Carrier Choice Counts In More Ways than One. Faced with choosing between several insurance companies, new physicians often make poor decisions based entirely on the cost of the policy.  While price is an important consideration, (especially since new physicians often have a heavy debt burden to repay,) coverage is equally (perhaps more) important.  Again the key is to look at the matter in on a long term basis, rather than simply asking “how much will I pay this year?”

It cannot be stressed enough that working with an insurance professional to explore all the different options out there is the only wise thing to do.  This is the one time a physician is definitely in the position to choose from any of the top rated insurance carriers, yet some new doctors make the mistake of choosing to save a few hundred dollars and get coverage through Risk Retention Groups (RRG), or Captives or other similar ventures.

Here’s the scenario:  As a new physician, Dr. Smith is told the malpractice malpractice insurance average premium will be $25,000 a year.  In an effort to reduce the cost, Dr. Smith decides to obtain coverage from a risk retention group, because a colleague mentioned that they were really cheap.  Not understanding much about the coverage, Dr. Smith is thrilled to get a quote for “only” $19,000 and writes a check before even reading the contract or doing any research.

Six months later Dr. Smith is named in a lawsuit which lacks merit.  Dr. Smith is is given no choice or input on the choice of defense counsel (the risk retention group saves money by having one attorney firm handle all claims).  Dr. Smith is also not consulted when the case is settled on for $250,000 (the RRG includes a clause in the contract that clearly gives them the right to settle a claim without Dr. Smith’s consent).  To add insult to injury (and damaged reputation,) Dr. Smith receives a non-renewal (cancelation) letter from the RRG due to the $250,000 payout.  In a panic, Dr. Smith finally calls Presidio for help.  (Please refer to this blog post for What do Do when you’re being non-renewed).   We can help guide this new doctor towards better choices in the future, but it’s too late to take back the poor choice of not getting a free consultation from Presidio in the first place.

Initial savings?  $6,000  Net cost?  Untold, as the average premium will be higher and the cost of a damaged reputation can’t easily be determined.  Cost of giving Presidio a call before buying a policy?  Free, yet priceless!

New Physician Malpractice Insurance Article Series

Part 1 – New Physician Insurance Scenarios
Part 2 – New Physician Insurance Strategy
Part 3 – New Physician Insurance Risk

2) Consider the longer term strategy and seek advice from an insurance professional. New physicians qualify for substantial discounts on professional liability insurance for the first 3 years in practice.  Keep in mind the term “new physician” can include physicians completing military service, coming to the US for the first time, working at a county clinic, even completing work in a Kaiser facility or on a research grant.  The “new physician” discounts can vary between 15% and 75%.  Rules also differ amongst the various companies as to what constitutes a “new physician”.  You’re well-served by asking the question beforehand, since the rules for Norcal Mutual Insurance Company may be more flexible than The Doctors Company or Medical Protective, for a couple examples.

Here’s the scenario:  Dr. Smith has finished residency and eventually plans to open a private practice.  For the time being, though, Dr. Smith is considering a job with either a county clinic or a private medical group.  Both offer medical malpractice coverage and (having read the first segment of this series), Dr. Smith makes sure there won’t be a cost for a tail policy.

While caring for patients at the county clinic is rewarding, the private medical group offers $10,000 more per year and Dr. Smith joins the medical group.  After 3 years Dr. Smith decides to leave the Group, ready to start a new practice.  Here’s where it gets tricky: Dr. Smith went to work for the private medical group for her first 3 years of practice, thereby the group enjoyed the benefit of the “new physician” discounts.  (Remember that the group agreed to pay for the policy.)  Premiums paid by the Group were $6,250 the first year (75% discount), $12,500 the second year (50% discount) and $18,750 (25% discount)  the third year.  The total premium savings on “new physician” discounts gained by the Group is $37,500.

Dr. Smith now applies for a policy for the new practice, but the “new physician” discounts have already been enjoyed by the Group.  Dr. Smith’s premium is now $25,000 for the first year in practice (this is Dr. Smith’s second largest monthly expense after rent).  The rules state that Dr. Smith no longer qualifies as a “new physician” because private practice was actually entered into when work for the Group began.  Had Dr. Smith worked at the county clinic for 3 years, the new practice would have been eligible for the “new physician” discounts, but …

Dr. Smith earned a total of $10,000 per year for 3 years, or $30,000 in additional salary — less taxes — which comes to about $24,000.  The loss of discounts equates to $37,500 in additional premium costs for the new practice, and comes at a time when that new practice can least afforded it!

$10k per year x 3 yrs = $30k, less taxes = $24,000
Extra premiums paid by the new practice = $37,500
Net loss to Dr. Smith:  $13,500

Good advice from Presidio? Priceless!

Check back for the third and final segment on professional liability insurance!

New Physician Malpractice Insurance Article Series

Part 1 – New Physician Insurance Scenarios
Part 2 – New Physician Insurance Strategy
Part 3 – New Physician Insurance Risk

The first of three parts, this series addresses issues every new doctor should be aware of.

Each year at the end of summer, we find a fresh crop of recently licensed physicians seeking positions within medical groups and establishing their own new practices.  If you’re one of them, congratulations!  All that hard work is finally going to start to pay off!

Whether coming on with an existing group or hanging out your own shingle, you’re about to be barraged by a stream of unanticipated and unfamiliar details, things left for “Later” while you were focusing on your medical education.  Here’s a bit of practical knowledge to help avoid potential pitfalls in your blossoming career.  Protect yourself by understanding your medical malpractice insurance options. Professional (Medical) Malpractice insurance is an essential part of any practice or business.

Consider these scenarios, which every new physician can learn from:

1) If you’re joining a Group, be sure to review your contract and understand the financial implications of cancelling an insurance policy, should you choose to leave the group.

Here’s the scenario:  Dr. Smith completes Residency and goes to work for ABC Medical Group.  ABC Medical Group agrees to provide the doctor with medical malpractice insurance coverage while part of the Group.  Unfortunately, Dr. Smith quickly becomes unhappy with ABC Medical Group and decides to take another job offer, (or set up a new practice which is better able to serve patients.)  Pursuant to the terms of the contract between Dr. Smith and ABC Medical Group, Medical Malpractice insurance coverage ends once Dr. Smith leaves the group.  The contract is silent on the issue of coverage for lawsuits that arise from patient contact while with ABC Medical Group, though the suit wasn’t filed until after doctor left the practice.  Only when the suit is filed does Dr. Smith realize there was no protection against litigation once they parted ways.  To remedy this and help poor Dr. Smith, ABC Medical Group’s insurance carrier offers Dr. Smith an extended reporting policy (often referred to as tail coverage) which can be purchased for a mere $8,000 (which must be paid in full within the next 30 days).  Dr. Smith did not anticipate this expense, and now has to figure out how to come up with an extra eight grand in a month.  Not the best news of the season.  Had the new doctor gotten a free consult with Presidio ahead of time, potential pitfalls like Tail Coverage would have been brought up, saving a lot of stress and eight thousand dollars.

Check back for the next installment, Long Term Strategy!

New Physician Malpractice Insurance Article Series

Part 1 – New Physician Insurance Scenarios
Part 2 – New Physician Insurance Strategy
Part 3 – New Physician Insurance Risk

When a physician sets out to become a healer, he has all the best of intentions.  He wants to use his gifts to help people.  What, then, motivates attorneys?  Certainly there are some who are altruistic, but for the most part, the profession is full of self-serving individuals… and once again we’re reminded of the expression “Follow the money.”   Congress itself is nearly entirely comprised of lawyers.  Is it any wonder, then, that working solutions can’t be gotten from them?

When it comes to children, the lawyers seem to set their differences aside and agree that they should have the care, whatever it takes.  What about the young adults, parents and grandparents, though?  States may be scrambling to provide insurance for minors, but they’re largely indifferent to the adults.  Meanwhile, the simple fact is that if the parents have insurance, their children will as well.  If the parents don’t, then just insuring the kids is nothing more than a minimal start, a step in the right direction.  The entire family needs to be able to embrace wellness for it to be safe for the children.  It doesn’t solve the problem if one or both of the child’s parents should become seriously ill or perish.

Wellness is a cornerstone to a prosperous society.  People simply can’t tend to the daily responsibilities very well when they’re sick.  When you happen to be one of those who are ill, it doesn’t much matter what the statistics and percentages of uninsured are.  When we’re talking about millions of people without health insurance, that’s simply too many lives in the balance, no matter what percentage they may represent.

While you’ve been reading this, someone has not gotten care because he or she can’t get insurance.  By the time you’re done reading it, someone will likely have become gravely ill because they didn’t get a much more cost-effective treatment earlier on.  There are a lot of issues and people to take care of.  Let the attorneys duke it out.  That’s what they do best.  Meanwhile, let’s do everything we can to get back to providing care for every patient in need.  In the overall, providing them with the best care possible, regardless of their insurance status, continues to be one of the very best ways to solve the healthcare crisis and avoid medical malpractice suits at the same time.

On a busy night, an ER can be slammed non-stop for 8-12 hours. Each ER doctor may be expected to see dozens of patients each of those hours, to attend to everything from minor traumas to the aftermath of a gang war shoot-out. In the midst of it all will be patients complaining of pain — tooth aches, belly aches, back pain, sunburn, sleeplessness… You name it, the addicts and dealers have thought it up. Pressed for time and unwilling to deny drugs that grant relief to a patient who is truly in pain, the physician will order an injectable and write a prescription for a pain medication. If the doctor begins prescribing a non-narcotic, the patient objects that he has already tried that, that an anti-inflammatory doesn’t work… perhaps even threatening the doctor. When that “patient” leaves, he leaves with a week or month’s supply of opioids that will be consumed in a night, perhaps bringing some of those drugs right back into the ER in the form of an overdose. Others may go directly to the morgue. Either way, when access to narcotics is abused, it doesn’t often end well.

At the core of it all are a few factors: Firstly, the doctor doesn’t want to inflict unnecessary misery on the patient who has legitimate pain. This brings us to that opioids don’t affect everyone equally. An amount which provides relief for one patient’s symptoms may barely scratch the surface of another patient’s pain, making it difficult to know how much is Relief, and when that turns to abuse. Finally, there’s a general lack of accountability. High profile cases like Michael Jackson and Heath Ledger’s deaths may fall under a forensic microscope, but in most circumstances, physicians are not called to justify or account for the prescription…or at least they haven’t been so far.

There is talk of establishing a standard and guideline for the prescribing of opioid drugs. If this should occur (and such legislation often follows high-profile cases,) the physician will have to add yet another issue to the list of things that he can be sued over. If a death can be even remotely connected to the prescription of narcotics, it’s a sure bet that the ambulance chasers will be circling overhead.

Today’s Medical Malpractice risk managment decidedly should include documenting the rationale employed for the prescribing of opioids and other narcotic substances. If the patient presents complaining of severe pain and that recommended non-prescription remedies have failed to provide relief, it may be wise to document this complaint and require that the patient sign to certify that they’ve made the complaint, along with the rationale which led to the prescription. Sending the patient home with a small supply or prescription and a referral to a pain managment specialist may be the best thing for the patient, the physician and the abuser who might otherwise have gotten those drugs on the street. “First, do no harm.”

The Mayo Clinic performed a study which found that physicians who are sued often begin a downward spiral of self-doubt which extends far beyond hurt feelings. The standard of care slips. Doctors begin to doubt themselves, their medical skills, diagnosis… Any and all of these aspects may come into play as the doctor is drawn farther into the legal process, leading to depression. Depositions, court appearances, patient and expert testimony, these are just the beginnings of a process which saps the healer’s strength, leaving the patient case load to pay the price.

When a frivolous lawsuit is filed, the doctor’s quality Medical Malpractice coverage usually kicks in, covering the direct costs of the defense. But it doesn’t cover the indirect costs and expenses, such as the time away from patients to give statements, make courtroom appearances, and the like. The physician is draggged through the muck even when he or she is entirely free from fault, to defend against the allegation. Of course, we all pay for the direct costs of defense, and any settlement which might be agreed upon or awarded. What’s less well known is that the doctor’s other patients are also suffering because of it as well.

As our leaders contemplate ways to get control of runaway medical coverage costs and provide affordable healthcare for all of us, the prices paid for frivolous, baseless lawsuits must be considered as well. Some physicians have become proactive, turning to organizations like Medical Justice for support. Dr. Jeff Segal, founder of Medical Justice, is determined to get put this ugly assault in check. One way that this organization does so is to counter-sue the patient as well as the attorney, seeking restitution for the loss of income, damage to reputation, etc., which are all results of a false or inappriopriate claim being filed.

This approach may not appeal to everyone, but if we are to get a grip on the “sue me” mentality and allow physicians to return to their job as healers, we — as a society — are going to have to stand united against false claims. A physician is not a pinata, to be poked and swiped at in hopes of recieving free treats. As we demand a high degree of excellence from them, we must also afford them protections against such disrespectful and unappreciative perspectives as would motivate people to sue without just cause. We should do so because it’s the right thing to do, of course. But it goes far beyond that when the false allegation affects the physician’s ability to provide quality health care.

We may forget, sometimes, that the doctor is a living, breathing, feeeling human being who feels the bite of that betrayal most sharply. It’s high time we all stood up against those who choose to make their doctor the enemy. Those who view a medical malpractice suit as a winning lottery ticket are costing us all in ways we can’t afford, ways most don’t ever even think about.

The Americans With Disabilities Act (ADA) may be well-intended. In at least this case, though, it seems to have gone too far. There’s a lot of language to wade through, and courts’ interpritations are not consistent. None of this makes it any easier for a physician to practice medicine while the lawyers are practicing law.

Dr. Fogari, a New Jersey rheumatologist, saw a deaf patient at his practice. The patient communicated with him by way of notes written back and forth — a reasonable thing to do, since the patient hadn’t brought anyone to interpret for him, and a working solution… so it would seem. This makes all the more sense in that hiring an interpritor costs $150-200 per hour, while the doctor could only have billed Medicare $49 per hour for that service. Since the patient was quite capable of reading and writing, it seems reasonable to simply communicate with pen and paper, right? Yet Dr. Fogari lost and suffered a $400,000 judgement against him. To make matters even worse, a portion of that was a Punative Damage award. Most states specifically forbid an insurance company to cover punative damages, so this well-intending physician was spanked hard. At this date, it has yet to be determined if an ADA judgment is allowed to be covered by professional liability insurance. The bottom line? Seeing that patient cost Dr. Fogari $400,000 plus the time defending his practice against the allegation, and damage to his reputation. Yet refusing to see that patient might have been deemed discriminatory. It seems the ADA is proving a bit short-sighted in places.

Everyone in the medical profession wants to help their patients to be well and live the best quality of life possible. When a miscarriage of justice like this happens, it can be difficult to feel good about trying. We join Medical Justice in expressing our frustration and disappointment at the court’s judgment, and bring this to you as something to be mindful of when dealing with Disabled patients.

Presidio Insurance Solutions would also like to clarify that, on a state-by-state basis, the insurance company may be legally prohibited from paying any punative damage awards. Nevertheless, a good quality of medical malpractice coverage will protect you from the direct-out-of-pocket costs of legal defense against such a suit. For additional information on the insurability of punitive damages in the United States visit: THE INSURABILITY OF PUNITIVE DAMAGES

Call Presidio now for a free policy check up, find out where your coverages start and stop in such situations.

The fact is that most traditional coverage requires a 20% co-pay by the patient for hospital stays.  When one has a major illness or trauma, that 20 percent becomes enormous and financially catastrophic to the individual’s budget.  If the bill is $200,000 then the patient still has to pay $40,000 of it… and while the insurance companies may have the clout to renegotiate the costs with the hospital and other providers, the individual does not have that ability, as few have the funds available to pay even a reduced portion of forty grand.

Another way in which the insured don’t really have coverage is exclusions from the health insurance companies.  We’ll examine this in greater detail in an upcoming post, but suffice it to say that just because your doctor prescribes a medication or procedure doesn’t mean that the insurance company is going to pay for that treatment.  This isn’t the difference between a drug and its generic equivalent either.  There are times when the insurance companies are effectively prescribing treatment by holding the purse strings.

Would a law which forces the insurance companies to pay for prescribed treatments raise the costs?  What about a low or zero deductible policy?  Surely those will raise the costs, won’t they?  The answer is split.  Yes, it would raise the costs to the health insurance company, but that company is going to split the costs amongst all of their clients.  In the final analysis, it will cost each of us a little bit more, but ensure that none of us is facing tens of thousands of dollars in debt — even when we have well-rated coverage — when we get out of the hospital.  It will protect us from having insurance companies practicing medicine by deciding not to pay for a medication or treatment.  Since any form of insurance is an attempt to spread the costs out across a larger number of people, it stands to reason that all-inclusive coverage for non-elective cosmetic care is a part of making existing healthcare functional.

Medical Malpractice insurance is often scapegoated as the cause of the high costs of medicine.  To be sure, the cost of protection is a factor, but defending against inappropriate law suits is expensive and creates a huge burden.  Get rid of that aspect, the costs go down dramatically.  Physicians do not want to harm their patients.  They became doctors to help people, to heal them.  Accusing them of intentionally or negligently harming a patient can be devastating, when the physician most likely never had any but the best of intentions!

Like any other form of abuse, frivolous malpractice suits are a form of insurance fraud which everyone pays for.  Tort reforms have helped a lot, but further protections mandated by legislation, protections for the physicians (except in cases of blatant malpractice, of course) could go a long way towards reducing both costs of premiums and losses. Meanwhile, getting more physicians to sign on with Medical Justice (and take other steps to reduce risk) is a large step in the right direction.

Whatever form the Obama Administration’s plan takes, if if it doesn’t address these concerns and issues, it’s going to be met with indifference by those who have healthcare, and prove ineffective overall.  Certainly, the entire system would gain from restructuring, but the working public must stand to benefit from these changes as well, it is to receive bipartisan support.

(continued)

In the previous section, we covered Step 3 and Step 4, which examined finding other coverage, and examining that coverage to be sure it’s right for you.  In this final installment, we’re looking at how best to pay for the new coverage, and looking at the long-term gameplan for your practice:

Step 5:  PAYING FOR YOUR COVERAGE.  If you are unable to secure replacement coverage from a traditional carrier (such as The Doctors Company or Medical Protective), you may need to consider the higher cost (usually 30-60% more) of obtaining coverage from a reputable, non-traditional carrier (such as Evanston, Admiral, General Star or Lloyds of London).  That’s where paying for the policy comes into play.  The ability to pay in installments is important to many practices.  Unlike traditional medical professional liability insurers (which offer convenient payment plans,) non-traditional insurers usually require the annual premium up front.  You’ll want to explore your financing options from your bank as well as the insurance premium financing options offered through your broker.  Generally, insurance premium financing requires a 30% down payment, but they offer a fairly competitive interest rate.

Step 6:  CONSIDER YOUR LONG TERM PLAN.  Once the fire is put out, take a little bit of time to look at the bigger picture.  The longer term goal is maintain insurance that suits your overall needs, in terms of expense as well as protections provided.  Here a few issues to consider:

• Will you need retirement tail in 5-10 years?  Consider that Non-traditional companies usually do not offer free retirement tail (protection for cases which may be filed against you after you retire).
• Can you make changes to your practice to improve your insurability? For example, if you were non-renewed due to a claim involving a certain procedure, ask yourself if the practice revenue for that procedure is worth the additional cost you are now paying for insurance.
• Can you take steps to illustrate your desire to improve patient safety?  Patient safety training and improved documentation procedures can go a long way to showing insurance companies you are serious about eliminating or reducing risk in your practice.

Receiving a non-renewal notice can be frightening and time-consuming.  A qualified independent insurance broker is your best resource and friend in such a harried circumstance.  Take a few deep breaths, then give Presidio Insurance Solutions a call.  We know how best to handle situations such as these, and we’re glad to be able to help!

Medical Malpractice Insurance Non-Renewal Series

1. Part One

2. Part Two

3. Part Three

4. –>> Part Four – Viewing

NOTE: This is the final segment of a 4-part article. Look elsewhere on this site for the other 3 medical professional liability insurance non-renewal article installments. Knowledge is power. Know what to do when Non-Renewal strikes!

In the previous section, we discussed first steps to take, and how to attempt to resolve the problem with your current medical malpractice carrier.  In this segment, we discuss Step 3 and Step 4, finding other coverage, and examining that coverage to be sure it’s right for you.

Step 3:  BEGIN THE PROCESS OF SECURING REPLACEMENT COVERAGE OPTIONS.  There is no need to panic.  Coverage is available.  It’s simply a matter of finding it and paying for it (more on paying for it below).  To find coverage, your broker will compile an application and all supporting documentation to submit to a variety of insurance carriers.  A good medical malpractice insurance broker can give you many insurance options in varying price ranges.  Often physicians going through a non-renewal panic and start calling and applying to companies through any agent and broker they can find.  This actually hinders your chances to obtain alternate coverage.  There are only 5-15 companies (depending on your circumstances) available and same company will receive applications from more than one broker representing a panicked physician.  If there is ANY conflicting information between the two applications it gives the appearance the physician is hiding material facts and can lead to the underwriter declining the application for coverage.  So, take it easy, breathe, relax and let your broker handle the problem for you.

What you DON’T want to do is to go from the frying pan into the fire. Alternate options from risk retention groups or newly formed companies are usually a very bad idea. Historically, alternative risk or new medical malpractice insurance companies have a failure rate exceeding 85%! Don’t be tempted by the cheap medical malpractice premiums offered by unscrupulous or simply naïve agents offering “coverage” from one of these fly-by-night companies. At a very minimum you should check with the Department of Insurance and AM Best to get information about the insurance company. As the adage suggests, if it sounds too good to be true, it probably is.

Step 4: CONSIDER ALL YOUR INSURANCE OPTIONS CAREFULLY.  Once your broker has completed the search for your replacement coverage, review all your options carefully.  Discuss the differences between the expiring coverage and replacement coverage options at your disposal.  Is there a deductible? A coverage exclusion?  Retirement tail?

Medical Malpractice Insurance Non-Renewal Series
1. Part One
2. Part Two
3. Part Three – VIEWING
4. Part Four

NOTE: This is Part 3 of a 4-part article.  Check out the next installment, where we discuss how best to pay for the new coverage, and developing a long-term gameplan for your practice’s medical malpractice needs.