Significant changes in the medical industry are set to continue in 2021. Here are four factors agents should discuss with their medical practitioner clients to ensure adequate coverage.
With the coronavirus pandemic accelerating a shift toward telemedicine, 2020 was a year of tremendous change in the medical industry. With the Biden Administration promising to shift the regulatory landscape, 2021 will be no different.
Insurers are still playing catch-up with last year's surprising developments. Even for practitioners, there are real and unsettling questions as to what awaits in the future. They will find a new and evolving landscape when they search for liability insurance in 2021 and beyond.
Despite the uncertainty, insurers and regulators have started to show their cards as to what changes the medical industry can expect, with higher rates being No. 1 on the agenda.
Here are four key considerations agents should discuss with medical practitioners to ensure they are adequately covered:
1) Medical malpractice insurance rates are going up. Rates for new policies and 2021 renewals will increase 10% on average, with some specialty classes going up more than others, according to MEDPLI research and internal data.
While internal medicine and family practice rates are only increasing around 5%, general surgery insurance rates are expected to increase about 15%, with some specialties and hospitalist rates increasing by as much as 20%. This is largely due to payouts for claims increasing across the board, as well as rising legal defense costs.
Unfortunately, even doctors that haven't had a claim in the last five years will likely see increases. Practices that have had fewer patients, such as those doing elective treatments, may be wondering why they aren't receiving rate reductions since revenues are down from lower patient volumes in 2020.
But insurers and actuarial firms seem to have priced this in and are expecting these practices to be even busier in 2021. Agents should prepare clients in advance for a potential increase in rates.
2) Telemedicine will start to cause insurance changes. Telemedicine will continue to gain traction, not only with providers, but also with patients who have gotten more used to it. Even the COVID-19 vaccines are unlikely to stop the trend, as telemedicine is more efficient and allows doctors to see more patients.
The most immediate concern with telemedicine is that currently, although doctors may be legally allowed to conduct telemedicine with out-of-state patients, their insurers are usually not covering it unless the provider is licensed in the state where the patients are located.
The pandemic has also caused states to allow non-licensed physicians to treat patients within the state, even without a license in the state where the patient is located, but underwriters typically require the physician to be licensed in that state.
Since these are temporary conditions, insurance carriers have not yet adapted to the law and allowed out-of-state telemedicine, which limits such laws' usefulness. Agents need to be up to speed on which carriers are modifying policies to cover out-of-state telemedicine, or whether new regulations could be passed that may require coverage.
To expedite malpractice coverage for telemedicine across state lines, agents can advise physicians to secure licenses in the states where their patients are located, a process that in many states is as simple as paying a modest fee.
Could telemedicine cause an increase in rates? That is a possibility. If more patients are seen, there could be more potential liability. Also, insurers have expressed concerns that telemedicine leaves more room for doctors to misdiagnose or fail to notice significant medical issues, given there is no in-person physical exam.
However, insurers are unsure if this concern will be borne out by more claims. Telemedicine could cause rates to go up, but the industry seems to be waiting for more information.
3) Cyber liability issues keep growing. Cyberattackers often perceive physicians and medical practices as soft targets and typically demand ransom after gaining access to private data. HIPAA and other regulations require measures to be taken to protect patient data. In managing client's expectations, agents should look into additional coverage for cyberattacks.
While cyber coverage is usually included in liability policies up to a certain point, higher limits of liability and more robust coverage should be considered.
Exposure for physicians and medical practices includes liability for the loss of personally identifiable information, as well as business interruption and other issues. Coverage for these contingencies may be too limited on many malpractice insurance policies. Agents should take a careful look at these policies and consider additional coverage in a world of expanding cyber threats.
4) Growth in medical marijuana and ketamine recommendations. Nothing about 2020 slowed down the trend towards legalization of marijuana, both for recreational and medical usage.
Agents should look for a growing institutional acceptance in 2021 and to carriers that specifically cover professional liability for doctors who certify that a patient meets the requirements for the state's medical marijuana program. Standard malpractice policies are usually insufficient for this exposure.
2020 unfortunately saw a rise in depression and other mental health issues, and therefore a rise in drugs prescribed to treat these issues. Ketamine is being used to relieve pain and treat depression. While there have been well-publicized problems and huge legal settlements related to the abuse of opioids for pain medicine, prescriptions for ketamine—previously known for its illegal recreational use—appear to be growing.
It remains to be seen how this will impact coverage in 2021, but agents should look for movement in this area from carriers. Medical practices using ketamine-assisted psychotherapy need specialized malpractice insurance policies.
Although 2021 will bring a lot more change to the industry, doctors who stay a step ahead and do some early planning, can have a healthy practice in the new year. Private practice physicians should seek expert medical professional liability insurance advice from a knowledgeable agent to cover their unique practices.
Max Schloemann is a 12-year medical industry veteran and the founder of MEDPLI, a national medical malpractice insurance brokerage firm.