Part I: 2012 PIAA Medical Liability Conference Focuses on MPL's Role in Changing Healthcare

Editor’s note: Today’s blogpost is the first of a two-part series reporting on the 2012 Physician Insurer Association of America (PIAA) Medical Liability Conference, which was held May 9 – 12 at the JW Marriott in Washington, D.C. The article it originates from was initially published in the June 2012 issue of Medical Liability Monitor, the industry’s premier source for consistent, reliable coverage and fresh perspectives on medical professional liability insurance and risk management issues. Click on the preceding hyperlink to visit the Monitor’s website, where subscription information is available.

With the American healthcare system in a holding pattern as it awaits a June decision by the United States Supreme Court on the constitutionality of healthcare reforms found in the Patient Protection & Affordable Care Act (PPACA), the Physician Insurers Association of America (PIAA) focused its 2012 Medical Liability Conference on getting the message out that change is coming regardless of which way the nation’s highest court eventually rules. This year’s conference took place May 9 – 12 at the JW Marriott in Washington, D.C.

“We are in the midst of a healthcare delivery transformation, which will be unaffected even if the Supreme Court—or the upcoming presidential election—overturns PPACA,” said Ian Morrison, PhD, author and healthcare futurist, during his keynote presentation to kick-off the conference. “The momentum behind the transformation of the delivery system is immense. It’s very safe to say the train has left the station, and it’s very unlikely to ever go back to the way it was.”

Morrison was keen to point out that the engine driving the movement for healthcare delivery change is not political, but economic in nature. The United States pays more per capita for healthcare services than any other country, but ranks No. 37 in terms of medical outcomes, according to the World Health Organization. By contrast, France pays the second most per capita for healthcare services, but ranks No. 1 in healthcare outcomes. America’s investment to outcome ratio is broken.

“The healthcare reform law stimulated a lot of the healthcare discussion recently, but what is really pushing the transformation is a relentless pressure from purchasers of healthcare, who are dissatisfied with the quality and performance of American healthcare,” Morrison said. “We pay much more for a system that underperforms in so many metrics.”

PPACA, ACO & MPL

At the heart of PPACA’s strategy for minimizing healthcare costs is the implementation of accountable care organizations (ACOs), which tie provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. Under Section 3022 of PPACA, the ACO is broadly defined as “a shared savings program that promotes accountability for a patient population and coordinates items and services, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.” It’s an oblique definition, by design, that has created a sense of uncertainty throughout the various industry segments that are tied to the healthcare delivery system.

“ACOs impact on medical professional liability is a difficult topic because the whole concept of the ACO is still a bit ill-defined,” said Chad Karls, FCAS, MAAA, principal and consulting actuary at Milliman Inc., during his panel presentation, The Impact of Accountable Care Organizations on Healthcare and MPL. “It’s evolving; it’s changing. It’s not a fixed thing we can necessarily evaluate.

“When you look at the 906 pages of PPACA, only six pages deal specifically with medical liability—five pages on demonstration grants and a half page on coverage for free clinics. To put that in perspective, the PPACA table of contents is 12 pages.”

While just one percent of the PPACA legislation is directly related to MPL, there is an array of indirect implications for PIAA companies. Most importantly, how do PIAA companies fit into the new model for healthcare delivery?

“First and foremost is the medical professional liability risks—whether direct or vicarious—that these entities are going to have,” Karls said. “That’s the largest exposure, and nobody knows that area better than you. So you are at a distinct advantage when it comes to serving this market.”

“The [ACO] trend is going to continue regardless of whether the Supreme Court upholds the Affordable Care Act,” agreed Paul Greve, Jr., executive vice president at Willis Health Care Practice. “We are already seeing provider alignment. It’s not always going to be the hospital employment model, but the payment [model] is moving away from fee for service to bundled payments. We’ll likely see the return of capitation—with financial incentives for good quality and conversely no payment for ‘never events.’

“Having traveled the country visiting different hospitals, I see great variation in the degree of preparedness for the healthcare reform that’s coming down the road. Those hospitals and groups that are not creating ACOs are still going to have clinical integration exposures due to payment transformation.”

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