The risk profile of healthcare organizations is evolving, thanks in large part to the Affordable Care Act. To manage new healthcare needs medical professional liability experts say they have had to evolve as well.
Part of that evolution for carriers has been the realization and acceptance that it isn’t just about the coverage anymore.
“The market is moving from very conventional, silo products, to more of an integrated risk profile and it’s important that we have not just products but solutions that respond to that,” says Matt Dolan, president of IronHealth in Simsbury, Conn.
Healthcare organizations have had to adapt new standards of care and deal with extreme consolidation. Many individual physicians have joined with larger practices or hospitals and are facilitating care among many different medical fields. Healthcare facilities also have new regulations and requirements to meet.
All of this creates new exposures for insureds, and insurers, says Dolan.
“The pace of change is quite incredible. It really requires people involved in this market to be thoughtful, hyper vigilant and hyper responsive,” he says.
Insureds are now looking to their medical malpractice liability carriers and agents for more than just coverage, and those carriers that cannot provide value beyond just coverage options will be left behind, say experts.
Midwest medical professional liability carrier MMIC has worked closely with its agents on education of the ACA and how they can help clients, says Bill McDonough, CEO of the Minneapolis-based company. Even still, he says agents are struggling with what the future holds for this marketplace and with trying to keep the business they have because of extreme competition from other agents and consolidation of the segment.
Agents have reported that there are fewer opportunities because of the ACA, but McDonough expects as things shake out opportunities will actually increase.
“There will be more care provided by physicians assistants and nurse practitioners, for example, and agents haven’t typically been very active in that market so that’s an opportunity for them,” he says. “Agents and brokers either focus on hospitals or physicians — they are not looking at both. But they need to look at this as a dynamic market…there are a lot more opportunities than they realize.”
Policyholder-owned MMIC has taken advantage of opportunities to partner with its clients through new accountable care organizations (ACO) or similar type models, which have been the most popular healthcare delivery systems to emerge out of the ACA. In fact, research from management consulting firm Oliver Wyman finds that ACO’s now cover up to 17 percent of Americans, with more than two thirds of the U.S. population living in areas that are served by ACOs. The analysis, based on information from the Department of Health and Human Services, found the total number of ACOs at 522, up from 320 a year ago.
Insurers have struggled with how to cover these new healthcare models because they incorporate many different physician practices and other coverages that are not traditional to the medical malpractice market. The models also rely on improving patient outcomes, which is a difficult exposure for insurers to take on. However, as the adaption rate increases with such high frequency, sitting back and doing nothing is not an option for insurers that want to stay relevant.
“I don’t know where the rest of the industry is, but we have decided to be part of the solution on how these are formed,” says McDonough.
MMIC is working on a product that deals with all of the liability exposures around the formation of an ACO, including all the clinical and management decisions — exposures that don’t fall under medical or D&O liability. The goal of the product, says McDonough, is to help groups with the formation of ACOs in how they are structured and how much risk will be assumed.
“There are hospitals that have formed ACOs but they aren’t doing anything with them because they don’t know what to do. Each one is really different in terms of where they are and what they are doing,” he says.
MMIC has also expanded geographically within the middle part of the country so it can operate on a broader footprint and continue to work with its larger clients as they grow. Most recently it expanded into Colorado bringing its total number of states to 15.
IronHealth is also responding to the needs of ACOs or those models that are similar. The carrier launched a product in October 2012 called Provider Excess Insurance (PEI) that addresses the financial risks of the new healthcare delivery models.
In addition, it offers coverage for ACOs that allows a start-up ACO to first purchase managed care E&O and D&O (which includes EPL), and then add medical professional coverage if they later hire medical practitioners to provide hands-on care. First and third party privacy coverage, general liability, fiduciary liability and an option for government billing E&O are also available.
The carrier also enhanced its Healthcare Professional Liability (HPL) policy just last month to include higher limits of $50 million and broader coverage, such as individual limits for employed or affiliated physicians. In the case of hospitals, the coverage can address any managed care exposures within their systems to protect against exposures with value-based contracts.
Dolan says the benefit of an integrated product suite, such as this, is that the carrier can respond to ACOs as well as those models that look like and share the same objectives of an ACO but are not technically the same thing.
“Literally and conceptually, the idea of managing distinct populations and organizing around the idea of wellness and better outcomes is a fundamental aspect of a post-reform environment,” says Dolan. “We are trying to make sure we have a solution set that is totally contemporary and informed by the realities of what’s happening with healthcare.”
And while some in the medical professional liability market have speculated that blurring the lines of what coverages healthcare facilities require could open up the segment to more competition, particularly from P/C carriers, Dolan says he thinks the holistic approach will have the opposite effect.
“I actually see this evolution of the risk profile and increasing complexity creating more barriers to entry,” he says. “It is more likely that there will be fewer carriers with the breadth of product, expertise, experience and business model that allows them to respond.”