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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

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

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.

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