Date: April 11, 2007
For more information contact: Eileen Mallow, Assistant Deputy Commissioner, (608) 266-7843 or eileen.mallow@wisconsin.gov

National States pays $50,000 forfeiture and $29,455.66 in restitution

Madison, WI—Wisconsin Insurance Commissioner Sean Dilweg announced today that National States Insurance Company entered into an agreement with his office to correct market conduct issues.

National States Insurance Company agreed to pay a forfeiture of $50,000.00, and $29,455.66 in restitution on four identified claims. There were over 40 instances where National States failed to actively review the care received by patients in skilled nursing facilities. National States has also made a commitment to significantly improve their reviews of Medicare supplement claims.

National States Insurance Company agreed to the settlement after the Office of the Commissioner of Insurance's (OCI) investigation alleged that, since 2001, the company has not adequately reviewed Medicare supplement claims to determine if each claim should be paid in accordance with either the state skilled nursing care mandate or to supplement payments made under Medicare Part A for eligible skilled nursing care.

"Many seniors have Medicare supplement policies through insurance companies like National States," said Sean Dilweg, Commissioner of Insurance. "To keep senior consumers from being denied claims, these insurance companies need to actively review the care received by seniors in skilled nursing facilities."

Wisconsin insurance law requires insurers offering disability policies, including Medicare supplement policies, to cover 30 days of medically necessary skilled nursing care. This law also requires insurers offering Medicare supplement insurance products to cover the co-payments associated with skilled nursing care for the 21st through the 100th day of care when Medicare determines the level of care being provided meets its eligibility requirements for skilled nursing care. This means insurance companies may be required to cover both the co-payments under Medicare Part A for 79 days and skilled nursing home care for an additional 30 full days when the patient requires it and the care is medically necessary as determined by the insurer.

Although both Medicare and private insurers provide some coverage for skilled nursing care, what is considered eligible or medically necessary may differ between Medicare and private insurance.

"In this case, the company paid either the Medicare Part A co-payments or up to 30 days under the state mandate, but not both, based upon a determination made on the first day the patient entered the skilled nursing facility," said Dilweg. "It is not unusual for a patient to need varying levels of care throughout a stay in a skilled nursing facility and for varying periods of time. Because of this, the insurer must actively review each claim with some frequency to ensure it is processed in compliance with Wisconsin law."

The OCI encourages consumers to file complaints if they are not receiving coverage and feel they should be.

Publications that explain Wisconsin consumer protections in health care, such as "Wisconsin Guide to Health Insurance for People With Medicare" and "Fact Sheet on Mandated Benefits in Health Insurance Policies," can be found on the OCI Web site at oci.wi.gov. Single copies can be ordered free from the agency by writing to OCI Publications, P.O. Box 7873, Madison, WI 53707-7873, or by calling 800-236-8517.

Created by the Legislature in 1871, Wisconsin's Office of the Commissioner of Insurance (OCI) was vested with broad powers to ensure that the insurance industry responsibly and adequately met the insurance needs of Wisconsin citizens. Today, OCI's mission is to lead the way in informing and protecting the public and responding to its insurance needs.