Physicians

Play Defense and Offense to Win the Medical Liability Game: A game plan for success in a hard insurance market

Part 3 of 3

By Shawna Bertalot, CIC, ACI, President WisMed Assure

“Physicians in Wisconsin will soon be paying more for medical professional liability (MPL) insurance thanks to a cyclical “hardening” of the market.”

(Excerpt from Part 1)

Three of every four primary care physicians will be sued by a patient during the course of their career. The numbers are even worse for specialties.

Which is why physicians as a whole are not willing to take the chance they will be among the lucky few who never get sued. To guard against the financial impact of a law suit, they purchase Medical Professional Liability (MPL) insurance. But, as Wisconsin physicians begin to experience rising MPL premiums along with greater underwriting scrutiny, the question becomes, “How can I get the coverage I need and avoid paying too much?”

The answer is to play defense and offense at the same time; defense by reducing the chances of being sued and offense by managing your insurance purchase.

It’s simple: don’t get sued

Well, if only it was that simple. In reality, a physician can do everything perfectly for a patient and still be sued because of a poor outcome.

Legally speaking, to be successful in court, a patient’s legal team has to prove three things:

  1. The physician committed a breach of duty by not providing medical care another healthcare professional would have provided
  2. The patient suffered emotional or physical injury
  3. The physician caused the damage to the patient

But, even when one or more of these three are not provable in court, no physician wants to end up in court in the first place… nor does their MPL insurer want to pay the legal bills.

How’s your Patient CRED?

Playing defense could be as conceptually simple as applying the “CRED” concept to your medical practice:

C – communication

R – relationship

E – education

D – documentation

Communication

A breakdown in patient-provider communication is a leading contributor to malpractice lawsuits. While it is absolutely essential to obtain adequate informed consent, doing so as part of an open, two-way conversation with the patient and their family when appropriate goes a long way to helping you avoid your day in court.

By taking the time answer questions, address concerns and openly discuss potential complications, you can avoid false assumptions and miscommunication while building patient confidence.

Relationship
Patients and families are much less likely to sue a physician when they feel they have a good relationship. Even if you deliver the best possible care, without a good relationship, its perceived value and effectiveness can be significantly diminished in the eyes of your patient.

That’s why approaching each patient with compassion and empathizing with their concerns and condition throughout the cycle of care, is one of your best defensive strategies. Most of the time all it takes is for you to stop for a few seconds and truly engage with patients. Making eye contact, actively listening, just being there for a moment instead of worrying about where you have to be next, can make all the difference.

Education
When a patient or a member of their family doesn’t understand the diagnosis, treatment or regulations, it is far too easy for them to feel you’ve done something wrong or inadequate.

If you don’t educate them, they instead rely on assumptions, what they read on the Internet, and what their cousin in Oconomowoc heard on the Doctor Oz Show.

To protect yourself, to play strong defense, take time to educate your patients and their family so they understand why you are recommending all tests and treatments ahead. Plus, they need to know what to expect including risks and possible side effects, recovery times, and results.

Clearly explaining why and what helps you avoid having to justify your actions and decisions by making the patient and their family part of the decision-making process.

Documentation.
Malpractice law suits occur when a patient thinks they’ve been harmed and are supported by others in making a case against a physician. Defense then is conceptually simple; you must accurately document the patient’s condition and why your diagnosis and treatment decisions were made.

But, in practice, it’s a lot more complicated. One complicating factor you cannot afford to overlook are the decision-making (or at least decision-influencing) conversations you have with patients and their families. When you use the other three elements of Patient CRED, these conversations gain importance and the need to document them is essential.

Going on the offensive

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, some insurers may reduce claims and risk management personnel and services. And some may sell directly and not through licensed insurance agents who can help you play offense. Which makes it even more important for physicians to make sure they have their act together when it comes to risk prevention.

Here is a risk management checklist you can use to improve your offense and be seen as a preferred risk to an insurance company.-

  • I understand and have taken advantage of the premium discounts and credits my insurance company offers.  Yes    No    Not Sure
  • I regularly participate in risk-reduction CME courses and seminars and receive discounts from my insurance company for doing so.  Yes    No    Not Sure
  • I utilize electronic medical records in my practice and receive discounts from my insurance company for doing so.  Yes   No   Not Sure
  • My organization pursues ongoing risk-management efforts such as claims management, quality initiatives, and risk assessments. Yes    No     Not Sure
  • My organization has an effective peer-review process.  Yes     No     Not Sure
  • My organization has practical guidelines for medical record documentation and consent forms.  Yes   No    Not Sure
  • I (we) have chosen the location for our organization by balancing market/patient accessibility and location-specific insurance costs.   Yes    No    Not Sure
  • When completing annual insurance renewal forms, I am careful to answer all questions as accurately as possible and include any and all substantive changes to my practice (e.g.: changes to hospital staff privileges, joining a managed-care network, gaining specialty board certification).   Yes   No   Not Sure
  • I understand the difference between claims-made and occurrence coverage and have chosen the coverage most appropriate for my situation:   Yes   No   Not Sure

It takes two to Tango

Playing offense goes beyond implementing risk management strategies. It also means playing tough with your insurance company. Given that the likelihood of a law suit occurring is so high, you need to be aware of your insurance company’s track record when it comes to managing claims.

Here are some important questions to ask:

  • How many law suits do they defend annually?
  • What is the percentage of cost they spend on defense vs. settlement?
  • How does their success rate in court compare to the national average?

Nationally, only about five percent of cases go to trial. And, of those, about 80 percent are decided in favor of the physician.

What should you do now?

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 market place. This is where an experienced broker can play a key role in helping you understand the quality of the insurers willing to do business with you.

As the market continues to harden, it is essential to seek the help and advice of an experienced, committed advisor who can help you improve your underwriting profile if need be and navigate your options.

If you would like to discuss this article or your insurance needs and concerns, please feel free to contact me.


Shawna Bertalot, CIC, ACI, President WisMed Assure

shawna.bertalot@wismedassure.org

800.975.3416

Term Life Insurance

How much can I get for how little?”

This is the usual question from a potential buyer of “Term” Life insurance.

But for our Residents, Fellows, and young Physicians who want to protect their life and their family, it’s an incomplete question.

The better question is, “How can I inexpensively protect my family from bad consequences while we buy time for our assets to grow to a point where we won’t need Life Insurance anymore?”

Thinking through potential bad things that can happen is no fun, especially with the understanding that the probability of something catastrophic happening (other than death) is highly unlikely to happen to you.

And you’re right. It is not going to happen to you. That’s right … it is statistically NOT going to happen to you.

But it does happen to some … and when it does, the consequences are either tolerable or devastating, leaving one either emotionally comfortable or severely distressed.

Keeping in mind that insurance, by nature, is intended to cover “low probability/highly severe financial consequences”, there is a difference between “inexpensive” Life Insurance (the goal) and “cheap” Life Insurance (the mistake).

So, what makes term life insurance “cheap”?

After 24 years of working exclusively with Physicians, I’ve experienced a lot. The issues that follow are very real … (We’ll just leave it at that … but I can tell you that I am much more “mindful” of structuring Term Life Insurance now than I was 24 years ago …).

So, let’s look at an example of this low probability circumstance happening to someone like you…

A Physician, age 30, buys a $1,000,000, 20-year Level Term Life Insurance policy. She is delighted because, after a comprehensive search, she found the least expensive contract. She got the best rating class possible: only $25.73 a month. Such a deal!

Then, at age 42, with three young children, she is diagnosed with MS and is partially disabled and can practice only part time.

By age 45, she is totally disabled and not working at all.

So here’s the situation …

Typically, if one is disabled early in one’s career, one has not enough time to attain enough assets for retirement (and other objectives, such as a child’s college tuition).  This is because the monthly benefits being received from one’s disability insurance benefits leaves little to save. There simply is not enough money.

This was the reason for purchasing the Term Life Insurance 15 years ago.

Now the life insurance takes on greater value … It’s there to do what was intended … to make sure there are assets there for the family …

But does it?

Here is what her Life Insurance policy can and cannot do for her and her family …

This was the lowest premium … and it is, indeed, a cheap policy …

  1. She has 5 years left on her 20-year level term. Then you know what happens at the end of the level term? It becomes very expensive … onerously expensive … and increases in premium every year. So, with a tight budget, it quickly becomes unaffordable … at just the wrong time …
  2. She is now uninsurable and cannot get a new policy.
  3. Her policy could have been convertible to a longer term, but only during the first 10 years …

Talk about stress … At a time when one is emotionally vulnerable, now there is additional stress.

So, how could this have been avoided?

There could have been a longer “conversion” period put on the original policy. This would have allowed for the policy to be stretched to a longer term.

A conversion to a “permanent” policy is no bargain at this point; it has a much higher premium; it is around $1,000 per month; $12,000 per year … year after year. But, at least one would have had the option.

Please Note: longer conversion periods cost pennies more per month … but need to be applied for and put on the original policy at inception.

Could a better decision have been made back when the policy was originally purchased?

The answer is “yes”. There could have been a “Waiver Of Premium” Rider on the policy.

Waivers differ with each Insurer, but “strong” waivers waive premiums when one is totally disabled … and continue to waive them past the “level” term period … Many will waive it all the way until one passes … no matter how long one lives.

Disability waivers typically cost about $12 – $15 per million per month.

If this had been part of the policy, the contract would have stayed in force free of charge.

So, the result could have been less stress, knowing that one’s family would be getting that $1,000,000 no matter how long or how short one’s life would have been.

Could decisions have been made that would have been even better than this?

The answer is “Yes”. This could have been a contract with the ability to both “waive” the premium and then convert it to a permanent contract, which, if one is totally disabled, not only waives premiums, but it funds itself, that is, the Insurer pays the premium.

Now that same $1,000 per month is deposited into the contract by the Insurer and would have been building a cash reserve for the insured that could have been accessed later in life.  

At age 65, the cash would have probably been in excess of $500,000 … and, of course, there’s the Life Insurance …

Now, instead of stress, there is the emotional comfort of knowing that one’s family is financially sound no matter if one lives a long time or dies prematurely.

There’s a little bit more to this story …

A “20” year level term is, by far, the most common “term” chosen by young Physicians … and, with me having been around for 24 years, many of those 20-year terms are coming to an end.

As mentioned before, once the “level” term ends, these contracts get incredibly expensive … No one ever keeps them …

The thing is … Many, now at age fifty-something, still want some life Insurance. “The kids are still in college” … Not quite enough yet in the Retirement plan … Just want the extra million for another 10 – 15 years of so …” are commonly heard reasons.

Well, back at age 30, that 20-year term for $25 per month could have been a 30-year term for $44, but it was decided back then that was just a little too “pricey”.

Now, at age 50, if one is healthy, a new 10-year level term is $75 per month and a new 20 year term is $119 per month.

And again, that is assuming one is still in good health …

In closing, if you want the cheapest Life Insurance, anyone can shop for you.

But, as a young Physician, if you want “inexpensive” insurance with the appropriate protections for you and your loved ones, our promise is to watch out for you and provide the right kind of guidance.


Dave Serena

Dave Serena is in his 25th year as an Agent with the Wisconsin Medical Society’s Insurance Group: Wismed Assure. He has Physician clients in 36 states and continues to provide them with  life-long counsel and guidance. His position is that Physicians are free to practice high quality medicine and enjoy their families when they are confident about their personal financial security. He can be contacted at dave.serena@wismedassured.org  (414) 238-6105

Ask for more – it never hurts to try.

When negotiating employment contracts – always ask for more. Ask for a signing bonus or higher salary or money for relocation or more money for CME. Better benefits are often easier to negotiate than salary so even negotiating for more paid vacation per year is an option. It never hurts to ask and in mot cases you’ll be surprised that the answer is ‘Yes.’ And then make sure it is in writing!

Wendy M.

Keeping Wisconsin Safe: Why It’s the Best Place to Practice Medicine

Part 2 of 3

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. 

Wisconsin is different… in a good way

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.

What the statistics tell us 

Consider these statistics for the period of 2004 to 2018 from the National Practitioner Data Bank managed by the Department of Health & Human Services:

  • In 2004, an approximate total of $4.6 billion in claims was paid. This sank to a low of just over $3.5 billion in 2012 and has risen to just over $4 billion as of 2018.
  • In the same time period (2004 – 2018) the number of claims has declined from approximately 17,000 to 11,584.
  • Conversely, the average paid claim has risen from around $260,000 to $348,000

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.

Who you gonna call?

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

History Repeats Itself: Medical Liability Insurance Premiums on the Rise

Part 1 of 3

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.”

Wisconsin is an insurance haven

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.

What can you do about it?

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

Want more value from your 2020 medical benefit spend? Think ahead. Act soon.

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.

Quoting and Timing

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.

Notices and Enrollment Periods

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.

WisMed Assure Exclusive Programs – AHP, Delta Dental, MGIS

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.

A Little Faith Means Less Frustration

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

chris.noffke@wismedassure.org

608-442-3734

Medical Liability Insurance Premiums on the Rise: Part 1 of 3 Available in September

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.

Sign up for our email list below

[sibwp_form id=2]