Premium pressure: Practice leaders weigh in on the state of medical malpractice policy costs

The Medical Group Management Association’s most recent MGMA Stat poll asked healthcare leaders if their doctors’ malpractice premiums increased, decreased or stayed the same in the past year. 50% answered “stayed the same” and 41% responded “increased,” while 9% said “decreased.”

The poll was conducted January 14, 2020, with 834 applicable responses.

A recent Aon/ASHREM Hospital and Physician Professional Liability Benchmark Analysis found the average cost of a medical malpractice claim has increased 50% since 2009, with a particularly sharp increase in total claims of more than $5 million in the past four years. The findings are based on more than 850,000 professional liability claims.

Speaking of the findings, U.S. hospitals focus group leader Valentina Minetti, of hospital professional liability insurer Beazley, noted that claims of $5 million or more were less than 1% of all claims in the early 2000s; new data points to those larger-figure claims representing 1.9% of all claims between 2015 and 2018.

Hospital-owned groups traditionally have reported higher professional liability insurance costs per full-time-equivalent (FTE) physician, according to MGMA data. The 2019 MGMA DataDive Cost and Revenue dataset found that primary care single-specialty practices had a median professional liability insurance cost per FTE physician of around $6,900, regardless of practice ownership.
For surgical single-specialty practices, the professional liability insurance costs per FTE physician were higher than primary care on account of needing to carry higher insurance limits in their policies. There is still a sizable gap based on ownership:

*Having trouble viewing this image? Please rotate phone horizontally*
 

The Medscape Medical Malpractice Premium Report 2019 (free registration required to access the report) put the average annual malpractice premium cost for specialists at $21,000, versus only $12,000 for primary care physicians. That same report found that about half of physicians surveyed (51%) felt that the premium paid for their specialty’s coverage was reasonable.

While premium costs vary, the overall trend in medical malpractice claims declined substantially toward the end of the past decade. In a 10-year study of medical professional liability (MPL) cases from 2007 and 2016, CRICO Strategies pointed to a 27% decline in MPL cases (5.1 per 100 physicians in 2007 to 3.7 in 2016) in that period, signaling “a dramatic change” in the risk of an individual physician being named in an MPL case. The specialty with the largest change in defendant rate — OB/GYN, with a 44% decrease — correlated “with long-term safety interventions” in the specialty, such as training to boost fetal heart rate tracking and team communication for labor and delivery.

A dual focus on quality and risk management in the medical practice is a valuable driver of positive care outcomes and mitigating the potential for adverse events that lead to lawsuits. Cristy Good, MPH, MBA, CPC, CMPE, senior advisor, MGMA, offered these tips for reducing the chance of a lawsuit:

• Beware of disruptive providers in your practice who drive up malpractice claims.
• Beware of disruptive patients and terminate physician-patient relationship according to your state’s laws.
• Encourage communication between providers and patients.
• Create a “safe” space for peer review.
• Regularly update and refresh policies and procedures.
• Perform regular self-audits to ensure compliance.
• Perform root cause analysis (RCA) with aid of counsel to cover it under attorney-client privilege.
• Encourage operational improvement.

Proper coding and documentation are closely tied to avoiding liability issues. If you are overwhelmed with coding questions MGMA’s chart audit service team can help.

Additional resources:

• “Malpractice insurance: 8 considerations before purchasing a policy” (MGMA Insight article)
• “MGMA RVU Calculator Tool Overview” (MGMA Insight article)
• “'Sorry' still matters: Patient communication, apologies still help in protecting, preventing physician lawsuits” (MGMA Connection article)
• “Right diagnosis, wrong patient: Lab specimen integrity and why it matters” (MGMA Connection article)

Would you like to join our polling panel to voice your opinion on important practice management topics? MGMA Stat is a national poll that addresses practice management issues, the impact of new legislation and related topics. Participation is open to all healthcare leaders. Results of other polls and information on how to participate in MGMA Stat are available at: mgma.com/stat