Insurance premiums remain mostly unchanged from a year ago
On the surface, medical malpractice premiums appeared little changed in 2013 for primary care physicians (PCPs). But a closer look at results of Medical Economics’ 2014 survey reveals significant fluctuations in payment amounts depending on a doctor’s age, location, workload and practice size.
The median (midpoint) level of annual premiums paid by family/general practitioners in 2013 was $11,900, unchanged from the prior two years. Internal medicine practitioners reported an overall median of $12,200, a 4.6% decrease from the $12,800 reported for 2012.
Overall, 15% of family/general practitioners and 16% of internists said their malpractice premiums had increased in 2013, while 45% of each group said their premiums remained the same. Eight percent of family/general practitioners and 9% of internists said premiums had come down, and 32% and 30%, respectively, either did not know or declined to answer.
Among all categories covered in the survey, the biggest spike in medical malpractice premiums-14.8%-was reported by doctors working more than 90 hours a week, probably reflecting carriers’ fear of overwork leading to physician error. Similarly, PCPs seeing 200 or more patients per week had premium increases of 13%, and those seeing 175 to 199 patients had increases of 9.3%.
PCPs in larger practices also saw substantial increases in their premiums. Those working in practices with 26 to 50 physicians reported a jump of 19.3%, while the median for those in practices with 50 or more physicians went up by 11.9%. The connection between size and premiums is not surprising, especially if the practice has experienced rapid growth, says Jack Meyer, senior vice president for business development and marketing for The Doctors Company, a California-based malpractice insurance carrier.
“Say a five-doctor group grows to a 50-doctor group. We have found in situations like that, where a group grows larger in a short period of time, it can lead to fluctuations in claims,” says Meyer. “There’s exposure every time you treat a patient.” On the other hand, Meyer adds, recent consolidations among agents who sell malpractice policies are helping to hold down premium increases.
Next: the impacts of consolidation and the ACA
“We’re seeing a lot of national brokers buying regional agents,” he says. “So now agents, instead of serving three or four markets will have maybe 10 markets, and they’re bringing more carriers to more places.”
Although it’s still too early to gauge the impact of the Affordable Care Act on the malpractice insurance market, Meyer expects the influx of new patients the legislation creates to have “a negative impact” on claims frequency. “It seems logical that if you’re treating more patients, chances are it will lead to greater frequency of claims,” he says.
After seeing their premiums spike a few years ago, younger doctors and those in their first years of practice-usually, but not always, the same group-reported significant decreases in their 2013 premiums. Physicians under age 30 saw premiums drop by 20%, and those in practice for two years or fewer had a reduction of 16.6%. Once they reached the 30 to 34 age group, however, median premium amounts rose by 13.6%.
In terms of geographic region, practices in Western states were alone in seeing premiums rise (up 7.8%). This may reflect a rebound following a significant drop between 2011 and 2012, says Meyer. Another factor, he adds, may be the threat of California voters approving Proposition 46, a ballot measure that would increase the state’s cap on non-economic damages that can be assessed in medical negligence lawsuits to over $1 million from the current cap of $250,000. Meanwhile, premiums in the Northeast and Midwest were down by single digits, while those in the South were unchanged from 2012.
Next: a preview from Missouri?
A preview of what could happen in California if voters approve Prop 46 may be on display in Missouri. Two years ago that state’s Supreme Court overturned a law capping jury awards for pain and suffering at $350,000. Alan Weaver, DO, a solo family practitioner in the rural community of Sturgeon, says his premiums have gone from $1,350 to $1,600 per quarter as a result. Even so, Weaver considers himself fortunate.
Weaver obtains his malpractice coverage through the nonprofit Missouri Doctors Mutual Insurance Company. “If I tried to get insurance through one of the bigger commercial groups the rates would be three to four times that. I know family docs paying $25,000 to $30,000 a year, without doing obstetrics,” he says.
In practice for 27 years, Weaver says he stopped providing obstetric and gynecology services other than counseling and assisting in a local hospital’s emergency department (ED) about five years ago in order to hold down his malpractice premiums.
Concern over rising malpractice premiums also caused William Thrift, MD, to eliminate some services to patients. A 27-year family practitioner in Prescott, Arizona, Thrift pays about $11,000 for malpractice coverage from Mutual Insurance Company of Arizona. He has stopped working in a hospital ED and treating fractures in his office. The ED work would require a $10,000 annual policy, while treating fractures would hike his premiums by an additional $15,000. “Malpractice is limiting what I can do,” he says.
Thrift also tries to hold down his premiums by maintaining his board certification in family medicine and taking classes in how to document for telehealth. “I try to be diligent about documenting stuff and getting it in the record,” he says. “It’s a big risk when you don’t see the patient and you have to account for what you’re doing and why you’re doing it.”
After providing obstetric services for about 10 years, Thrift stopped after being sued. Although the case was eventually dismissed, he recalls it as “four and a half years of anxiety, even if you’re fairly sure you’re right.
“It’s really hard, not just on the doctor but on the family,” he adds. “A lot of our self-worth is tied up in what we do. So when we hear ‘you’re a bad doctor’ it translates to ‘you’re a bad person.’ And that’s very stressful.”