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Health care organizations seeking commercial liability insurance in 2012 are likely to find conditions in the marketplace more challenging than they were a year ago, according to a Marsh Inc. report published Monday.
Although premium rates for policies that health care companies typically buy remained flat or decreased in 2011, the New York-based broker said it anticipates some underwriters will push for rate hikes in the coming year amid signs that the market appears “to be leveling off,” Holly Meidl, the Nashville, Tenn.-based leader of Marsh's health care practice, said Monday in a statement.
In its report, “Navigating the Risk and Insurance Landscape: U.S. Insurance Market Report 2012,” Marsh said fourth-quarter policy renewal rates for medical professional liability and managed care errors and omissions decreased from zero to 5% over the same period in 2010. However, those 2010 rates were as much as 10% lower than they had been in 2009.
But, said Ms. Meidl, “As health care reform and the growing employment of physicians by hospitals changes the landscape for both insurable and uninsurable risks, the market is likely to become more challenging for (policyholders) throughout 2012.”
Rate hikes may be most accelerated in the senior care sector, where Marsh predicted some insurers could seek increases of between 5% and 10%.
HMO reinsurance and provider excess loss insurance rates remained competitive in the last quarter of 2011, but Marsh noted that insurers are becoming more selective about the risks they'll underwrite.
Though pricing is showing some signs of firming, the report noted that there has been no discernible change in capacity or policy terms and conditions for most lines of coverage.
In addition to overall market pressures—driven in large part by historic catastrophe losses in 2011—Marsh noted several issues and trends that could affect risk management strategies for individual health care companies or the industry as a whole.
The health care industry is still sorting through the legal and financial impact of the Patient Protection and Affordable Care Act. Though the law itself is being challenged in the Supreme Court, health providers already must comply with stricter guidelines and protocols regarding patient safety and care, coding and reimbursement, audits and case management.
The development of accountable care organizations as a response to the changing regulation and declining reimbursement from the Center for Medicare and Medicaid Services has become an attractive alternative business model for some health care companies.
However, the report warns that health care risk managers will need to account for several factors before persuing “pioneer” status for ACO pilots, including development of new staffing models and patient engagement strategies, as well as clinical integration and data collection and measurement.
Cyber security and patient privacy protection remain growing areas of concern for health care companies and their insurers, the report said.
Depending on the number of records affected, the total cost of mitigating a data breach can be anywhere from $2 million to $20 million, including notification expenses, call center operation, credit monitoring and identity theft repair costs, according to the report.
According to the report, more than 150 data breaches have been reported in the health care industry in the last two years, affecting as many as 5 million patient files.