According to the Insurance Journal, while the details are still spotty and the data still limited, experts are beginning to feel more comfortable making some observations and predictions about the likely impact that the Affordable Care Act will have on medical malpractice insurance and the liability market going forward. Specifically, while warning about the spin that comes with a topic as politically charged as healthcare reform, the Journal on a session given at the Casualty Actuarial Society’s Seminar on Reinsurance in New York, titled, “The Impact of the Affordable Care Act on Medical Professional Liability – an Update.” This seminar brought together “two casualty actuaries and a veteran medical malpractice underwriter” to discuss what the next decade might look like for medical malpractice insurance.
In addition to that recap, the Insurance Journal’s Amy O’Connor had in a story earlier this month on trends that are being seen even now in the medical malpractice market and, on her analysis, these changes too are being driven largely by the implementation of the Affordable Care Act. So, what kinds of changes do these industry insiders see happening both now and moving forward? Here are some of the highlights.
A more complex market and more dynamic risk profiles. The market is changing. Doctors are becoming employed, but more than that they are moving into roles that have them practicing in multiple areas, with variable risk levels. The hospitalist, the doctor whose job it is to monitor patients for short terms while they are in the hospital, is a growing role and one that certainly calls for a much more carefully crafted risk analysis than many traditional positions.
In addition to new and more diverse roles for doctors regulatory factors along with related value added services have created an environment where insurers who want to compete have to take more of a risk profile approach to providing coverage to their clients than they have in the past. Doctors are starting to realize that more than ever just getting a generic, one-size fits all policy isn’t good enough. Why settle for that? Brokers with good access to the market should have no trouble providing them with a more tailored, robust, and full orbed risk management package than any generic, canned malpractice plan. Things like HIPAA compliance training, data protection coverage, supplemental disability policies and more should all be things doctors look for in building their risk management profile.
A More Fluid Market. With the flood of new patients being brought into the healthcare system as a result of the Affordable Care Act (7-8 million already, likely upwards of 20 million within the next few years) it’s surely the case that nurses and physicians’ assistants will be taking on more direct care and increasing their coverage needs. At the same time the formation of Accountable Care Organizations (ACO) creates its own set of new risk calculations and coverage needs. Insurance companies will have to adapt to these needs quickly, discerning a growing market in less traditional roles and the new markets that will develop as doctors and hospitals continue to work out new models for providing coordinated care. This is happening even now as we see providers developing new products like Provider Excess Insurance (PEI) and re-thinking how and who to provide E&O and D&O policies to.
Loss of Continuity of Care? The long term predictions of the seminar panel mentioned above are in one sense just extrapolations of the kinds of trends discussed by O’Connor and summarized above. First of all, more patients, fewer doctors, and more ACOs could mean that continuity of care diminishes substantially. If patients are constantly being shuffled from one provider to another the chances of communication breakdown go up and with that the likelihood of a triggering event for a med mal case goes up. But on the other hand, ACOs are meant to provide better, more tailored, patient centered care. While the industry seems somewhat spooked about the future as ACOs and other non-traditional cooperative care models are developed it is important to remember that insurance companies will always be hesitant about new models. New models mean undefined risk. There is always a learning curve involved in providing profitable coverage in the face of unknowns, but it is possible that these new models will eventually prove to offer patients better, more coordinated care by integrating practices that would otherwise be operating completely independently of one another. That integration combined with the shift to electronic health records and greater ease of sharing data digitally may mean that ACOs ultimately improve overall risk in the market, or at least function as a positive, helping to counteract increased risk caused by a diluted doctor to patient ratio.
A More Diverse Range of Risk Management Products. As with the questions raised about continuity of care this is really just the long term corollary to what we said about the fluidity in the market in the short term. However, it’s good to see that the experts at the Casualty Actuarial Society’s seminar came to similar conclusions about the long term future of the market as Ms. O’Connor did about what she’s seeing today. That should give us some confidence that both are on the right path. The diverse range of market products that the three experts talked about, besides those mentioned earlier include the “exposures usually left to errors and omissions or directors and officers policies.” Essentially, providers will have to adapt to a changed landscape, and in doing so will almost certainly end up developing new risk management products tailored for the new cooperative care models that are being developed. What those products will look like remains a matter of speculation, but we have no doubt that the market will react to the needs as they develop.
Consolidation of Risk. One significant concern that insurers have has to do with the consolidation of risk. Once again ACOs are the common factor driving this concern. ACOs allow big hospitals and groups to buy up small and rural practices and essentially bring them into their risk pool without substantially changing the practice at all. This tends to consolidate risk in hospitals, which are seen as deep pockets and magnets for huge malpractice claims. Insurers would much rather see risk continue to be widely distributed and more small and medium sized practices retaining their own policies. This probably is a legitimate concern on the part of the insurers, but it’s not clear what can be done about it. The Affordable Care Act incentivizes centralization, and specifically the formation of ACOs, so it seems that such a trend is probably with us to stay for the foreseeable future. Tort reform, and specifically non-economic damage caps may take on renewed importance if we see some massive malpractice cases against large hospitals that have consolidated lots of small practices into ACOs.
Whether you take a short term survey or you look at the long term analysis it is fair to say that though the market is changing and developing there doesn’t appear to be any pending crisis. Some of the changes will probably drive beneficial outcomes for doctors as risk management becomes more sophisticated and finely tuned, and as coverage is added for new risks. Other changes like risk consolidation are somewhat worrying but far from a reason to panic. And still others are ambiguous. Will ACOs drive risk up by breaking down continuity of care or will they mitigate risk by facilitating cooperation between doctors and practices, and getting patients to the right specialists for their specific needs? It’s not clear just yet. Whatever happens though, eQuoteMD will be here to help you find the coverage you need at the price you’d expect.
This post was written by Justin Donathan.