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However, the report also finds significant variation in existing regulatory regimes, with companies reporting that different states frequently respond to identical rate requests in differing ways, raising equity issues for consumers. GAO also reported varied standards for what constitutes "timely" claims payments, ranging from five days in one state to 45 days in another.

"Despite state oversight efforts, some consumers remain more likely to experience rate increases than others," the GAO reported. "Specifically, consumers may face more risk of a rate increase depending on when they purchased their policy or which state is reviewing a proposed rate increase on their policy."

The report came at the joint request of a broad range of House and Senate leaders, including Senate Aging Committee Chairman Herb Kohl, Senate Finance Committee Ranking Member Chuck Grassley, R-Iowa, and Reps. John Dingell, D-Mich., and Joe Barton, R-Texas, the chairman and ranking member, respectively, of the House Energy and Commerce Committee.

Others joining in the request include Sens. Hillary Rodham Clinton, D-N.Y.; Byron Dorgan, D-N.D.; Amy Klobuchar, D-Minn.; and presidential candidate Barack Obama, D-Ill.

The inquiry is expected to prompt a series of hearings in both houses that could examine a larger federal role in regulation of LTC coverage and claims. The federal government already has promulgated consumer protection standards for LTC insurance through 1996's Health Insurance Portability and Accountability Act, in the Federal Long Term Care Insurance Program established in 2000, and as a part of the state long-term care "partnership" programs authorized by 2005's Deficit Reduction Act.

"The GAO's findings and our own Committee staff's investigation have identified troubling weaknesses in the states' ability to protect consumers from abusive practices," Dingell said. "If the insurance industry is not up to the task of correcting these problems swiftly and treating vulnerable policyholders and their families fairly then Congress will need to consider steps to ensure strong, uniform national standards."

Dingell's committee was first out of the gate in the report's wake, with a hearing by the Oversight and Investigations Subcommittee that drew testimony from representatives of Genworth Financial, Conseco, John Hancock and Penn Treaty, as well as the New York, Florida, Wisconsin and Washington state insurance departments.

The congressional inquiries were sparked, in part, by reports of widespread claims denials and unreasonable premium hikes faced by LTC policyholders. According to the National Association of Insurance Commissioners, the number of denied LTC insurance claims rose 92% between 2001 and 2006, including a 74% jump from 2003 to 2006.

Such concerns prompted Grassley, a co-author of the Deficit Reduction Act, last October to ask 11 top insurers to provide his committee with detailed descriptions of the documents policyholders must provide when filing a claim, how claim denials are communicated to customers, and the processes available for appeals and policyholder inquiries (BestWire, Oct. 5, 2007).

"The very high costs of long-term care make it smart public policy to help people manage their financial risk with long-term care insurance policies," Grassley said. "It's also important to make sure these products are viable and don't leave consumers with big premiums and little security. This new report provides helpful information for federal and state lawmakers, regulators and consumer watchdogs in meeting that challenge."

America's Health Insurance Plans spokesman Robert Zirkelbach said the group's own data found that LTC insurers pay nearly 97% of all claims submitted. Nonetheless, he said, AHIP members "strongly support strengthening regulations to protect consumers and give them peace of mind about their long-term care insurance coverage."

"This report highlights the need for all states to adopt the most recent NAIC model to ensure premiums remain stable and that only qualified individuals purchase a policy. We support this model and have pushed for its adoption in all 50 states," Zirkelbach said.

(By R.J. Lehmann, Washington bureau manager: raymond.lehmann@ambest.com)