Malpractice Consult

By Lee J. Johnson, JD

Moves you can make to cut premiums

•  The lowest price isn't always your best bet.

• Choose a policy with a deductible.

•Let insurers know you take the patient seriously.

Q: Last year, our group practice paid $200,000 in malpractice premiums. This year our tab jumped to $250,000, even though we've had few claims. Can we do anything to get a handle on these costs?

A: You may not be able to do much right now. And you're not alone: Premiums are rising across the country and 12 states are in a crisis, according to the AMA. Insurers are imposing tough underwriting standards, and physicians are conducting work stoppages and protesting at state capitals.

Still, there are some moves you can make:

Shop around.In some markets, only a handful of carriers are writing policies, so you may not have much choice. But if you do, evaluate your alternatives carefully. If someone files a claim against you, the insurer may still be defending you five years later. Will that company still be around then? What's its track record in handling claims? Don't let cost alone sway you; a low price could indicate that the carrier will pull out of the market within a few years.

Check out local IPAs.Some IPAs have negotiated lower rates with malpractice insurers. Just be sure to consider the costs and other commitments involved in joining the IPA, such as unique contracting arrangements, its referral network, and the overall impact on your practice. Malpractice rates shouldn't be your only concern.

Consider taking a deductible.Some carriers will offer a premium discount if you'll accept a deductible for every claim filed against you. You should, however, negotiate an "aggregate limit" on these deductibles, so you know the maximum additional cost your practice could face. Agreeing to a deductible demonstrates to the insurer your willingness to share some of the risk, and your confidence in your ability to avoid future claims.

Look into a risk-sharing arrangement.Sometimes doctors can join together to bear a limited layer of risk in return for recovering some of their malpractice premiums plus the investment income. This "carrot and stick" approach has encouraged practices to implement loss prevention programs. By referring other quality practices to the program, physicians can help it grow, increasing its buying power and spreading risk. An underwriting committee can approve or decline prospective practices based on their claims history.

Tell your insurer about your risk-management efforts.Effective loss control programs may convince an insurer that you can minimize potential future losses. Report all staff educational activities and your own CME efforts. An independent reviewer can conduct office assessments, or you can perform a self-assessment. When you discuss liability issues at office staff meetings, record the corrective actions in the minutes of the session, and forward those notes to the insurer. Don't include patient names.

Loss prevention activities are a process, not a final product, so you must thoroughly document your goals and efforts. If your insurer offers programs, participate. If you hire your own risk-management consultant, send the letters of recommendation and a description of your follow-up actions to your insurer when you renew the policy. Don't be shy about touting your own programs. You may find yourself with a lower premium.

 

Lee Johnson. Malpractice Consult: Moves you can make to cut premiums. Medical Economics 2003;7:114.