Obamacare Signals Significant Changes for MPL Carriers
September 16, 2013| By Joe Meli |
Medical Professional Liability (MPL) insurers are heading into the unknown - the post-PPACA world of healthcare. After enjoying several relatively stable years and favorable results, MPL carriers now have to adjust to the radical changes wrought by the Patient Protection and Affordable Care Act (PPACA).
Signed into law on March 23, 2010, the chain of events PPACA sets in motion represents the most significant regulatory overhaul of the country’s healthcare system since the passage of Medicare and Medicaid in 1965. Not only does PPACA open the doors to over 20 million new patients, it reshapes healthcare delivery - and with it the liability risk profile of the sector.
What Are the Implications for MPL Carriers?
The surge in demand created by new patients, many of them old and sick, is likely to put a strain on care quality. Providers will be forced to cut the average time spent on patients. Another outcome will be doctors shifting care to mid-level providers, such as nurse practitioners, and the shifting of in-patient care to outpatient facilities. The shifting of care to mid-level providers will bring up issues of scope of practice expansion and supervision by physicians and the associated vicarious liability. Also there will be uncertainty over the standard of care for these new providers. The shifting of care from inpatient to out-patient facilities will bring to the surface the need to risk manage the expanded scope of services provided by these outpatient facilities.
As the economics of the system change, we foresee continued consolidation among providers, creating a more integrated, coordinated and efficient system where physicians work for large corporate entities, and the entities providing services across the entire continuum of care. Such "cultural" change could mean dissatisfied patients are more likely to sue a perceived deep pocket with which they have no personal connection.
Consolidation will be necessary as the healthcare delivery system adapts to new payment models, such as shared savings, bundled payments and value based payments. Will a more coordinated, efficient delivery system reduce claim frequency? Will the care quality suffer increasing claim frequency?
The new risk issues raised by the onset of PPACA are game changers for MPL carriers. However, they need not impact on results, if you know how to adapt.
Read my summary for more on the implications of PPACA for MPL insurers.