By Daniel G. Smith, AIC, Director of Claim Operations, MEMIC; and Diana Toste, Claim Manager, Beacon Mutual
 This newlsetter article will review the following aspects of Life Care Plans: What is a Life Care Plan, When are Life Care Plans Appropriate, Why are LCP's good for business, Who makes a good Life Care Planner and proper Considerations of a Life Care Plan.
What Is A Life Care Plan?
A Life Care Plan (LCP) is formally defined as “A dynamic document based upon published standards of practice, comprehensive assessment, data analysis and research, which provides an organized, concise plan for current and future needs with associated costs, for individuals who have experienced catastrophic injury or have chronic health care needs. ” 1
In essence, it identifies future health considerations and what the medical costs are going to be. In the following segments we will identify in more detail the aspects of Life Care Plans beyond a formal definition.
When Are Life Care Plans Appropriate?
On a broad view Life Care Plans are used in cases involving a variety of injurious events including catastrophic injury, illness and/or chronic healthcare needs such as Medical Malpractice, Personal Injury, Elder Care, Medicare Set-Asides, and Trust Accounts. Our focus today is on the LCP's role in work related injuries. However, LCPs are not for every workers' comp case. From a simple cost benefit analysis LCPs should be limited to those workers' comp case resulting from catastrophic injury. The LCP process routinely starts once a patient's condition has stabilized following a catastrophic injury. The most thorough LCP should involve a life-care planner, a nurse case manager and an economist working in concert towards an all-encompassing plan.
“Life Care Plans are an important document as they outline potential future cost projection for an injured worker suffering a catastrophic injury. It will help the adjuster set the reserves appropriately to prepare for the future. All aspects of the person's medical history are reviewed: this includes life expectancy, other illness or diseases with the associated potential medical expenses. Most catastrophic injuries or chronic medical conditions follow a predicted path, a trained professional is able to develop a written life care plan so that we can prepare for this future.” – Brenda Carland, Disability Nurse Unit Manager - MEMIC
In addition to workers' comp cases LCPs are used in cases of third-party responsibility, or subrogation, for medical costs associated with a claim. For example, when an employee sustains an injury resulting from a motor vehicle accident while traveling to a business meeting, it may be determined that while the injured employee worked for a consulting group at the time of the accident, it was through the negligence of another motor vehicle which was the cause of the accident. In some cases, both the plaintiff and the defense may hire Life Care Planners to determine the scope and cost of future medical needs. The opinions of the Life Care Planners then become evidence in the case and are used to determine a settlement or award for future medical needs. Life Care Planners also could be hired to review and give an expert opinion on an existing plan.
The LCP can also be an important tool in the Medicare set-aside toolbox. Life Care Plans are needed to meet Medicare set-aside requirements. LCPs are used as a tool to make an allocation recommendation to CMS relative to a Medicare eligible claimant who wishes to settle their claim. This is necessary should the individual face other health issues in the future that are covered by Medicare.
LCP's Are Good Business For Comp Insurers
Beyond good case management and case by case medical projections LCPs are simply good for business. Some of the benefits are explained here.
Reserve justification: In the workers' comp arena, an LCP is used in catastrophic injury cases. For an insurance company to remain healthy, it's claim reserves need to adequately reflect the anticipated costs that will be associated with a claim during a period in which the premium will be reflective of the loss. It projects the expected future treatment over the life of the patient, including surgeries, therapy, medicine and other care issues, and provides one with the estimated cost which can be incorporated into the claim reserves.
Structured Settlements: Projecting the future medical needs of an individual is also the basis of structured settlements that provide for payments over time to cover medical costs. For example, based on an individual's life expectancy, future treatment requirements, and the cost of ongoing care, pain management, and other medication, it is determined that a person needs a certain dollar amount each year for general medical treatment. In addition, the LCP estimates the individual will require a hip replacement every eight years. Based on these expectations, a settlement is structured by the insurance company and financed with annuities.
“A well conceived life care plan addresses the anticipated needs of the injured party, and in combination with a structured settlement utilized to fund those anticipated needs, can allow the difficult claims to move forward toward settlement. The insurer can realize a significant savings by funding the life care plan via an annuity, and the injured party can contemplate settlement knowing anticipated future needs will be met.” - Michael Fraser, Fraser and Associates, Structured Settlements / Financial Services
Lump Sum Settlements: As with the structured settlements, LCPs can help when determining the value of a claim for lump sum settlement (in those states where medicals can be closed with settlement).
Reinsurance Relations: An LCP helps insurance companies mitigate their risk and determine their claim exposure with regard to reinsurance requirements. Typically, reinsurance becomes an issue at a certain dollar threshold, such as $2 million or $3 million. If a life-care plan estimates that the claim, over time, will approach that number, the insurer must notify its reinsurance company.
Customer Service : Finally, having a quality life care planner work with the injured worker and claim handler can convey a higher level of service commitment to the policyholder. A level of service that might not be available from other insurers who aren't willing to invest in the extra effort and expense needed to forecast expected lifetime medical costs.
Who Is Qualified To Prepare An LCP?
With the increased demand for Life Care Plans and the attention they have gleaned from the connection to Medicare Set Asides more and more vendors will be offering this service as a stand alone service or bundle it together with their Medicare Set Aside products. It is important for an insurer to hire an effective, reputable professional who would be considered a Life Care Planning expert under testimony. So how does one choose an expert Life Care Planner, or better yet how does an insurer ensure that someone internal to the organization meets the qualifications of an expert Life Care Planner? Here are some questions that an insurer can ask themselves and the planner to prepare for an assignment.
Are they qualified to support their plan and recommendations under testimony if needed?
What education, life care planning, work experience, training and/or certifications do they have?
Do they participate in their professional associations or development?
The Commission on Healthcare Certification (CHCC) provides a listing of Certified Life Care Planners (CLCP), listed by state, on its website: http://www.chcc1.com . Another resource is the American Association of Nurse Life Care Planners (AANLCP) at http://www.aanlcp.org .
Considerations Of A Life Care Plan
Traditionally, LCPs have been known to take several months to complete. But in the current environment of Medicare set-asides, the market has become competitive. As a result, Life Care Plans can be completed within a month's time, provided the Life Care Planner is provided with a full copy of the claim file and treating doctors are cooperative in those cases involving additional considerations beyond paper files.
Most quality life care plans include a meeting with an injured worker, ideally a meeting conducted at the residence of the employee. Many factors can be analyzed once the planner has been able to experience first hand the injured worker's current home environment. Information such as home modifications, vehicle modifications, and a family member's availability to assist with activities of daily life can be incorporated into the LCP after a visit to the injured workers home.
The treatment team and physicians involved are contacted to obtain their input into the client's current and future medical needs. If the client is in rehabilitation, the Life Care Planner may attend the team conference meetings. Frequently, a Case Manager is involved and can be a valuable asset in assessing what the client's needs are.
Once the Life Care Plan is complete, an economist is utilized to compute the present value of future medical and other care costs. Various costs of items on the plan will change and are anticipated to increase with inflation. Without all the necessary components, the economic analysis can be challenging. The areas of concern, from an economic point of view, include: (1) cost categories, (2) items that should be included, (3) timing of the items, (4) the use of actual or annual averages, and, (5) the emphasis placed on trivial items.
Vocational issues also need to be explored by a professional vocational counselor. To project future medical needs and costs, the Life Care Planner would take into consideration the age and general health of the individual, the life expectancy, and how the normal aging process affects their future disability. Research and cost projections for all the items are completed and incorporated into the Life Care Plan. These are then placed on a Life Care Plan chart. Each major category has its own column heading. Areas to be addressed include the following:
Projected therapeutic modalities, Diagnostic testing, Wheelchair Needs, Wheelchair Accessories and Maintenance, Aids for Independent Functioning, Orthotics/Prosthetics, Home Furnishings and Accessories, Drug/Supply Needs, Home Care/Facility Care, Future Medical Care –Routine, Transportation, Health and Strength Maintenance, Architectural Renovations, Potential Complications, Future Medical Care/Surgical Intervention or Aggressive Treatment, Orthopedic Equipment Needs , Vocational/Educational Plan.
While Life Care Plans have important financial components to provide for future costs, the medical management and prevention are also vital parts. With a Life Care Plan, an individual's long-term medical needs are anticipated and provided for, including proactive treatment and preventive care to help achieve a maximum state of health and well-being. Because the life-care plan projects future health care needs, it also identifies health risks that could have an impact on the patient's future needs. Implementing prevention steps can mediate those health risks.
Without a Life Care Plan that addresses these needs as they arise and identifies potential risks in the future, the effects of aging and the onset of other medical conditions could further compromise the person's health.
In summary, once completed, the Life Care Plan should be a working document that would assist the clients and/or family to obtain needed services. The LCP creates a blueprint for the clients' needs and assists family, case managers, trust managers, etc. in helping the client achieve his or her maximum level of functioning and independence.
Footnotes: (1) Valpar Consultants, http://www.valpar.com/services.html
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