A four percent annual increase in the average claim size is responsible for the growth of long-term care liability costs, according to a study on 2011 long-term general and professional liability actuarial analysis by the Aon Corporation and the American Health Care Association.

Nationwide, the severity of liability claims increased steadily from $125,000 in 2005 to $153,000 in 2010. In 2011, claims severity is projected to reach $159,000. In addition, the average annual loss rate per bed, which has hovered around $1,400 for the past five years, is projected to be $1,430 in 2011. Likewise, since 2005, the loss cost as a percentage of the Medicaid per diem reimbursement rate has been near its 2010 level of 2.22 percent.

The yearly analysis measures the severity and frequency of liability claims, tracks the loss rate (liability cost) as a percentage of the Medicaid per diem reimbursement rate and calculates the overall loss rate per occupied long-term care bed in the U.S. to help gauge the level of risk facing long-term care providers.

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