The U.S. medical professional liability (MPL) market has been profitable in recent years but challenges await MPL insurers because an influx of newly insured patients, coupled with health care delivery system changes, could expand the risks MPL insurers face, the Casualty Actuarial Society (CAS) was told at its annual Seminar on Reinsurance, held June 6-7, 2013.
The federal government estimates 32 million Americans who have no health insurance today will become covered under the Patient Protection and Affordable Care Act (ACA), a measure which will be primarily implemented in 2014. MPL insurance policies financially protect doctors against lawsuits alleging negligence or errors and omissions on the doctors' part that result in harm to their patients.
"Health care coverage offers no guarantee that someone will have access to health care," said Kevin Bingham, an Associate of the Casualty Actuarial Society and principal at Deloitte in Hartford, CT. Bingham pointed out that while 78 percent of all doctors had either a private practice or operated with one other doctor in 1978, the number of doctors who worked under that business model had dropped to 30 percent as of 2013.
Many of these same doctors are now working directly for hospitals so the need for hospitals to provide personalized care has grown in importance. "A lot of medical malpractice claims go away if there's good customer service," Bingham stated.
"There may be fewer doctors to care for a greater number of patients," stated Brian Ingle, a Fellow of the Casualty Actuarial Society and executive vice president with Willis Re. Inc. in New York City. Facing reduced health insurance reimbursement payments for their services, Ingle agreed with Bingham's assessment of the changing health care delivery landscape, with some doctors closing their private practices and choosing either to retire or to work directly for hospitals.
MPL insurers could in turn lose premium revenue because half of all hospitals self-insure when it comes to MPL, Ingle noted, meaning doctors who previously purchased MPL policies will no longer need to do so.
The MPL experts who convened at the CAS seminar also pointed to Massachusetts' health care law, similar in some ways to the ACA, when arguing that a more insured populace would not necessarily reduce the general public's reliance on hospital emergency room visits.
The panel on Medical Professional Liability: Effects of the New Health Care Law, which was moderated by Athula Alwis, associate vice president & actuary, Freedom Specialty, also touched on how doctors can use technological advances to document their treatment of individual patients.
"Data and IT [information technology] is the new frontier in health care," said Elke Kirsten-Brauer, executive vice president, chief underwriting officer, at the Salt Lake City, Utah-based MGIS Companies. Doctors need to make sure they've made progress notes after each patient visit, and record their patients' lab results and vitals properly so this information can be used in the doctor's defense in the event of a lawsuit.
Protecting these electronic medical records from public disclosure is also a concern for actuaries who price MPL policies and Cyber related exposures given the strict privacy laws governing the release of this information, Ms. Kirsten-Brauer added, with a single lost laptop costing an insurer upwards of $60,000 if it stored sensitive patient information.
MPL insurer exposures could also increase as nurse practitioners and physician assistants are asked to handle a greater workload than they have previously, the panelists agreed.
The Casualty Actuarial Society fulfills its mission to advance actuarial science through a singular focus on research and education for property/casualty actuarial practice. Among its 5,800 members are experts in property-casualty insurance, reinsurance, finance, risk management, and enterprise risk management.