As they grapple with persistently soft market conditions, medical professional liability (MPL) underwriters must weigh the potential impact on their business of proposed changes in the U.S. healthcare financing system.
As they gathered in Chicago for their annual meeting, MPL underwriters, along with the rest of the country, received the news that the Congressional Budget Office (CBO) is projecting that up to 24 million Americans could lose their health insurance by 2026 under terms of the proposed American Health Care Act (AHCA).
Proposed by Republicans in the House of Representatives and endorsed by the Trump Administration, AHCA would eliminate the individual mandate to purchase health insurance and shift premium subsidies from income to largely age-based criteria.
In those and other respects, the AHCA differs from the 2010 Affordable Care Act (ACA), commonly called “Obamacare,” but the AHCA also retains popular provisions of the ACA, including bans on lifetime coverage limits and on restrictions of coverage due to an insured’s pre-existing health conditions.
“Americans hate Obamacare except for the things that are in Obamacare,” said Ian Morrison, keynote speaker at the 2017 Medical Professional Liability Symposium of the Professional Liability Underwriting Society (PLUS).
Morrison, a healthcare futurist and author of books including “Healthcare in the New Millennium: Vision, Values and Leadership,” was generally critical of AHCA, especially its proposal to establish per capita limits on federal payments for Medicaid beneficiaries. It was not entirely clear from his remarks, however, how a change in healthcare financing would impact the environment for medical professional liability.
Certain profound changes in health care will likely continue whatever happens with the AHCA or ACA, he noted. These changes include:
- The consolidation and integration of health care organizations and practices;
- The shift from “volume-based” care (the number of procedures, essentially) to “value-based” care (the outcome of treatment);
- The continued shift from in-patient to out-patient “ambulatory” care for a growing number of conditions; and
- Implementation of improvements in Medicare reimbursement made possible under the 2015 Medicare Access and CHIP Reauthorization Act (MACRA).
During a “hot topics” panel discussion, moderator Paul Greve, executive vice president of Willis Health Care Practice, expressed concern over the impact on hospitals of changes in healthcare financing.
“Talk of replacing the ACA creates tremendous uncertainties for hospitals, which are dependent on Medicare and especially Medicaid,” he said, adding that any reduction in public funding might force health care providers to redouble “zealous collection efforts” of co-payments and deductibles.
Surveys show that the public is generally supportive of hospitals and health care providers, especially those with a local focus, Greve said.”Will that [public support] go away if [patient relations] become all big business?” he asked.
“I worry about erosion of community goodwill and its potential impact on motivation to sue and on juries.”
One of Greve’s co-panelists cited another, lesser-known, aspect of healthcare financing that medical professionals and their liability insurers may want to consider.
Leslie Jenny, managing attorney for the Cleveland-base Marshall, Dennehy, Warner, Coleman & Goggin, told attendees that the individual mandate that is in Obamacare but not in the AHCA can be used in medical professional defense to limit the amount of damages a health care professional or insurer must pay.
The reason, she said, is because the “collateral source rule” in civil litigation can prevent a defendant from benefitting from any other source of recovery a plaintiff has “negotiated” to acquire. If health insurance is mandated by law, however, she said there is a possibility in some states of claiming it is not a negotiated benefit and potentially reducing damages to reflect what the plaintiff has had covered or reimbursed by a policy.
“Without an individual mandate,” Jenny said, “I don’t think we can make an argument that a federal law applies across the board to reduce damages.”
Tort Reform Prospects
On the plus side for MPL insureds and carriers, another panelist said that prospects for federal tort reforms favoring defendants are greatly improved with Republican control of the White House and Congress.
“This is the best environment for medical professional liability reform in a decade” said Michael Stinson, vice president of governmental relations and public policy for the PIAA, formerly the Physician Insurers Association of America. “Congress is focused on medical liability reform for the first time in a long time and making it a priority.”
Apart from drawing its usual support among most Republicans, combining malpractice reforms with other healthcare initiatives may draw support from other s in Congress including a few not always supportive of malpractice reform, according to Stinson.
As for President Trump himself, Stinson confessed to initial uncertainty among tort reform advocates for a man who was “never shy about using the legal system,” but was reassured when the president explicitly called for medical liability reform in his Feb. 28th address to Congress.
The principal Republican malpractice reform initiative is the Protecting Access to Care Act (PACA), introduced by Rep. Steven King (R-Iowa), which would establish statutes of limitations, limitations on contingency fees, and other measures in connection with the awarding of federal funds.
The connection to federal funding, as opposed to superseding state law, is designed to overcome objections of “states’ rights” proponents who balk at federal pre-emption of state law, Stinson noted.
Yet, even with the stars seemingly aligned, Stinson said he only expects modest reforms, “nothing dramatic,” at least in the short term.