April 11, 2023 by matray

Below are some headlines and article synopses from the April 2023 issue of Medical Liability Monitor. To read the articles in entirety, please subscribe today.

New Mexico Avoids MedMal Insurance Crisis with Damage Cap Fix
The New Mexico Legislature threaded the needle last month and passed a bipartisan update to the state’s Medical Malpractice Act with just four days left in the 2023 session, averting what could have been a medical liability insurance crisis. Senate Bill 523, drafted in a compromise between trial lawyers and healthcare professionals, caps medical malpractice payouts for independent outpatient clinics — such as urgent care, ambulatory surgical centers and free-standing emergency rooms not hospital controlled — at $1 million, which they say will allow them to maintain medical liability insurance coverage and keep their doors open. Beginning in calendar-year 2024, the cap will adjust annually by the prior three-year average consumer price index. Two previous legislative attempts at fixing the damage cap for independent clinics stalled in committee earlier this year …

Vertical Integration Worsens Patient Outcomes, Increases Costs
Vertical integration within the healthcare delivery system should improve patient outcomes and shrink costs, in theory. When physicians work directly for hospitals, rather than in independent practices, there should be greater efficiencies, coordination and information sharing due to economies of scale. And indeed, the U.S. healthcare system has been headed in that direction for years, consolidating at a rapid rate. The number of doctors who have transitioned from working in independent practices to hospital employment has doubled during the past decade, and the trend looks to continue. But a new Harvard University study finds that in at least one representative area of medicine, gastroenterology, vertical integration is leading doctors to change the way they approach patient care — with consequent adverse effects on patient health and the cost of care. The problem lies in a system of financial reimbursements that incentivizes the wrong behaviors and addressing that issue may offer a solution …

Prior Authorization Toll Exceeds Alleged Benefits, According to AMA Survey
The approval process health insurers impose on medical services or prescription drugs is generating a toll that exceeds the purported benefits, according to a physician survey released last month by the American Medical Association (AMA). While health insurers claim that prior authorization requirements are used for cost and quality control, a large majority of physicians say authorization controls lead to unnecessary waste and avoidable patient harm …

Macroeconomic Conditions, Uncertainty Lead to a Mixed Year For MPL Insurers
Medical professional liability insurers’ direct written premium increased by 5.7% in 2022 to almost $6.7 billion, its highest level since 2006, but adverse macroeconomic trends persist. As has been the case since 2016, the composite continues to rely on investment performance to maintain its profitability as combined ratios remain above 100% and surplus continues to shrink …

Study Accuses P&C Insurers of Fabricating Social Inflation to Price Gouge
A new study of the property/casualty insurance industry, Inventing Social Inflation 2023, alleges commercial insurers have been misrepresenting their actual losses to justify “price-gouging” and push for further restrictions on the tort rights of American consumers. For the medical professional liability line of business, the study’s authors assert that “perhaps no commercial insurance policyholders have been victims of the industry’s manufactured economic cycle crises more than doctors.” They accuse medical malpractice insurers of misrepresenting their actual losses by 37% during the previous hard market to justify rate hikes and ramping up a similar strategy in 2019. The authors point to 2020 and 2021 rate hikes — when malpractice claims dropped precipitously due to COVID-19 physician immunities and closed court systems — as evidence premiums are not connected to actual loss data …

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