by Michael Matray, editor of Medical Liability Monitor
Hosted in the nation’s capitol during the most bizarre, contentious election year in recent memory, the 2016 PIAA Medical Liability Conference convened from May 11 – 13 to foster discussion about the factors currently driving the medical professional liability industry as well as the emerging trends it will address in the near future.
Educational sessions at this year’s conference examined generational differences between younger millennial physicians and those of the baby boom generation, the benefits of shared decision making for patients and providers, the rapid growth of retail medicine and the emerging role of telemedicine in healthcare delivery as well as the future of data analysis and how to leverage this new approach to healthcare management. Following are some highlights from the three-day Medical Liability Conference.
PPACA Remains Front & Center
The Medical Liability Conference kicked-off with a keynote address from Kathleen Sebilius, former-U.S. Secretary of Health & Human Services and the woman who helmed the launch of the Patient Protection & Affordable Care Act (PPACA) of 2010. A leading voice in health policy, Sebelius revisited her part in the rollout of PPACA, its influence on the current direction of the healthcare industry and its potential future effects on the medical professional liability industry.
Sebelius began by noting how PPACA has driven the U.S. uninsured rate below 10 percent for the first time, moved the Centers for Medicare & Medicaid Services from a passive payer to an active purchaser of healthcare and slowed the rate of expansion in healthcare spending to a 15-year low.
When it comes to the future of medical liability, she believes “the next 10 years will look much different than any previous period.” According to Sebelius, the new technologies, data sets and reimbursement model PPACA has made possible will have great influence on those participating in the business of medical professional liability.
“The future is in data and data analysis,” Sebelius explained, highlighting how PPACA’s incentives to move from paper medical records to electronic health records will help facilitate the collection and scrutiny of healthcare data in new and advantageous ways. She also noted the boom in startup companies that analyze large volumes of data in order to advise the most advantageous course of treatment.
Sebelius warned that while the move to a value-based reimbursement system has had the positive effect of reducing adverse outcomes by 17 percent and decreasing the number of hospital readmissions by 565,000 since 2010, enterprising trial lawyers are likely to exploit readmission denials as a new claim avenue when such a denial ends in an unintended negative outcome.
Millennials & Baby Boomers
Two sessions at this year’s Medical Liability Conference focused on how generational differences between physician populations are affecting the practice of medicine as well as physician risk profiles.
In a session titled Perspectives on 21st Century Medicine: Enter the Millennials, Graham Billingham, MD, MedPro Group chief medical officer, moderated a panel that looked at challenges the healthcare delivery system is likely to confront in adapting to the expectations of this new millennial demographic.
Characteristics that define the worldview of physicians who reached adulthood at the turn of the 21st century include their comfort with and reliance upon technology, emphasis on a work-life balance, comfort in challenging authority and embrace of performance-based incentives rather than reimbursement for the quantity of patients seen in a day.
These generational attributes meld well with the direction PPACA reforms have been pushing healthcare delivery, but they also present certain challenges. How will they react when the technology they rely on fails? What is the best way to provide positive reinforcement—while at the same time establishing realistic expectations for recognition—for a segment of physicians who grew up as part of the “everyone-gets-a-trophy” generation?
Later the same day, James Swift, DDS, chair of OMS National Insurance Co., moderated a session on Aging Healthcare Professionals—Issues & Considerations for Insurers, which looked at the impact aging has on a physician’s cognitive and physical abilities as well as how malpractice insurers can manage senior physicians’ elevated risk profile.
Like the millennials, the aging baby-boom generation of physicians carry their own challenging liability issues. Reasoning skills generally decline by around 10 percent between ages 65 and 70 years old. Between 3 and 19 percent of adults older than 65 years experience mild cognitive impairment, affecting memory under stressful situations. Due to their earned stature, most aging physicians receive little evaluation and are almost universally resistant to an intervention regarding their cognitive decline.
In light of these statistics, the panel discussed the benefits of late-career-practitioner medical malpractice insurance policies that incorporate confidential, well-structured, rigorous peer review to evaluate cognitive and physical decline.
Two sessions at this year’s conference examined healthcare practices that have recently emerged into the mainstream—telemedicine and retail medicine.
Joseph McMenamin, MD, JD, who spends the majority of his legal practice advising and consulting practitioners of telemedicine, conducted a session titled Telemedicine: Indentifying, Assessing & Minimizing Associated Risks where he weighed the benefits against the disadvantages of telemedicine. McMenamin acknowledged there have been few telemedicine liability claims to date, but he expects that to change in the future.
With a growing physician shortage in the United States, telemedicine offers isolated patients convenient access to medical care. Patients are more likely to share sensitive, personal information via telemedicine than during face-to-face consultations, and the practice also carries a number of cost-saving advantages.
Those benefits aside, telemedicine is limiting in that the medical professional cannot auscultate and is limited by his or her inability to conduct a physical, hands-on inspection of the patient.
McMenamin anticipates liability claims will stem from telemedicine’s limited data for diagnosis, documentation errors and whether or not the telemedicine professional directed the patient to visit his or her primary care physician for follow-up.
Kavita Patel, MD, MS, presented a session titled The Rapid Growth of Retail Medicine in which she detailed the scope of services offered at retail clinics, their beneficial cost structure and consumer appeal.
Retail clinics offer acute episodic care, and according to Patel, 75 percent of diagnoses are for five to seven common conditions. Costs are containable due to the low cost for space and the fact that labor is generally performed by less-expensive nurse practitioners. Consumers are drawn to retail medicine for to its convenience and transparent pricing.
According to Patel, medical centers previously thought if they ignored the retail medicine trend, it would go away; now most are affiliating themselves with local big-box retail clinics. Payer coverage is also expanding.
The Financial State of the MPLI Industry
Perhaps the most well attended of the sessions each year at the Medical Liability Conference is the one that dives deep into the financial health of the medical professional liability insurance industry. This year’s session, titled MPL Financial Performance: Are the Winds of Change Finally Beginning to Blow?, conducted by James D. Hurley, consulting actuary with Willis Towers Watson, was no exception.
For his presentation, Hurley assembled the data of roughly 35 PIAA member companies, excluding Medical Protective and MLMIC of New York for logistical reasons, as of Dec. 31, 2015.
The good news is that 2015 continued the medical professional liability insurance industry’s decade-long streak of underwriting profitability.
“The combined ratio was at 89 percent in 2006, dipped down to a low of 76 percent in 2008 and has been on a steady, but slow increase to date,” Hurley explained. “But you also see an indication of stability in that every one of these numbers over the last 10 years is under 100 percent.”
To illustrate how much the medical professional liability insurance industry’s underwriting has changed over the years, Hurley showed a slide stretching back to 1976 where the combined ratio dipped under 100 percent just three times previous to 2006. And underwriting needs to be sound in today’s marketplace, as 2015’s investment income was at its lowest point since the economic crisis of 2008.
“Pressure is building on the underwriting side,” Hurley warned, pointing to a slide that illustrated how combined ratios have steadily climbed from a low of 76 percent in 2008 to 96 percent in 2015. “We can see the steady increase in combined ratios. Dealing with exposure and balancing that with pricing is critical.”
To stay competitive during the industry’s now-decade-long soft market, insurers have buoyed themselves with reserve releases. Hurley shared how the industry’s total loss reserves have decreased from a high point of $11.2 billion in 2007 to $8.5 billion in 2015. At what point will this be unsustainable?
Hurley noted that another significant factor to the industry’s positive financial results has been the decline in claims frequency. He shared a slide that showed a stark, almost-nine-point decline in claims frequency with cost in two states that passed medical liability tort reforms in the early 2000s as well as two states that passed no reforms, yet still experienced a decrease in claims with cost.