith .huskey@aon .com

Molly RozranActuarial Analyst 1 .410 .381 .2439molly .rozran@aon .com

Donald Riggins, FCAS, MAAA, CPCUAssociate Director and Actuary1 .410 .309 .4539donald .riggins@aon .com

Konstantin SakherzonSenior Actuarial Analyst1 .215 .255 .1806konstantin .sakherzon@aon .com

1 2016 Long Term Care Actuarial Analysis

Executive Summary

Key Findings

Based on the actuarial analysis of GL/PL claims data from long term care providers on a national level:

§ Long term care loss rates are increasing by 6 .0% annually .

§ The overall forecasted 2017 occurrence year long term care GL/PL loss rate limited to $1 million per occurrence is

$2,350 per bed .

§ Long term care frequency is increasing by 4 .0% annually .

§ The forecasted 2017 occurrence year long term care GL/PL frequency is 1 .08 claims per 100 occupied beds .

§ Long term care claim severity is increasing by 2 .0% annually on an overall basis .

§ The forecasted 2017 occurrence year long term care GL/PL severity is $218,000 per claim limited to $1 million per

occurrence .

Liability and the Long Term Care Profession

The cost of liability continues to increase for the Long Term Care profession . At the national level, the overall loss rate is

expected to grow by six percent annually, with claim frequency driving the increase at an expected four percent growth

rate . We have increased our estimate of frequency trend to reflect a deteriorating claims environment .

The most significant development related to liability for Long Term Care providers in 2016 is the Centers for Medicare and

Medicaid Services (CMS) ban on the use of pre-dispute binding arbitration agreements . Last year, members of Congress

and a number of states’ attorneys general sent letters asking CMS for this ban . On September 28, 2016, CMS issued a final

rule for participants in Medicare and Medicaid . Included in the rule was a prohibition on the use of pre-dispute binding

arbitration agreements, effective November 28, 2016 .

The American Healthcare Association (AHCA), in association with several providers, has filed for declaratory and injunctive

relief to prevent this part of the rule from taking effect . AHCA contends that the CMS rule bypasses the legislative process

and is in conflict with the Federal Arbitration Act (FAA) . Historically, AHCA has promoted best practices for arbitration,

recommending voluntary agreements that are set apart from the admission document and that include rescission language .

Providers are facing another challenge to managing liability costs if arbitration is no longer available .

1 http://www.franken.senate.gov/files/documents/150923CMSArbitration.pdf retrieved September 24, 2015 http://hankjohnson.house.gov/sites/hankjohnson.house.gov/files/documents/ Nursing_Home_Arbitration1.pdf retrieved October 21, 2015 http://www.ag.state.mn.us/Office/PressRelease/PDF/LTCArbitrationComments.pdf retrieved October 21, 2015

2 https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-09-28.html retrieved October 18, 2016

3 https://www.ahcancal.org/News/news_releases/Pages/American-Health-Care-Association-Files-Court-Challenge-to-Arbitration-Rule.aspx retrieved October 18, 2016

Aon Global Risk Consulting 2

Advisory EstimatesThe following table presents a summary of our findings for long term care GL/PL:

LTC Estimates and Annual Trends for Losses Limited to $1 Million per Occurrence

Projected 2017 estimate Annual trend

Overall claim frequency* 1 .08 4 .00%

Indemnity claim frequency* 0 .80 4 .00%

Severity $218,000 2 .00%

Loss rate** $2,350 6 .00%

*number of claims per 100 occupied beds**liability cost per occupied bed

§ Overall claim frequency is the number of claims per 100 occupied beds . Indemnity claim

frequency is the number of claims that resolve with a payment to the claimant per 100

occupied beds .

§ Claim severity is the average size of claims, with claims limited to $1 million per occurrence .

§ The loss rate is the annual amount per occupied bed required to defend, settle or litigate claims

in a given year .

§ The projected 2017 loss rate is $2,350 and is projected to grow by six percent annually .

State FindingsThe following chart shows projected 2017 loss rate levels for the states that we have profiled in this

study . The 2017 projected loss rates are determined by applying trend to our 2016 estimates by state .

The states were profiled based on the volume of data received, the stability of the results compared to

prior years, and the number of providers represented in the data .

Comparison of Projected 2017 Loss Rates Limited to $1 Million per Occurrence

$2,350

100%

$3,320

6.0%

$7,400

3.4%

$2,880

4.2%

$3,410

4.6%

$1,210

4.1%

$7,500

2.6%

$500

4.7%

$1,530

3.5%

$890

2.3%

$480

2.3%

$2,790

4.5%

$1,050

5.2%

$1,000

4.4%

$2,210

9.4%

$3,800

3.7%

$510

6.3%

$7,360

2.2%

$1,650

26.4%

Loss Rate

Loss Rates are relative to 2017 occupied beds. The % of Database is measured by occupied beds.

% of Database

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

All OtherWVTXTNPAOHNCNJMNMIMDMAKYINILGAFLCA

Countrywide


Closed claims are presented to show the relationship between indemnity and expense . The claims

were limited to those that are seven or less years from the occurrence date . This represents 99% of

the claims in each closing year .

The following chart shows the distribution of claims closed with expense only versus claims closed

with indemnity .

The percent of claims closed with indemnity is 72% over the experience period, but only 66% of

claims closed with indemnity in 2015 .

Indemnity and Expense Only Claim Counts

The following chart shows the average paid indemnity and expense for claims closed with an

indemnity payment . Indemnity costs are about 75% of total costs on claims closed with indemnity .

The average indemnity has grown since 2008, while the average expense is relatively flat .

Claims Closed with Indemnity: Average Size - Unlimited

Indemnity and Expense Statistics

0

500

1,000

1,500

2,000

2,500

2015201420132012201120102009200820072006

232

618

266

643

306

813

443

784

374

1,128

304

907

380

1,293

431

1,305

509

1,240

740

1,406

2.05%1.98%1.86%2.14%

Closed Year

Cla

im C

oun

t

Expense Only Claims Indemnity Claims

0%

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

2015201420132012201120102009200820072006

$77,

770

$218

,919

$76,

281

$203

,186

$52,

539

$152

,377

$59,

906

$160

,126

$66,

937

$183

,609

$56,

632

$177

,601

$60,

140

$207

,608

$56,

705

$180

,983

$54,

664

$178

,273

$68,

722

$233

,959

Closed Year

Ave

rag

e C

laim

Siz

e

Average Paid Expense Average Paid Indemnity


The following chart shows the average paid expense for claims closed without an indemnity

payment . The average expense on claims closed without indemnity averages $19,000 .

Claims Closed without Indemnity: Average Expense - Unlimited

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

20152014201320122011201020092008

$33,027

$10,840

$16,955

$23,372

$18,872

$16,255 $16,046$17,141

Closed Year

Ave

rag

e Ex

pen

se


Occurrence to Closing LagThe occurrence to closing lag is number of months between the occurrence date of an event

and the time it is closed . Our analysis shows 19% of incidents are closed within 12 months of the

occurrence, and 42% are closed within 24 months . Four years after an occurrence, 81% of

claims are closed .

Closing Lag: Cumulative Percent of Claims Closed

0%

20%

40%

60%

80%

100%

60-7248-6036-4824-3612-240-12

19.3%

41.7%

64.3%

81.1%

92.2%97.1%

Number of Months from Occurrence to Close

0%

20%

40%

60%

80%

100%

60-7248-6036-4824-3612-240-12

71.2%

92.2%98.2% 99.5% 99.7% 99.9%

Number of Months from Incident to Report

Claim Lag Statistics

Reporting LagThe reporting lag is time between the occurrence date of an event and the time it is reported to the

provider . 71% of incidents are reported within 12 months of the occurrence, and 92% are reported

within 24 months .

Reporting Lag: Cumulative Percent of Claims Reported


Report to Closing LagThe report to closing lag is the number of months between the report date of the incident and the

final settlement . 34% of claims close within 12 months of being reported and 63% of claims close

within the first 24 months after being reported .

Report to Closing Lag: Cumulative Percent of Claims Closed

0%

20%

40%

60%

80%

100%

60-7248-6036-4824-3612-240-12

34.4%

63.3%

81.9%

91.5%96.8% 98.6%

Number of Months from Report to Close


The following table shows the distribution of claim sizes and incurred dollars in our database .

Distribution of Claim Counts and Claim Dollars

Total Claim Size Claim CountDistribution of Claim Count

Distribution of Incurred Dollars

$50,000 or less 8,818 47 .7% 19 .8%

$50,001 - $250,000 5,865 31 .7% 43 .5%

$250,001 - $500,000 2,599 14 .1% 18 .7%

$500,001 - $1,000,000 931 5 .0% 9 .6%

$1,000,001 - $2,500,000 232 1 .3% 5 .6%

$2,500,001 - $5,000,000 34 0 .2% 1 .3%

$5,000,001 and Greater 6 0 .0% 1 .5%

Total 18,485 100.0% 100.0%

In our analyses, except where noted, we limit the size of each claim to $1 million . This limitation

reduces the influence and skew of individual large claims on our calculations .

Claim Size Distribution


Countrywide Estimates

Loss RateThe following chart shows the loss rate per

occupied bed .

Loss rates are increasing since 2010 .

The current annual loss rate trend is

projected at 6 .0% .

Loss Rate per Occupied Bed Limited to $1M Occurrence

$0

$500

$1,000

$1,500

$2,000

$2,500

20162015201420132012201120102009200820072006

$1,100$1,170 $1,130 $1,150

$1,430$1,560 $1,640

$1,830$1,990

$2,090$2,220

Occurrence Year

Claim Frequency per 100 Occupied Beds

0.00

0.20

0.40

0.60

0.80

1.00

1.20

20162015201420132012201120102009200820072006

0.49

0.67

0.51

0.71

0.49

0.66

0.53

0.71

0.59

0.80

0.63

0.85

0.64

0.89

0.71

0.96

0.71

0.96

0.74

1.00

0.77

0.19 0.20 0.17 0.180.20

0.22 0.250.25 0.25

0.26 0.27

1.04

Occurrence Year

Expense ClaimsIndemnity ClaimsClaim FrequencyThe following graph shows the frequency

per 100 occupied beds . The stacked bar

chart provides frequency estimates for claims

with indemnity (indemnity claims) and claims

without indemnity (expense only claims) .

Claim frequency has increased from 0 .67 per

100 occupied beds to 1 .04 per 100 occupied

beds .

The participants in this study represent approximately 223,600 occupied beds in the country . This is approximately 17% of

the beds in the country .


SeverityThe following graph shows the average size

per claim, also called claim severity .

Claim severity has grown over the experience

period from $164,000 in 2006 to a projected

$214,000 in 2016 .

Claim Severity Limited to $1M per Occurrence

$0

$50,000

$100,000

$150,000

$200,000

$250,000

20162015201420132012201120102009200820072006

$164

,000

$165

,000

$171

,000

$163

,000

$179

,000

$183

,000

$184

,000

$190

,000

$207

,000

$210

,000

$214

,000

Occurrence Year

Liability Costs and Medicaid Reimbursement TrendsMedicaid is a significant source of revenue

for long term care providers .

The following graph shows the per diem

loss rate per bed as a percentage of the

Overall Medicaid per diem reimbursement

rate . The Overall Medicaid reimbursement

rate shown here is a state rate weighted by

the exposure distribution underlying the

per diem loss rate .

Concurrent with the recent loss rate

growth, liability costs as a percent of the

Medicaid Reimbursement rate has increased

in recent years .

Loss Rate as a Percentage of Medical Reimbursement Limited to $1M per Occurrence

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2015201420132012201120102009200820072006

$146.49

$3.01

$154.38

$3.20

$162.16

$3.09

$167.22

$3.15

$171.58

$3.92

$174.47

$4.27

$179.12

$4.49

$181.34

$5.01

$185.73

$5.45

$190.40

$5.72

Avg. Medicaid per Diem Reimbursement

Per Diem Loss Rate per Bed

2.05% 2.07%1.91% 1.88%

2.28%2.45% 2.51%

2.76%2.93% 3.00%

Occurrence Year


California

Loss RateLoss rates have increased to a level above

$2,300 since 2012 .

FrequencyClaims frequency is fairly flat since 2010, with

a spike in 2012 .


The participants in this study represent approximately 15,900 occupied beds in the state . This is approximately 16%

of the state total beds .


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

20162015201420132012201120102009200820072006

$1,560 $1,590 $1,530 $1,570

$1,920

$1,500

$2,360

$2,850 $2,760$2,940

$3,110

Occurrence Year

0.00

0.20

0.40

0.60

0.80

1.00

1.20

20162015201420132012201120102009200820072006

0.70 0.640.72

0.620.70

0.51

0.700.61 0.63 0.63

0.65

0.32

1.03

0.43

1.07

0.29

1.00

0.22

0.840.25

0.95

0.40

0.920.36

1.06

0.29

0.90

0.29

0.92

0.29

0.92

0.30

0.96

Occurrence Year

Expense ClaimsIndemnity Claims


Severity In 2013, claim severity has exceeded

$300,000 per claim and appears to be

holding at that level .

Liability Costs and Medicaid Reimbursement TrendsThe loss rate as a percentage of the

Medicaid Reimbursement Rate is 4 .21% .

Severity per Claim Limited to $1M per Occurrence

Loss Rate as a Percentage of Medicaid Reimbursement Limited to $1M Per Occurrence

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

20162015201420132012201120102009200820072006

$152

,000

$149

,000

$153

,000

$187

,000

$202

,000

$164

,000 $2

22,0

00

$317

,000

$300

,000

$319

,000

$325

,000

Occurrence Year

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%4.00%

4.50%

5.00%

2015201420132012201120102009200820072006

$142.14

$4.27

$150.69

$4.35

$156.56

$4.19

$163.40

$4.30

$168.05

$5.26

$175.24

$4.11

$179.14

$6.46

$178.61

$7.80

$185.09

$7.56

$191.33

$8.05



3.00% 2.89%2.68% 2.63%

3.13%

2.35%

3.61%

4.37%4.08% 4.21%

Occurrence Year


Florida

Loss RateFlorida loss rates are increasing since 2007,

with a projected 2016 loss rate at $6,960 per

occupied bed .

The sharp increase in 2009 is attributable to

rising claims frequency .

Florida’s loss rate is the second highest

among the profiled states and is noteworthy

because of the elevated frequency of claims .

FrequencyFlorida’s frequency is the highest of the

profiled states at 2 .79 claims per 100

occupied beds .

Frequency has been elevated since 2009 .


The participants in this study represent approximately 6,400 occupied beds in the state . This is approximately nine percent



$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

20162015201420132012201120102009200820072006

$3,250$2,900 $2,980

$4,880

$4,180

$5,780

$4,830$5,300

$5,660

$6,560$6,960

Occurrence Year

0.0

0.5

1.0

1.5

2.0

2.5

3.0

20162015201420132012201120102009200820072006

1.35

0.31

1.67

1.15

0.191.33

1.30

0.69

1.98

2.021.61

0.27

1.88

2.201.63

2.001.96 2.03 2.11

0.68

2.79

0.32 0.43 0.43

2.450.49

2.69

0.92

2.54

0.64

2.64

0.63

2.58

0.65

2.68

0.30

Occurrence Year



Severity Florida’s claim severity has been over

$190,000 since 2009 .

Liability Costs and Medicaid Reimbursement TrendsThe liability costs as a percent of the

Medicaid Reimbursement Rate is 7 .98%,

and is the second highest among the

profiled states .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

20162015201420132012201120102009200820072006

$195

,000

$218

,000

$150

,000 $1

99,0

00

$222

,000

$215

,000

$190

,000

$201

,000

$219

,000

$245

,000

$250

,000

Occurrence Year

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

2015201420132012201120102009200820072006

$160.43

$8.90

$175.00

$7.94

$180.05

$8.16

$202.66

$13.36

$206.47

$11.44

$205.61

$15.82

$211.98

$13.22

$211.98

$14.51

$218.64

$15.50

$225.14

$17.96



5.55%

4.54% 4.53%

6.59%

5.54%

7.69%

6.24%6.84% 7.09%

7.98%

Occurrence Year


Georgia

Loss RateGeorgia’s loss rate has been increasing

over time .

The sharp increase in 2010 may be related

to the removal of the $350,000 cap on

non-economic damages .

FrequencyClaim frequency in Georgia spiked in 2010

coincident with the Georgia Supreme Court’s

ruling striking down the $350,000 cap on

non-economic damages .





$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

20162015201420132012201120102009200820072006

$950$850

$1,030 $960

$2,540

$1,980

$2,960

$2,680$2,500 $2,550

$2,700

Occurrence Year

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

20162015201420132012201120102009200820072006

0.44

0.19

0.62

0.45

0.090.53

0.51

0.14

0.65

0.48

0.88

0.32

1.21

0.70

0.95 0.91 0.90 0.94 0.97

1.29

0.43

0.24

0.72 0.19

0.890.26

1.20

0.30

1.21

0.30

1.19

0.31

1.24

0.32

Occurrence Year



Severity Claim severity in Georgia also increased

in 2010, around the time of the Georgia

Supreme Court ruling, which struck down the

$350,000 cap on non-economic damages .

Liability Costs and Medicaid Reimbursement TrendsGeorgia’s loss rates relative to the

Medicaid Per Diem Reimbursement rate is

substantially higher than levels pre-2010 .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

20162015201420132012201120102009200820072006

$152

,000

$159

,000

$159

,000

$134

,000

$210

,000

$222

,000

$246

,000

$221

,000

$210

,000

$205

,000

$209

,000

Occurrence Year

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2015201420132012201120102009200820072006

$126.61

$2.60

$127.43

$2.33

$133.48

$2.82

$135.22

$2.63

$141.78

$6.95

$141.59

$5.42

$146.90

$8.10

$156.10

$7.34

$158.33

$6.84

$164.02

$6.98



2.05%1.83%

2.11% 1.94%

4.90%

3.83%

5.51%

4.70%4.32% 4.26%

Occurrence Year


Illinois

Loss RateThe loss rate in Illinois has been increasing

moderately since 2008 .

FrequencyClaim frequency in Illinois is the third highest

among the states profiled in this report .

The claims frequency is higher than historical

levels since 2011 .

The overall indemnification rate for Illinois

is 83% .





$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

20162015201420132012201120102009200820072006

$1,600

$2,590

$2,330 $2,410$2,530

$3,080

$2,640

$2,970 $2,950 $3,020$3,210

Occurrence Year

0.00

0.50

1.00

1.50

2.00

2.50

20162015201420132012201120102009200820072006

0.82

0.09

0.91

1.10

0.191.29

1.03

0.191.22

1.331.39

0.241.62

1.621.48

1.83 1.891.81

1.88

2.26

0.43

0.29

1.62 0.36

1.98

0.30

1.790.37

2.200.38

2.27

0.36

2.180.38

Occurrence Year



Severity Severity has been under $150,000 since

2011 .

Liability Costs and Medicaid Reimbursement TrendsIllinois’ loss rate relative to the Medicaid

Per Diem Reimbursement rate is above

five percent .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

20162015201420132012201120102009200820072006

$176

,000

$201

,000

$191

,000

$149

,000

$156

,000

$156

,000

$148

,000

$135

,000

$130

,000

$139

,000

$142

,000

Occurrence Year

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

2015201420132012201120102009200820072006

$96.94

$4.38

$103.89

$7.09

$112.20

$6.38

$117.29

$6.60

$117.88

$6.93

$130.47

$8.43

$135.28

$7.23

$129.30

$8.13

$136.14

$8.08

$145.99

$8.27



4.52%

6.82%

5.69% 5.63% 5.88%

6.46%

5.34%

6.29%5.94%

5.66%

Occurrence Year


Illinois - Cook County

Loss RateThe loss rate in Cook County, Illinois has

been increasing since 2009 and is nearly 30%

higher than the Illinois state loss rate .

FrequencyClaim frequency in Cook County, Illinois is

has been increasing over the experience

period . The claim frequency is currently 26%

higher than the Illinois state frequency .

Interestingly 85% of claims in Cook County

result in indemnification to the plaintiffs .


The participants in this study represent approximately 5,900 occupied beds in Cook County, Illinois . This is approximately

nine percent of the Illinois state total beds .


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

20162015201420132012201120102009200820072006

$1,560

$3,290

$2,810$2,670

$2,840

$3,170 $3,140

$3,830$3,700

$3,880$4,120

Occurrence Year

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

20162015201420132012201120102009200820072006

0.82

0.07

0.89

1.20

0.151.35

1.15

0.201.35

1.41 1.47

0.231.70

1.79 1.81

2.322.30 2.32 2.41

2.86

0.43

0.301.71

0.372.16

0.342.15

0.43

2.75

0.43

2.72

0.43

2.750.45

Occurrence Year



Severity Severity is around $144,000 per claim and

has been stable since 2011 .

Liability Costs and Medicaid Reimbursement TrendsWhen compared to the Medicaid Per Diem

Reimbursement rate, Cook County’s loss

rate per bed is over seven percent . This is

comparable to the West Virginia and Florida,

the states with the second and third highest

loss rates among the profiled states .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

20162015201420132012201120102009200820072006

$175

,000

$244

,000

$208

,000

$156

,000

$167

,000

$147

,000

$146

,000

$139

,000

$136

,000

$141

,000

$144

,000

Occurrence Year

0.00%

1.00%

2.00%

3.00%4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

2015201420132012201120102009200820072006

$96.94

$4.27

$103.89

$9.01

$112.20

$7.69

$117.29

$7.31

$117.88

$7.78

$130.47

$8.68

$135.28

$8.60

$129.30

$10.49

$136.14

$10.13

$145.99

$10.62



4.40%

8.67%

6.85% 6.23% 6.60%6.65%

6.36%

8.11%7.44% 7.27%

Occurrence Year


Illinois - Excluding Cook County

Loss RateThe loss rate in counties other than Cook

County, Illinois is generally under $2,000 per

occupied bed .

2011 was influenced by several claims over

$600,000 .

FrequencyClaim frequency in counties other than Cook

County show an increase in 2011, but has

been stable near 1 .40 claims per occupied

bed in recent history .


The participants in this study represent approximately 3,400 occupied beds in counties other than Cook County .

This is approximately five percent of the Illinois state total beds .


$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

20162015201420132012201120102009200820072006

$1,710

$1,290

$1,700 $1,710$1,530

$3,000

$1,750$1,580 $1,670 $1,690

$1,800

Occurrence Year

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

20162015201420132012201120102009200820072006

0.90

0.141.04

0.85

0.32

1.17

0.90

0.21

1.11

1.201.08

0.22

1.30

1.17

0.821.06 1.09 1.06 1.10

1.400.24

1.44

0.31

1.49

0.40

1.220.29

1.34

0.30

1.38

0.29

1.35

0.30

Occurrence Year



Severity Severity is currently around $128,000 per

claim .

2011 was influenced by several claims over

$600,000 .

Liability Costs and Medicaid Reimbursement TrendsFor counties other than Cook County, the

loss rate relative to the Medicaid Per Diem

Reimbursement rate is generally below

four percent .

This is a bit higher than the countrywide

average of three percent .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

20162015201420132012201120102009200820072006

$164

,000

$111

,000 $1

53,0

00

$119

,000

$118

,000

$202

,000

$143

,000

$118

,000

$121

,000

$125

,000

$128

,000

Occurrence Year

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2015201420132012201120102009200820072006

$96.94

$4.68

$103.89

$3.53

$112.20

$4.65

$117.29

$4.68

$117.88

$4.19

$130.47

$8.21

$135.28

$4.79

$129.30

$4.33

$136.14

$4.57

$145.99

$4.63



4.83%

3.40%

4.14% 3.99%3.55%

6.29%

3.54% 3.35% 3.36% 3.17%

Occurrence Year


Indiana

Loss RateIndiana’s loss rates increased sharply in 2012

due to increasing severity .

FrequencySince 2012, claim frequency has been near

the current level of 0 .78 claims per 100

occupied beds .





$0

$200

$400

$600

$800

$1,000

$1,200

20162015201420132012201120102009200820072006

$430 $440

$330 $310

$600$560

$840$880

$1,050 $1,070$1,140

Occurrence Year

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

20162015201420132012201120102009200820072006

0.42

0.17

0.59

0.31

0.13

0.44

0.28

0.19

0.47

0.23

0.53

0.16

0.69

0.500.59 0.52 0.60 0.55 0.57

0.78

0.10

0.33

0.14

0.65 0.13

0.73

0.19

0.710.22

0.82

0.20

0.75

0.21

Occurrence Year



Severity Claim severity is increasing since 2012 .

Liability Costs and Medicaid Reimbursement TrendsThe loss rate as a percent of the Medicaid

Reimbursement Rate has increased from a

low of 0 .56% in 2009 to 1 .63% in 2015 .



$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

20162015201420132012201120102009200820072006

$73,

000 $1

00,0

00

$70,

000 $9

4,00

0

$86,

000

$87,

000 $1

15,0

00

$124

,000

$128

,000

$143

,000

$146

,000

Occurrence Year

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2015201420132012201120102009200820072006

$114.92

$1.18

$132.94

$1.20

$148.57

$0.90

$151.69

$0.85

$153.79

$1.64

$158.25

$1.53

$163.95

$2.30

$168.87

$2.41

$173.76

$2.87

$179.32

$2.93



1.03%

0.90%

0.61% 0.56%

1.07%0.97%

1.40% 1.43%

1.65% 1.63%

Occurrence Year


Kentucky

Loss RateKentucky has the highest loss rate of the

profiled states in this study .

The loss rate has increased from $1,500 in

2007 to a projected $7,070 in 2016 .

FrequencyClaim frequency in Kentucky is the second

highest among the profiled states .

Frequency has increased from a low of

0 .72 claims per occupied bed in 2007 to a

projected high of 2 .32 claims per occupied

bed in 2016 .





$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

20162015201420132012201120102009200820072006

$2,660

$1,500

$3,320 $3,440

$5,080

$6,210$5,750 $5,900

$6,240$6,660

$7,070

Occurrence Year

0.00

0.50

1.00

1.50

2.00

2.50

20162015201420132012201120102009200820072006

0.91

0.221.13

0.53

0.180.72

0.87

0.40

1.27

0.87

1.33

0.31

1.64

1.531.30 1.47

1.79 1.69 1.76

2.32

0.171.04

0.46

1.99

0.64

1.94

0.48

1.95 0.58

2.37

0.55

2.24

0.57

Occurrence Year



Severity Claim severity in Kentucky is the highest of

the states profiled in this study and has been

above $250,000 per claim since 2008 .

Liability Costs and Medicaid Reimbursement TrendsThe loss rate as a percentage of the per

diem Medicaid Reimbursement rate is

10 .63% in 2015 .

This is the highest level among the

profiled states .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

20162015201420132012201120102009200820072006

$235

,000

$209

,000 $2

61,0

00

$330

,000

$310

,000

$312

,000

$297

,000

$303

,000

$263

,000

$298

,000

$304

,000

Occurrence Year

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2015201420132012201120102009200820072006

$125.56

$7.28

$132.72

$4.11

$137.49

$9.09

$142.72

$9.42

$147.14

$13.91

$151.41

$17.00

$156.86

$15.74

$161.57

$16.15

$166.25

$17.08

$171.57

$18.23



5.80%

3.10%

6.61% 6.60%

9.45%

11.23%

10.03% 10.00% 10.27% 10.63%

Occurrence Year


Maryland

Loss RateThe loss rates in Maryland have increased

since 2013 .

FrequencyClaim frequency in Maryland is stable around

0 .75 claims per 100 occupied beds .





$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

20162015201420132012201120102009200820072006

$1,280

$950 $970

$1,130 $1,090 $1,120

$760

$1,560

$1,350 $1,350$1,440

Occurrence Year

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

20162015201420132012201120102009200820072006

0.65

0.13

0.78

0.53

0.18

0.71

0.53

0.050.58

0.54 0.49

0.12

0.60

0.530.44

0.61 0.57 0.62 0.64

0.75

0.10

0.64

0.12

0.65

0.020.46

0.10

0.71

0.090.67 0.10

0.720.11

Occurrence Year



Severity Claim severity in Maryland increased sharply

in 2013 .


Reimbursement Rate is 1 .55% .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

20162015201420132012201120102009200820072006

$163

,000

$133

,000 $1

66,0

00

$176

,000

$180

,000

$171

,000

$165

,000

$219

,000

$202

,000

$188

,000

$192

,000

Occurrence Year

0.00%0.20%

0.40%

0.60%

0.80%

1.00%1.20%

1.40%

1.60%

1.80%

2.00%

2015201420132012201120102009200820072006

$186.41

$3.50

$194.10

$2.60

$213.27

$2.66

$212.29

$3.09

$222.47

$2.98

$231.81

$3.07

$239.63

$2.08

$237.86

$4.27

$243.47

$3.70

$239.37

$3.70



1.88%

1.34%1.25%

1.46%1.34% 1.32%

0.87%

1.80%

1.52% 1.55%

Occurrence Year


Massachusetts

Loss RateThe loss rate in Massachusetts has been

near $450 per occupied bed since 2009,

with a surge to $530 in 2011 driven by claim

severity .

Massachusetts has a $500,000 per occurrence

limit on non-economic damages and

limitations on plaintiff’s attorneys’ fees . These

may contribute to the stable environment,

low claims incidence and low severity .

FrequencyClaim frequency in Massachusetts has been

stable over the experience and is currently

at 0 .34 per 100 occupied beds, the lowest

frequency among the profiled states .





$0

$100

$200

$300

$400

$500

$600

$700

20162015201420132012201120102009200820072006

$390

$620

$480

$420$370

$530

$390

$320

$440 $440$460

Occurrence Year

0.00

0.10

0.20

0.30

0.40

0.50

0.60

20162015201420132012201120102009200820072006

0.21

0.20

0.41

0.30

0.21

0.51

0.25

0.12

0.37

0.24 0.24

0.13

0.37

0.26 0.23 0.21 0.23 0.23 0.24

0.34

0.08

0.310.09

0.34

0.10

0.33

0.09

0.300.10

0.33

0.10

0.33

0.10

Occurrence Year



Severity Claim severity in Massachusetts has been

under $155,000 for the entire experience

period .

The projected severity in 2016 is $135,000 .


Reimbursement Rate has been declining

over the experience period and, at 0 .60%, is

the lowest of the profiled states .



$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

20162015201420132012201120102009200820072006

$96,

000

$122

,000

$131

,000

$133

,000

$99,

000

$155

,000

$116

,000

$107

,000 $1

31,0

00

$132

,000

$135

,000

Occurrence Year

0.0%0.1%

0.2%

0.3%

0.4%

0.5%0.6%

0.7%

0.8%

0.9%

1.0%

2015201420132012201120102009200820072006

$177.16

$1.07

$191.30

$1.70

$191.30

$1.31

$192.84

$1.15

$196.84

$1.01

$197.40

$1.45

$197.39

$1.07

$197.91

$0.88

$199.00

$1.20

$201.44

$1.20



0.60%

0.89%

0.68%

0.60%

0.51%

0.73%

0.54%

0.44%

0.60% 0.60%

Occurrence Year


Michigan

Loss RateThe loss rate in Michigan surged in 2011, but

has since subsided to a projected $840 per

occupied bed in 2016 .

FrequencyFrequency has leveled at 0 .90 claims per 100

occupied beds .





$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

20162015201420132012201120102009200820072006

$1,160

$780

$1,020$960

$530

$1,190

$1,010

$840$790 $790

$840

Occurrence Year

0.00

0.20

0.40

0.60

0.80

1.00

1.20

20162015201420132012201120102009200820072006

0.71

0.26

0.98

0.49

0.33

0.82

0.54

0.17

0.71

0.56 0.48

0.26

0.74

0.870.68 0.70 0.70 0.73

0.76

0.90

0.090.66

0.040.90

0.080.76 0.13

0.83

0.13

0.840.14

0.870.14

Occurrence Year



Severity Severity peaked at $147,000 in 2009 and has

since decreased to under $100,000 .

Michigan has the second lowest severity

among the profiled states .


reimbursement rate is at 0 .91% .



$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

20162015201420132012201120102009200820072006

$119

,000

$96,

000

$144

,000

$147

,000

$72,

000

$132

,000

$133

,000

$101

,000

$94,

000

$91,

000

$93,

000

Occurrence Year

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

2015201420132012201120102009200820072006

$163.84

$3.18

$180.92

$2.14

$187.31

$2.79

$195.18

$2.63

$207.40

$1.45

$211.44

$3.26

$219.05

$2.77

$223.76

$2.30

$230.25

$2.16

$237.62

$2.16



1.94%

1.18%

1.49%1.35%

0.70%

1.54%

1.26%

1.03%0.94% 0.91%

Occurrence Year


Minnesota

Loss RateThe loss rate in Minnesota has been growing

during the experience period, from $260 per

occupied bed in 2006 to $450 per occupied

bed in 2016 .

Minnesota has the lowest loss rate among the

profiled states .

FrequencyClaim frequency has been level since 2011

and is currently 0 .35 claims per 100 occupied

beds .





$0

$100

$200

$300

$400

$500

$600

20162015201420132012201120102009200820072006

$260

$360

$480

$390

$190

$270 $260

$390$360

$420$450

Occurrence Year

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

20162015201420132012201120102009200820072006

0.17

0.11

0.28

0.23

0.040.28

0.20

0.16

0.37

0.28

0.20

0.06

0.26

0.140.19 0.20 0.20 0.20 0.21

0.350.14

0.42

0.20

0.33

0.16

0.34

0.14

0.33

0.14

0.34

0.14

0.34

0.15

Occurrence Year



Severity Severity has increased from a low of $72,000

per occurrence in 2010 to a projected

$128,000 per occurrence in 2016 .

This is the third lowest severity among the

profiled states .


reimbursement rate is 0 .64% .



$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

20162015201420132012201120102009200820072006

$91,

000

$131

,000

$130

,000

$94,

000

$72,

000

$82,

000

$76,

000

$117

,000

$105

,000 $1

25,0

00

$128

,000

Occurrence Year

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

2015201420132012201120102009200820072006

$142.02

$0.71

$147.68

$0.99

$154.24

$1.31

$164.34

$1.07

$164.34

$0.52

$165.82

$0.74

$170.05

$0.71

$169.63

$1.07

$177.94

$0.99

$179.96

$1.15



0.50%

0.67%

0.85%

0.65%

0.32%

0.45% 0.42%

0.63%

0.56%

0.64%

Occurrence Year


New Jersey

Loss RateThe loss rate per occupied bed in New Jersey

has been generally between $2,110 and

$2,640 since 2010 .

FrequencyThe frequency per 100 occupied beds has

been fairly level between 1 .13 and 1 .25 since

2009 .





$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

20162015201420132012201120102009200820072006

$1,220$1,380

$1,180

$1,680

$2,110$2,240

$1,550

$2,250$2,450 $2,490

$2,640

Occurrence Year

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

20162015201420132012201120102009200820072006

0.63

0.56

1.19

0.70

0.66

1.36

0.71

0.30

1.01

0.740.84

0.31

1.15

0.980.67

0.84 0.82 0.82 0.86

1.24

0.39

1.130.27

1.25

0.44

1.110.37

1.21

0.36

1.18

0.36

1.19

0.38

Occurrence Year



Severity Claim severity increased sharply in 2009

and has grown steadily since then, reaching

$214,000 per claim in 2016 .





$0

$50,000

$100,000

$150,000

$200,000

$250,000

20162015201420132012201120102009200820072006

$103

,000

$102

,000

$117

,000

$149

,000 $1

83,0

00

$179

,000

$139

,000

$186

,000

$208

,000

$210

,000

$214

,000

Occurrence Year

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2015201420132012201120102009200820072006

$187.10

$3.34

$187.17

$3.78

$204.96

$3.23

$204.96

$4.60

$207.76

$5.78

$203.13

$6.13

$200.96

$4.24

$203.85

$6.16

$205.75

$6.71

$207.35

$6.82



1.79%2.02%

1.58%

2.24%

2.78%3.02%

2.11%

3.02%3.26% 3.29%

Occurrence Year


North Carolina

Loss RateThe loss rate in North Carolina has been

volatile over the experience period .

The projected loss rate per occupied bed is

expected to reach $990 in 2016 .

A $500,000 non-economic damages cap

became effective October 1, 2011 .

FrequencyThe frequency increase in 2010 may be

related to claimants presenting before the

implementation of tort reform effective

October 1, 2011 . Claim frequency has not

subsided since the legislation became

effective .





$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

20162015201420132012201120102009200820072006

$470

$1,220

$600$540

$930

$480

$650

$880$920 $930

$990

Occurrence Year

0.00

0.10

0.20

0.30

0.40

0.50

0.60

20162015201420132012201120102009200820072006

0.23

0.09

0.32

0.42

0.07

0.49

0.35

0.10

0.45

0.37

0.45

0.10

0.55

0.350.38 0.35 0.37 0.38 0.39

0.49

0.060.43

0.09

0.440.11

0.49

0.09

0.440.09

0.47

0.10

0.47

0.10

Occurrence Year



Severity Claim severity has increased since 2011 and

is now $201,000

The claim severity spike in 2007 reflects

several claims that exceed $1 million .





$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

20162015201420132012201120102009200820072006

$147

,000

$250

,000

$135

,000

$126

,000 $1

70,0

00

$110

,000

$133

,000

$199

,000

$196

,000

$197

,000

$201

,000

Occurrence Year

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2015201420132012201120102009200820072006

$134.18

$1.29

$136.54

$3.34

$150.33

$1.64

$155.69

$1.48

$160.52

$2.55

$165.17

$1.31

$171.12

$1.78

$176.25

$2.41

$181.36

$2.52

$187.17

$2.55



0.96%

2.45%

1.09%0.95%

1.59%

0.79%

1.04%

1.37% 1.39% 1.36%

Occurrence Year


Ohio

Loss RateLoss rates in Ohio have grown from a low

point of $420 per occupied bed in 2007 .

The growth is related to increases in claim

severity .

FrequencyClaim frequency in Ohio has been between

0 .50 and 0 .65 claims per 100 occupied beds

since 2009 .





$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

20162015201420132012201120102009200820072006

$540

$420

$650

$450$490

$590

$710

$900$840

$890$950

Occurrence Year

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

20162015201420132012201120102009200820072006

0.37

0.32

0.69

0.36

0.21

0.57

0.43

0.18

0.62

0.230.28

0.24

0.52

0.28 0.38 0.380.34 0.32 0.34

0.58

0.27

0.50

0.24

0.57

0.23

0.61

0.27

0.65

0.25

0.59

0.23

0.55

0.24

Occurrence Year



Severity Claim severity has grown strongly over the

experience period and is projected to be

$164,000 in 2016 .


reimbursement rate is around 1 .39% .



$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

20162015201420132012201120102009200820072006

$79,

000

$74,

000 $1

05,0

00

$90,

000

$94,

000

$103

,000

$117

,000

$137

,000

$142

,000

$161

,000

$164

,000

Occurrence Year

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

2015201420132012201120102009200820072006

$158.71

$1.48

$163.96

$1.15

$166.07

$1.78

$172.16

$1.23

$177.77

$1.34

$172.33

$1.62

$170.63

$1.94

$174.64

$2.46

$174.35

$2.30

$175.10

$2.44



0.93%

0.70%

1.07%

0.71%0.75%

0.94%

1.14%

1.41%1.32%

1.39%

Occurrence Year


Pennsylvania

Loss RateThe 2016 projected loss rate in Pennsylvania

is $2,090 per occupied bed .

FrequencyThe frequency of losses has increased from

a low of 0 .53 in 2006 to a projected 1 .26

in 2016 .





$0

$500

$1,000

$1,500

$2,000

$2,500

20162015201420132012201120102009200820072006

$980

$810$970

$1,190

$1,610

$2,080

$1,770$1,840

$1,990 $1,970$2,090

Occurrence Year

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

20162015201420132012201120102009200820072006

0.40

0.130.53

0.44

0.16

0.60

0.47

0.19

0.66

0.570.69

0.28

0.97

0.79 0.72 0.81 0.89 0.89 0.92

1.26

0.18

0.740.28

1.08

0.25

0.970.30

1.110.32

1.21

0.32

1.21

0.34

Occurrence Year



Severity Since 2009, claim severity has been near

$165,000 with the exception of 2011 and

2012 .

Liability Costs and Medicaid Reimbursement TrendsThe liability cost as a percent of Medicaid

per diem rate has grown over the

experience period and is currently at 2 .49%



$0

$50,000

$100,000

$150,000

$200,000

$250,000

20162015201420132012201120102009200820072006

$186

,000

$134

,000

$147

,000

$161

,000

$166

,000

$193

,000

$182

,000

$166

,000

$165

,000

$163

,000

$166

,000

Occurrence Year

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2015201420132012201120102009200820072006

$179.17

$2.68

$190.83

$2.22

$197.61

$2.66

$199.42

$3.26

$203.54

$4.41

$204.63

$5.69

$207.61

$4.85

$209.65

$5.04

$214.64

$5.45

$216.75

$5.39



1.50%

1.16%1.35%

1.63%

2.17%

2.78%

2.34% 2.40%2.54% 2.49%

Occurrence Year


Tennessee

Loss RateThe loss rate in Tennessee has grown from a

low in 2009 of $1,170 per occupied bed to a

projected $3,580 per occupied bed in 2016 .

The growth is primarily due to growth in

frequency .

Tennessee enacted limits on non-economic

damages effective October 1, 2011 . The

enacted cap on noneconomic damages was

$750,000 for most allegations . This cap is

higher than the caps implemented in other

states .

FrequencyClaim frequency has increased since 2008 .

The continued growth in claim frequency

after the implementation of tort limits in 2011

is surprising .





$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

20162015201420132012201120102009200820072006

$2,060$1,840

$1,230 $1,170$1,370

$2,150$2,410

$3,060$3,330 $3,370

$3,580

Occurrence Year

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

20162015201420132012201120102009200820072006

0.68

0.18

0.86

0.67

0.16

0.83

0.42

0.16

0.59

0.520.58

0.21

0.79

0.83 0.79 0.810.90 0.89 0.92

1.23

0.16

0.68

0.21

1.04

0.30

1.10

0.27

1.080.30

1.21

0.30

1.18

0.31

Occurrence Year



Severity Claim severity has increased since 2009 and

is the fourth highest severity of the profiled

states .


per diem reimbursement has increased from

a low of 2 .22% in 2009 to 5 .32% in 2015 .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

20162015201420132012201120102009200820072006

$239

,000

$221

,000

$210

,000

$173

,000

$174

,000

$207

,000

$220

,000

$283

,000

$276

,000

$285

,000

$291

,000

Occurrence Year

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2015201420132012201120102009200820072006

$131.05

$5.64

$136.12

$5.04

$141.56

$3.37

$144.30

$3.20

$148.77

$3.75

$153.09

$5.89

$158.60

$6.60

$163.36

$8.38

$168.09

$9.12

$173.47

$9.23



4.30%

3.70%

2.38% 2.22%2.52%

3.85%4.16%

5.13%5.43% 5.32%

Occurrence Year


Texas

Loss RateThe loss rate in Texas has been growing since

2010 .

The increases are related to severity growth .

FrequencyThe claim frequency in Texas is generally

around 0 .55 per 100 occupied beds since

2010 .

Texas has the fourth lowest frequency rate






$0

$100

$200

$300

$400

$500

$600

20162015201420132012201120102009200820072006

$380$430

$280 $280

$220

$270

$320

$460$480

$450$480

Occurrence Year

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

20162015201420132012201120102009200820072006

0.36

0.25

0.61

0.35

0.29

0.63

0.25

0.19

0.44

0.260.22

0.31

0.53

0.170.23

0.26 0.26 0.25 0.26

0.55

0.25

0.51

0.21

0.380.25

0.48

0.28

0.55

0.28

0.55

0.27

0.53

0.28

Occurrence Year



Severity Claim severity in Texas has grown to just

under $90,000 .

Despite this growth, Texas has the lowest

severity of the profiled states .


per diem reimbursement rate has grown

from a low of 0 .47% in 2010 to 0 .87% in

2015 . Texas has the third lowest rate among

the profiled states .



$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

20162015201420132012201120102009200820072006

$62,

000

$68,

000

$62,

000

$54,

000

$42,

000

$71,

000

$67,

000 $8

3,00

0

$88,

000

$86,

000

$88,

000

Occurrence Year

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

2015201420132012201120102009200820072006

$107.26

$1.04

$106.48

$1.18

$111.89

$0.77

$123.20

$0.77

$128.09

$0.60

$126.87

$0.74

$129.98

$0.88

$131.61

$1.26

$133.42

$1.31

$141.64

$1.23



0.97%

1.11%

0.69%0.63%

0.47%

0.58%

0.68%

0.96% 0.98%

0.87%

Occurrence Year


West Virginia

Loss RateThe loss rate in West Virginia has grown from

a low in 2007 of $2,480 to a projected $6,940

in 2016 .

West Virginia has the third highest loss rate


FrequencyFrequency has increased from 1 .03 claims per

100 occupied beds in 2007 to a projected

2 .19 claims per 100 occupied beds in

2016 . West Virginia has the fourth highest

frequency among the profiled states .

The bulge in claims for occurrence years

2010 and subsequent may be related to the

large jury award in 2011 .

The state legislature explicitly applied

statutory caps to long term care providers

in 2013 and this may have reduced claims

frequency from its peak in 2012 .





$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

20162015201420132012201120102009200820072006

$2,750$2,480

$3,560

$5,270

$7,680

$5,350

$8,350

$7,010

$6,450 $6,550$6,940

Occurrence Year

0.00

0.50

1.00

1.50

2.00

2.50

3.00

20162015201420132012201120102009200820072006

0.87

0.211.09

0.90

0.141.03

1.04

0.141.18

1.311.75

0.44

2.19

1.23

1.79 1.611.38 1.50 1.56

2.19

0.251.56

0.56

1.790.66

2.45

0.66

2.27

0.54

1.910.60

2.10

0.62

Occurrence Year



Severity Severity in West Virginia has been between

$299,000 and $351,000 since 2008 .

This is more than 150% of the countrywide

average severity over the same time period .


reimbursement rate has increased from a

low of 3 .89% in 2007 to 7 .95% in 2015 .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

20162015201420132012201120102009200820072006

$253

,000

$240

,000 $3

02,0

00

$338

,000

$351

,000

$299

,000

$341

,000

$309

,000

$337

,000

$311

,000

$317

,000

Occurrence Year

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2015201420132012201120102009200820072006

$168.11

$7.53

$174.36

$6.79

$180.64

$9.75

$187.50

$14.43

$193.31

$21.03

$198.92

$14.65

$206.08

$22.86

$212.26

$19.19

$218.42

$17.66

$225.41

$17.93



4.48%3.89%

5.40%

7.70%

10.88%

7.36%

11.09%

9.04%

8.09% 7.95%

Occurrence Year


All Other States

Loss RateThe All Other States loss rate is increasing

since 2009 .

FrequencyThe All Other States frequency has increased

from a low of 0 .56 claims per 100 occupied

beds in 2006 to a projected 0 .72 claims per

100 occupied beds in 2016 .


The participants in this study represent approximately 52,600 occupied beds in the remaining states . This is

approximately 11% of the remaining state total beds .


$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

20162015201420132012201120102009200820072006

$1,050

$1,260

$1,070

$820

$970

$1,150$1,210 $1,240

$1,400$1,460

$1,550

Occurrence Year

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

20162015201420132012201120102009200820072006

0.42

0.14

0.56

0.48

0.17

0.65

0.41

0.15

0.56

0.410.42

0.15

0.57

0.430.48 0.47 0.48 0.49 0.51

0.72

0.17

0.58

0.20

0.64

0.20

0.67

0.19

0.66

0.20

0.67

0.20

0.69

0.21

Occurrence Year



Severity All Other States claim severity is growing

since 2009 and is projected to reach

$216,000 per claim in 2016 .

Liability Costs and Medicaid Reimbursement TrendsThe All Other States liability cost as a

percent of the Medicaid Reimbursement

rate has increased from 1 .36% in 2009 to

2 .09% in 2015 .



$0

$50,000

$100,000

$150,000

$200,000

$250,000

20162015201420132012201120102009200820072006

$187

,000

$194

,000

$191

,000

$142

,000

$171

,000

$180

,000

$180

,000

$188

,00

$208

,000

$212

,000

$216

,000

Occurrence Year

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2015201420132012201120102009200820072006

$144.21

$2.87

$153.28

$3.45

$160.65

$2.93

$165.06

$2.25

$168.84

$2.66

$172.71

$3.15

$179.73

$3.31

$181.88

$3.39

$186.49

$3.83

$191.55

$4.00



1.99%

2.25%

1.82%

1.36%

1.58%

1.82% 1.84% 1.86%

2.05% 2.09%

Occurrence Year


Database and Collection Methodology

In an effort to present a comprehensive analysis from the perspective of all long term care systems,

Aon disseminated a request for data to for-profit and not-for-profit providers including independent

providers, regional multi-facility providers and national multi-facility providers .

The results presented in this study are based on the ensuing database of long term care GL/PL losses

and allocated loss adjustment expenses (ALAE) as reported to us by 31 long term care participants .

Participants included large national providers, regional providers, single state operators and

insurance companies . Data from the participants was aggregated, resulting in 18,300 non-zero

claims and $2 .9 billion in incurred losses . The facilities represented in the national study operate

approximately 224,000 long term care beds, consisting primarily of skilled nursing facility beds but

also including a number of independent living, assisted living, home health care and rehabilitation

beds . They represent approximately 17% of the beds in the United States, and include six of the ten

largest providers in the country .

The results found in this study are based on calculations of participant provided data . Providers that

did not participate may have different results, either higher or lower . This may be due to any number

of reasons, including levels of effectiveness in quality of care initiatives and the attractiveness of the

provider for tort actions . Based on standard actuarial techniques, the number of claims, number of

participants and bed representation ensure significant credibility of the results at the national level .

The proportion of statewide bed representation assures significant credibility of the results at the

state level . To increase credibility, a higher response rate among providers would be required .

All long term care results published in this report are based on losses (indemnity plus allocated

adjustment expense) limited to $1 million per occurrence unless otherwise noted . The $1 million per

occurrence limitation was selected to limit the impact of large claims on the results .

Statutory limitations were based on National Conference of State Legislatures research updated

August 2011, accessed October 18, 2016 from http://www .ncsl .org/issues-research/banking/medical-

liability-medical-malpractice-laws .aspx . Referenced statutory limitations were confirmed by retrieving

the individual state codes online .

The loss rates are presented relative to the Medicaid per diem reimbursement rate . The Medicaid

per diem reimbursement rate is based on data from “A Report on Shortfalls in Medicaid Funding for

Nursing Home Care” produced by Eljay LLC and Hansen Hunter & Company, PC for the American

Health Care Association and dated April 2016 . The Overall Medicaid per diem reimbursement rate is

based on the state exposure distribution inherent in this study .


The statistics presented in this report are based on an actuarial analysis of the aggregated long term care

GL/PL claim database and related exposure data . The analysis applies standard actuarial methods to the

claim data to develop ultimate losses and claim counts by occurrence year . These projections are used to

calculate the following statistics presented in this report:

• Loss Rate – ultimate loss projection per occupied bed equivalent

• Overall Frequency – annual number of non-zero claims per 100 occupied bed equivalents

• Indemnity Frequency – annual number of claims with indemnity payments per 100 occupied bed

equivalents

• Severity – average ultimate size of each claim, where each claim is limited to $1 million per occurrence

Actuarial Analysis


Conditions and Limitations

Inherent UncertaintyActuarial calculations produce estimates of inherently uncertain future contingent events . We

believe that the estimates provided represent reasonable provisions based on the appropriate

application of actuarial techniques to the available data . However, there is no guarantee that actual

future payments will not differ from estimates included herein .

Extraordinary Future EmergenceOur projections make no provision for the extraordinary future emergence of losses or types of

losses not sufficiently represented in the historical data or which are not yet quantifiable .

Data RelianceIn conducting this analysis, we relied upon the provided data without audit or independent

verification; however, we reviewed it for reasonableness and consistency . Any inaccuracies in

quantitative data or qualitative representations could have a significant effect on the results of our

review and analysis .

Use and DistributionUse of this report is limited for the specific purpose described in the Introduction . Other uses are

prohibited without an executed release with Aon .

We request that Aon be notified of further distribution of this report . This report should only be

distributed in its entirety, including all supporting exhibits .


Definitions

ALAE ALAE is an abbreviation for allocated loss adjustment expense .

ALAE refers to costs, in addition to indemnity payments and

reserves, which are incurred in handling claims . Typically, these

costs are comprised of legal fees paid by the insured entity in

investigating and defending claims . In the context of this study

ALAE represents defense costs . The majority of claim data used

in this study contained a separate field to identify ALAE costs

separately from indemnity costs . Whether separately identified

or not, allocated loss adjustment expenses are included in the

reported loss information, loss reserving methodologies and

loss projections contained in this report . All references to losses

throughout the report and exhibits include ALAE except where

noted otherwise .

Claim A claim is a demand by an individual or other entity to recover

for a loss . It may involve a formal lawsuit but not necessarily,

especially in the case of a general liability claim .

Exposure Actuaries select an exposure base such that the incidence of

claims will tend to vary directly with the exposure of the entity

at risk . The actuary must consider both the historical loss level

and the corresponding exposures in evaluating historical claim

liabilities and expected future costs . It is important to choose an

exposure measure that is relevant to the unique situation of each

risk group .

In this study the exposure base is occupied beds . Occupied

beds are calculated by multiplying the number of licensed

beds by the average annual occupancy rate . There is a strong

correlation between the number of occupied beds and the

total amount of losses incurred by a long term care facility .

Not all beds are equal in terms of their risk exposure, however .

An assisted living bed generates fewer dollars of GL/PL claim

activity than a skilled care bed . All beds in this study have been

adjusted to the equivalent of a skilled nursing care bed .

By dividing losses by exposures, comparative estimates of the

long term care industry GL/PL loss rates are developed .

Frequency Frequency is the ratio of the number of claims divided by

exposures . In this report, frequency is measured on an annual

basis as the number of claims projected for the given time

period divided by the number of occupied beds during that

same period . In the summary exhibits, frequency is the annual

number of claims per 100 occupied beds .

General Liability (GL) General liability exposure relates to those sums an entity

becomes legally obligated to pay as damages because of a

bodily injury (typically including personal and advertising

injury) or property damage .

IndemnityIndemnity refers to the component of claim costs actually paid

or reserved to be paid to the plaintiff . Indemnity costs include

both the amount provided for the plaintiff, either as a jury award

or a settlement, and the amount retained by the plaintiff’s

attorney . However, in most claim files, including those used to do

this study, the split between plaintiff award and plaintiff attorney

is not provided . Indemnity may also include punitive damages,

although this is not consistently treated among companies .

Indemnification Rate This is the ratio of claims that result in indemnity to all

claims (claims with indemnity and claims with expense

only) . This reflects the likelihood that a claimant will receive

indemnification .

The following definitions are provided to help the users of this report to fully understand the analyses presented and the resulting conclusions .


Definitions

Limit of Liability A limit of liability is a maximum amount of coverage provided by an insurance transaction . Above the limit of liability, the insured is responsible for all losses . Limits of liability may be expressed on a per occurrence basis or an aggregate basis, similar to deductibles . The losses included in this study are limited to $1,000,000 per occurrence .

Loss RateLoss rate is the cost per exposure of settling and defending claims . Loss rate is calculated as the ratio of total dollars of losses (indemnity and ALAE) to total exposures for a given period of time . In this report exposures are selected to be occupied beds and the time period is one year . Consequently, a loss rate represents the annual amount per occupied bed expected to be paid to defend, settle and/or litigate GL/PL claims arising from incidents occurring during the respective year .

Loss Trend Loss trend is the change in claim frequency and/or severity from one time period to the next . Factors that affect the frequency and severity of claims are constantly changing over time . Examples of causes include inflation, societal attitudes toward legal action, and changes in laws . Actuaries use trend factors to adjust historical loss experience to comparable levels .

Occurrence Year An occurrence year is the year in which an incident giving rise to a claim occurred . All of the loss rate, frequency and severity analyses use grouped data by occurrence year, unless specifically noted otherwise . Accident year is interchangeable with occurrence year .

Professional Liability (PL) Professional liability exposure relates to those sums an entity becomes legally obligated to pay as damages and associated claims and defense expenses because of a negligent act, error or omission in the rendering or failure to render professional services .

Severity Severity refers to the total dollar amount of a claim including indemnity and ALAE . In this report, the average severity for a given year is measured by dividing the total dollars of losses for all claims incurred in the year by the total number of claims .


Aon’s Actuarial & Analytics Practice is the third largest North

American property and casualty consulting firm, providing

actuarial services to clients for more than 20 years . Our

international capabilities are matched by our strong local

presence that positions us to deliver timely results and

meaningful communication to every level of your organization .

Our practice is comprised of highly skilled and experienced

professionals in the risk quantification and analysis field . We

have more than 100 consultants and 50+ Fellows and Associates

of the Casualty Actuarial Society . As part of Aon Global Risk

Consulting, we are dedicated to expanding our solutions to

help our clients effectively and proactively manage their risk in

the current dynamic and challenging global economic market .

About Aon’s Actuarial & Analytics Practice

About Aon Aon plc (NYSE:AON) is a leading global provider of risk management, insurance brokerage and reinsur-ance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative risk and people solutions. For further information on our capabilities and to learn how we empower results for clients, please visit: http://aon.mediaroom.com.

© Aon plc 2016. All rights reserved.The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is re-ceived or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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2016 Long Term Care - Kentucky Association Long Term Care Benchm… · Indemnity and Expense Statistics ..... 4. Claim Lag Statistics ... relief to prevent this part of the rule from