BOC measures professional liability concerns
Premiums jump, some alter practices in response
By Sandra Lee Breisch
Across the country, professional liability insurance premiums are on the upswing. Experts blame managed care, aggressive plaintiffs attorneys, sympathetic juries, activist judges, huge settlements for plaintiffs and media exposure. And more rate increases are likely to come as carriers begin to charge to cover their losses.
Given this current environment, the choices for orthopaedists are not simple. They can dig deep in their pockets to pay for their professional liability insurance premiums (which vary from state state) or make some heartfelt business decisions. These decisions include leaving their hometowns to practice in other states where premiums are lower, retiring early or going into different health care fields as a consultant or other expert.
In response to memberships growing concerns about increased professional liability insurance premiums, the Board of Councilors developed and distributed the "Medical Malpractice Insurance Concerns Survey" in conjunction with the AAOS department of research and scientific affairs. The aim was to gather information that could help the AAOS more directly address the needs of its members.
The survey was distributed via broadcast fax in February 2002 to a sample of 8,000 fellows who did not receive the recently distributed supplement C of the 2002 Orthopaedic Physician Census. The total number of completed questionnaires received and analyzed by March 11, 2002 was 1215, for a response rate of 15 percent. The 95 percent confidence interval for the sample of 1215 respondents, as (continued on p. 16) generalized to an estimated total population of 16,266, is +/- 2.7 percent.
The survey results were summarized in an April 18, 2002 final report entitled, "Medical Malpractice Insurance Concerns," that was prepared by the department of research and scientific affairs.
The mean number of years in practice for respondents was 18.6. They were distributed somewhat evenly across the years in practice, with the exception of those in practice less than five years (6 percent) and those in practice for more than 30 years (8 percent)
The largest percentage of survey respondents was from California, Texas, Florida, and Pennsylvania (11 percent, 6 percent and 6 percent, respectively). Rhode Island is not represented in the sample. Due to the small number of respondents from each state, data were aggregated into state regions for the purpose of statistical analyses. The survey matches the 2000 AAOS Census distribution closely across regions.
The average respondents age was 51. The survey sample comprises a great number of orthopaedic surgeons between the ages of 55 through 64 than in the general population, differences that should be noted when making inferences about the population.
Jump in premiums
According to the survey results, average professional liability insurance premiums for respondents have increased steadily over the past two years from a mean of $28,000 in 2000 to $38,000 in 2002. The lowest premiums paid were $10,000 or less (56 respondents) and the highest premiums paid were $61,000 or more (144 respondents).
Overall, the mean cost per thousand dollars of aggregate coverage for 2002 was $11.93, increasing to an average of $14.72 in 2002. The lowest average cost per thousand dollars of aggregate coverage was $8.87 in New England, while the highest average cost per thousand of aggregate coverage was $22.85 in the South Atlantic region (see chart No. 1).
Amount of Insurance Coverage
The amount of professional liability coverage reported varied greatly. Most respondents (76 percent) specified "per occurrence" coverage between $1,000,000 and $3,000,000, with a mean of $1,500,000 and median of $1,000,000. Seventy percent of respondents have aggregate coverage between $3,000,000 and $6,000,000 with a mean of $3,500,000 and median of $3,000,000.
Additional Annual Premiums
Only 10 percent of respondents indicated paying additional premiums for spine surgery. Forty percent pay an additional premium of less than $5,000 and an additional 36 percent pay between $5,000 and $10,000. Only two individuals pay additional premiums for telemedicine, and three pay additional premiums for emergency room coverage. Thirty-six respondents (3 percent) pay additional amounts for state-sponsored secondary coverage.
How practices are affected
One-third of respondents (34 percent) indicated that the cost of professional liability insurance did not affect their practice. Another 34 percent indicated their practice was "somewhat" affected, and the remaining 32 percent felt that costs did affect their practice to some degree.
The Mid Atlantic and the West South Central regions had a higher percentage of respondents indicate that their practices were directly affected by the costs of professional liability insurance premiums.
Overall, responses were split evenly to the question as to whether or not the cost of professional liability insurance caused many orthopaedic surgeons to alter their practice. Of the 943 respondents completing this question, 48 percent felt that the costs of insurance did cause them to alter their practice; 52 percent felt it did not.
Two-thirds of respondents indicated that the cost of insurance has affected their practice to some degree. A greater number of respondents in the Mid Atlantic and West South Central regions are affected (see chart No. 2)
The most frequent changes to practices were to 1) order more diagnostic tests (64 percent: 2) refer more cases (55 percent); 3) keep more detailed records (54 percent); 4) refuse litigious patients (48 percent); and 5) avoid performing spine surgery (39 percent).
If you would like a copy of the complete survey report, contact Jay Fisher, legislative analyst, health policy department, at (847) 384-4336 or firstname.lastname@example.org.
Orthopaedic community responds
Escalating professional liability premiums have put orthopaedic surgeons in Mississippi, Nevada, Pennsylvania, Texas, and West Virginia in a state of crisis and other states are on the cusp. To remedy this problem that could affect patients access to specialty care, various state orthopaedic societies are meeting with their state legislators. They are advocating for tort reforms such as caps on non-economic damages and laws to allow the introduction of evidence of collateral source payments.
On a national level, the AAOS seeks to reform the medical liability system by urging AAOS Fellows to contact members of Congress to support H.R. 4600, "The Help Efficient, Accessible, Low Cost, Timely Health Care Act (HEALTH) of 2002." The HEALTH Act was introduced at a Capitol Hill press conference by a bipartisan group of legislators, including Rep. James Greenwood (R-Pa.) and Rep. Christopher Cox (R-Calif.).
A number of orthopaedic leaders in Washington to participate in the National Orthopaedic Leadership Conference (see article on page 45) attended the press conference. All the speakers emphasized the fact that increases in professional liability insurance rates could compromise patient access to specialty care.
H.R. 4600 is closely modeled after the California Medical Injury Compensation Reform Act (MICRA) and includes a $250,000 cap on non-economic damages, but exempts states with laws that allow higher caps.
Although similar legislation has passed the U.S. House of Representatives six times, it faces resistance in the Senate. While prospects for passage of H.R. 4600 this year are slim, introduction of the legislation is necessary to continue to create awareness about this issue among policymakers, especially those in states that face escalating premiums.
For more information, read the AAOS Washington Office Legislative Updates, May 3, 2002 and April 19, 2002
An AAOS Position Statement on "Professional Liability: Tort Reform," is also available at http://www.aaos.org/ wordhtml/position.htm.
The AAOS and state orthopaedic societies are working with other medical groups to convince state and federal legislators that the current tort system needs to be reformed or access to quality health care will suffer. In addition, orthopaedists are urged to actively encourage their federal legislators to cosponsor H.R. 4600.