ACA could raise your malpractice insurance rates

A key element of healthcare is leveraging technology and system efficiencies to allow individual providers to see more patients. But as the number of patients goes up, so does a provider’s malpractice risk according to a new study from the RAND Corporation.

The report issued last week by the non-profit think tank examined the ancillary effects the expansion of health insurance through the Patient Protection and Affordable Care Act (ACA) may have on other types of insurance. While the report authors anticipated the effect on other forms of liability insurance to be fairly modest — a few percentage posts by 2016 — they noted that the impact of the ACA on other forms of insurance is something that has received little analysis and probably bears watching.

They predicted that most forms of liability insurance — automobile, homeowners and workers compensation — would see individual rates fall as a result of the ACA through two main mechanisms. The first is that as more people acquire health insurance, the incentive to use other forms of liability insurance to cover health care needs that may or may not be related declines. The second mechanism is that the ACA’s reductions in Medicare rates, which form the basis for many liability payments, may spill over into private rates.

However, these mechanisms do not apply to medial malpractice insurance. Instead, as the ACA encourages providers to become more efficient and see a larger number of patients in the same amount of time, the risk of a medical malpractice claim being filed rises along with the expansion of the patient panel. In addition, the RAND authors note that in general, insured individuals have more contacts with physicians, make more visits, and receive more procedures. With each encounter the chance of a medical malpractice claim goes up.

Because of state differences in tort law, the degree to which the ACA impacts medical professional liability rates will vary, the authors noted. Some states limit the total amount of medical malpractice awards or cap some components of an award, such as non-economic damages (i.e., pain and suffering). States' laws also vary regarding the extent to which payments from collateral sources for injury-related costs can be factored into jury decisions regarding the amount of an award.

Dovetailing with the RAND Corporation analysis was a roundtable discussion published the same week by medical malpractice insurer the MGIS Companies, Inc. It also found that the ACA may raise malpractice claim risk, but through different potential mechanisms. These included:

• The more lucrative nature of filing malpractice claims as individual provider organizations join together into larger networks with potentially deeper pockets for paying claims.
• Plaintiff attorneys using the ACA’s focus on development of standards and best practices as rules providers must follow or be deemed negligent.
• Team based care within more complex health systems leading to more transitions in care that increase the risk of errors through miscommunication.
• A population of newly insured patients who may lack previous healthcare experience and have more unrealistic expectations and demands.
• Provider burnout leading to more errors as patient loads increase. 

The full RAND Corporation report is available as a free download.