After taking on the risk of two residencies in Primary Care/Family Medicine and then Internal Medicine, I initially felt it would negatively impact the return over my professional journey. But I was given a greater return than I expected. Following my passion has paid off, helped me feel more competently trained and built a lifelong network of colleagues/ friends.
Albert M.
There’s a reason Wisconsin is one of the safest places to practice medicine; it’s long been a haven for affordable medical professional liability (MPL) insurance. Which, among many other reasons, also makes it a great state to be a patient in.
But now, as the rest of the country feels the impact of increased MPL premiums, it may only be a matter of time before Wisconsin physicians see similar increases.
The economics behind this growing threat are relatively simple- insurance companies make money by collecting premiums, investing those premiums, and then paying out claims that are less than the income they make on their investments. On a national level, adverse litigation trends, an increased frequency of severe claims, and years of poor investment returns are driving down insurance company profits. As a result, MPL insurers are increasing premiums for the first time since 2001.
Several states have already seen significant premium hikes and higher deductibles, along with reduced coverage options and fewer (if any) risk management services. It gets worse; some insurers are exiting the market all together.
It’s a classic hard market scenario: if they aren’t already, physicians and employers of physicians will be paying more for less.
However, because of a number of factors, Wisconsin physicians have been shielded from this trend.
Thanks to the efforts of the Wisconsin Medical Society, the AMA, and the medical-legal community in general, Wisconsin has always been among the top states when it comes to affordable MPL insurance.
One of the most significant factors was in 1975 with the creation of the Injured Patients & Families Compensation Fund. Physicians and other health care providers pay into the fund, which covers malpractice awards greater than $1 million. Physicians must purchase their own MPL insurance to cover claims less than $1 million. Bottom line: A physician’s personal assets are never at risk in Wisconsin thanks to this fund.
In addition to being instrumental in the creation of the fund, the Wisconsin Medical Society has consistently and effectively lobbied the state legislature resulting in the capping of non-economic damages and other legislation beneficial to physicians.
Wisconsin currently has capped non-economic damage claims at $750,000. The state also guarantees full recovery of economic damages awarded by a jury. This includes awards for past and future medical expenses as well as lost wages.
When a 2012 malpractice suit resulted in a ruling the cap was unconstitutional, the Wisconsin Medical Society, along with the AMA’s Litigation Center, stepped in. They jointly argued against the ruling and asked the state Supreme Court to review the case. In 2018, the state Supreme Court rejected the lower court’s ruling and confirmed the cap’s constitutionality.
Consider these statistics for the period of 2004 to 2018 from the National Practitioner Data Bank managed by the Department of Health & Human Services:
Considering that the last time we saw a hard market was in 2001, these statistics are likely contributing to the national trend away from the historically lengthy soft market.
When it comes to the per-capita medical malpractice costs for all practitioners (from 2012 – 2016), Wisconsin was the lowest with an average of $3. This compared to New York’s number-one ranking of $36.
But, here’s something to watch in light of the national trends and the hardening of the MPL insurance market. Even though the number of claims paid in Wisconsin has dropped (as of 2016, the state ranked #50 out of 51 in the claims frequency category), we’ve seen a spike in paid claims from 2016 to 2017. Total paid claims for all healthcare providers went from 17 to 39 with the total payout jumping from $4.83 million to $14.28 million.
While there are no hard market busting solutions out there, Wisconsin is most likely to remain one of the least expensive insurance havens in the country. Clyde “Bud” Chumbley, MD, CEO of the Wisconsin Medical Society, agrees saying, “The Society is vigilant and will continue to play a significant role in ensuring our physicians are protected from unreasonable and unnecessary insurance premium increases.”
While the Wisconsin Medical Society and others are acting on your behalf, there are some fundamental ways you can protect your ability to acquire and maintain the right amount of professional liability coverage. We will dig a little deeper into what you can do to better manage your risk and the help that you can expect from a dedicated and experienced insurance brokers in the third part of this article.
In the meantime, if you have any questions regarding what the future of MPL holds for you, contact your trusted insurance and risk advisor.
Shawna Bertalot, CIC, ACI, President WisMed Assure
shawna.bertalot@wismedassure.org
608.442.3738
I wish I had a dedicated financial planner involved earlier in my career. I went with a default planner provided by employer’s 403b or 501K plan. They often didn’t understand the nuances of being a physician. And when changing jobs, this would be problematic as there would be a new plan and they were often not helpful rolling over old plans. Finally having a dedicated financial planner outside of my employer really helped to better make my money work for me.
Wendy M.
Physicians in Wisconsin will soon be paying more for medical professional liability (MPL) insurance thanks to a cyclical “hardening” of the market. Many younger physicians have never experienced a hard market because we have been in a “soft” market for an unprecedented length of time. The last time premiums increased was in 2001. And, prior to that, 1975 and 1986.
Chris Noffke is well versed in the insurance industry and makes it his mission to find the best solutions for his clients. He helps groups all over Wisconsin with their group benefits. On September 25, he will be hosting an informative and educational webinar about 2020 renewals for group benefits. Register here.
While an employer could choose to limit employees’ HSA contributions in some ways, they have to allow employees the chance to change their HSA contribution amount at least monthly.
As background, pre-tax HSA contribution election changes must be allowed at least monthly and upon a loss of HSA eligibility. This requirement correlates with the HSA monthly eligibility rules. Although an employer could choose to place other restrictions on HSA contribution elections under its cafeteria plan (such as only allowing one election change per month), the same restrictions must apply to all employees.
So the employer would essentially have to allow employees to change their HSA contribution elections on at least a monthly basis. Keep in mind, though, that many employers just allow open-ended prospective election changes to employees’ HSA contributions.
Ultimately, the circumstances under which mid-year election changes will be allowed for HSA contributions should be addressed in the cafeteria plan document and in participant communications.
Source: NFP Benefit Partners Compliance and Regulatory Frequently Asked Questions; May 29,2019
Physicians in Wisconsin will soon be paying more for medical professional liability (MPL) insurance thanks to a cyclical “hardening” of the market.
Many younger physicians have never experienced a hard market because we have been in a “soft” market for an unprecedented length of time. The last time premiums increased was in 2001. And, prior to that, 1975 and 1986.
Here’s how it works. The insurance underwriting cycle is determined by the collective behavior of insurers. During a soft market, insurers are willing to provide coverage at or below cost, usually in an attempt to gain market share. But, at some point, insurers get nervous about low premiums failing to cover the payment of future claims.
Tom Baker, a University of Pennsylvania Law School professor, says understanding how insurers define cost is, “key to understanding the insurance under-writing cycle”. He goes on to say that when, “…insurers set their prices, most of the costs of the insurance coverage will be incurred only in the future. As a result, insurers constantly have to imagine the future to decide how to price their products today. This situation creates a remarkably high degree of uncertainty… This uncertainty about insurance costs is the fuel that drives the underwriting cycle.”
Insurers turn a profit by charging their clients premiums, investing those premiums and then paying out claims that are less than the income they make on premiums and investments.
Things are changing because 2018 was the third year in a row the industry’s combined ratio has exceed 100%. In other words, the industry would have been unprofitable each year since 2016 without investment income.
And, according to Don Tejeski, Senior Vice President at AmWINS Group Inc., no insurer is bucking the trend: “Underwriting overall has gotten more disciplined. No one is undercutting the market.”
Despite publishing an article earlier this year that forecast a continued soft market, Susan J. Forray, a principal and consulting actuary at Milliman (one of the world’s largest providers of actuarial and related products and services), when contacted directly cautiously advised, “The closest proxy to a nationwide market would be the market for reinsurance. Most companies would say the reinsurance market has hardened. This was the case when we wrote our article but I think the hardening has broadened across the reinsurance market since then. I think this will continue to contribute to a hardening market in states where the soft market has not yet ended.”
Nationally, adverse litigation trends, increased frequency of severe claims, and years of poor market results are driving insurers to look at raising premiums for the first time since 2001. Several states have already seen significant premium hikes and higher deductibles along with a reduction in coverage. It’s a classic hard market scenario; physicians and employers of physicians are paying more for less.
And it gets worse. Some insurers are exiting the market all together.
Because of a number of factors, Wisconsin physicians have been shielded from this trend. But, in the last three months, we have seen that shield start to give way.
Thanks to the efforts of the Wisconsin Medical Society and the medical community in general, Wisconsin has always been among the top states when it comes to affordable MPL insurance. One of the most significant factors was the creation in 1975 of the Injured Patients & Families Compensation Fund. Physicians and other health care providers pay into the fund, which covers malpractice awards of greater than $1 million. Physicians must purchase their own MPL insurance to cover claims less than $1 million. Bottom line: A physician’s personal assets are never at risk in Wisconsin thanks to this fund.
In addition to being instrumental in the creation of the fund, the Wisconsin Medical Society has consistently and effectively lobbied the state legislature resulting in the capping of non-economic damages and other legislation beneficial to physicians.
Inevitably, you will pay more for MPL insurance. But, to avoid an even worse-case scenario, where you can no longer find adequate coverage at all, there are several things you can do.
As the market hardens, underwriters will begin to clamp down on exceptions. This means that if your risk management practices and policies are irregular, you will pay a lot more and your options could be severally limited.
Unfortunately, to protect their profits, insurers may reduce claims and risk management personnel and services. Which makes it even more important for physicians to make sure they have their act together when it comes to risk prevention.
This means you’re going to have to be more self-reliant when it comes to risk management because every claim will have an increasingly significant adverse effect on your premiums and even your ability to be insured at all. If you make risk management a top priority, you are much more likely to be been seen as a preferred customer by your insurer.
We will dig a little deeper into what you can do to better manage your risk and the help that you can expect from a dedicated and experienced insurance brokers in the third part of this article.
For now, assuming your house is in order, you will want to look for stability and security by renewing your coverage with a financially strong insurer; a long-term player committed to the MPL insurance marketplace. Here again, an experienced broker can play a key role in helping you understand the quality of the insurers willing to do business with you.
It is essential now more than ever to seek the help and advice of an experienced, committed adviser who can help you improve your underwriting profile if need be and navigate your options.
Shawna Bertalot, CIC, ACI, President WisMed Assure
shawna.bertalot@wismedassure.org
608.442.3738
Do you ever notice how the days seem to slip by faster and faster with each passing year?
Here we are approaching the final couple months of 2019 and it’s a shock to realize we’ll be entering a new decade. I can’t seem to adjust to typing 2020 on the applications. Before the rest of the year slips away completely, it is time to do some serious thinking about your medical benefit policies for next year.
We see it every year— there is always a time crunch when quoting medical benefits mostly because the insurance companies do not make rates available to groups and agents until they absolutely need to. I believe insurance companies offer limited information on rates because it makes it difficult for clients to switch providers.
If you take action early… perhaps even right away, together we can put the pressure on the insurance companies. Additionally, we can reduce the time crunch by taking care of ancillary benefits like Dental, Disability, Life and Vision sooner because all quoting can be done months in advance of renewal. This will allow for more time to be spent toward working on medical benefits when the rates are available.
As a side note, I think it is unfortunate these benefits are called ancillary. Even though they might be seen as a luxury when rising premiums force people to make hard choices, they can be just as important as medical benefits… just ask the employee who needs dental work or has vision problems.
Other important, time-sensitive things to think about now are your notices and enrollment periods. Open enrollment is the annual period of time when employees are able to make changes to their benefit selections. The only other time they can make changes is when they experience a Qualifying Life Event (QLE). Typically, groups need to provide a special notice to their employees to establish the time period for the upcoming open enrollment.
I am often asked to clarify which employees are eligible for open enrollment. The answer is simple for groups where all employees are working full time – 30 hours or more per week. However, for groups with employees who are working a variety of hours per week, it is a little more difficult. If you are concerned about getting it right, call me, I can help.
If you want to protect yourself, I recommend you consider setting up what is known as a Look Back Period. A Look Back Period helps you and your insurance advisor verify which employees qualify to have been part of the open enrollment process.
Most agencies only quote and spreadsheet for their clients which is why they are happy to work with any type of group or company. We’re the opposite. We are focused solely on health care companies which has helped us develop innovate and exclusive products that only WisMed Assure can offer. Some examples are the Association Health Plan, Delta Dental and income protection solutions from MGIS. If you shop for these elsewhere, you won’t get the discounts we offer.
If, as the end of the year comes closer, you find yourself scratching your head with insurance questions, and feel frustrated due to not having access to the systems and services you need, think of us… have faith in us. We are here to help you move the health care of Wisconsin forward and to be your financial partner for life.
Chris Noffke, GBDS
608-442-3734
During medical school and residency, and even early on in my career, I wish somebody would have made it crystal clear that I was setting up habits that would affect my lifetime success, both inside and outside of medicine.
I would have done things differently if I had known my work and time allocation habits would determine how I spent my life, both at work and at home, for the next 25 years.
As humans, all we really have has is time. And, it’s what we do with the time we have that reflects our values, our mission, our effect on our friends, family, patients, and our legacy both at work and in life.
As a resident, it is easy to get lost in the excitement of the job, the learning, the culture of self-denial, self-sacrifice, the excitement of healing. We are surrounded by folks who want to be the best, do the best, who often give up large parts of their lives to accomplish these goals. The pressure to compete, to work the longest, hardest, sacrifice the most, read the most, do the most cases, see the most patients is relentless.
But, we need to remember that our patients need to see us as real people, not just fountains of endless medical knowledge, but also humans with struggles, values, and wisdom perhaps outside of the latest journal article.
As medical decision making gets ever more complex, dealing with expensive, extensive, invasive procedures on people who often are late in their life journey already, or have very advanced disease, having your own human experience, with life outside of medicine, with families, friends allows you to bring so much more understanding to your patients and their journey.
As a resident, how you spend your time reflects your values, and sets you up for a lifetime of journeys and experiences, and will determine what you bring to your patient encounters. So, make sure you are spending your time in relation to your values and your goals. Make sure the way you spend your time adds value to both your life and your patient encounters.
Glen R.
For the first time since 2001, the insurance market is hardening. This means Wisconsin physicians will be paying more for their medical professional liability (MPL) policies. It also means you will face stricter conditions, less favorable terms, and have fewer options and insurance companies to choose from.
At WisMed Assure, we know this is a serious matter for our clients. Our president, Shawna Bertalot, has written a three-part series examining what to expect as the market changes and MPL premiums increase. Part one of the series will be released in September with the debut of our bi-monthly newsletter. Be sure to subscribe to stay up-to-date on the financial and insurance matters of utmost importance to you and all of the Wisconsin health care community.
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I just received a $50K signing bonus; it’s more money than I’ve ever had and I don’t have a clue what to do with it? I will be making $250K a year and my wife and I would like to buy a home and to raise a family in. But, I have a whopping $400,000 in student loan debt. Who do I turn to for advice? Help!
Jennifer B.
