HUB International 2021 Outlook
Transforming Uncertainty into Opportunity
Charting a New Course
The healthcare industry faces intense disruption as it battles the pandemic, implements new payment and service models, and anticipates an as-yet undetermined liability for COVID-related deaths
Ground Zero of the COVID-19 pandemic.
The industry faces a lengthy rebuilding period that will likely extend beyond 2021, with some sectors more challenged than others.
So many uncertainties stemming from the pandemic create new risks and new questions. How can and should telemedicine stretch to fill existing and potential service gaps? Will the shortage of medical professionals lead to staffing shortages and worrisome shortcuts in credentialing practices? How fast can healthcare practices transition to the bundled payment model to recoup pandemic-related losses?
“The unpredictability in every facet of healthcare is posing uncertainty for insurers as well.”
Then there is the especially precarious position of the senior care sector,
accounting for some 40% of the coronavirus-related deaths in the U.S. There may
be some cover in states where “shield” laws were adopted against COVID-related
lawsuits over lapses in care, but it will be challenging to find a professional
and general liability policy that doesn’t exclude the novel coronavirus and
other communicable diseases moving forward.
The unpredictability in every facet of healthcare is posing uncertainty for insurers as well. COVID has impacted many lines of insurance for healthcare professionals – professional liability, general liability, management liability, property, cyber liability as well as workers’ compensation. Even before the pandemic, premiums were escalating and availability was tightening, pretty much across the board, even as underwriters scrutinized risks more closely. Professional liability has been particularly problematic in the wake of outsized, multi-million dollar claims, and the full impact of COVID has yet to be seen. The disruption, though, makes risk management an essential component of 2021 business strategies.
It is more important than ever to work with the right broker to help guide organizations through these remarkable times.
Among the most significant trends and issues influencing the healthcare industry and its risk posture in 2021 and beyond are the following:
“The disruption... makes risk management an essential component of 2021 business strategies.”
“Telemedicine may finally have staying power, having also proven itself in the pandemic to be a viable option to specialty practices, hospitals and senior care, too, as a safe way to consult with and remotely monitor patients.”
1. Telemedicine proves a lifeline for hard-hit practices.
Primary care practices were among those facing significant risk of closing during the pandemic as in-person visits were suspended. Some had only a few weeks of cash on hand. Layoffs and furloughs were common.
One issue, shared by many practices, was their billing model, based on volume of service, combined with lack of parity in reimbursements between virtual and traditional office visits. That made adding telemedicine hard to justify. But with the pandemic, the Centers for Medicare & Medicaid Services (CMS) threw out a lifeline that included paying for virtual visits at the same rate as in-person visits during the coronavirus emergency.
Telemedicine may finally have staying power, having also proven itself in the pandemic to be a viable option to specialty practices, hospitals and senior care, too, as a safe way to consult with and remotely monitor patients. But it creates new risks, too. Any organization that has added telemedicine services should immediately update its risk management policies and procedures accordingly – clinical and otherwise – including documented standards of care for telemedicine. These protocols must be evaluated against the conditions or circumstances of the technology’s use for each provider: Is a telehealth consult by itself sufficient? The issue is whether a healthcare professional can adequately judge through a camera lens whether, for example, the patient has an ordinary skin lesion or a melanoma, and when a face-to-face exam is the best practice. Guidelines establishing telehealth’s limitations will protect against overreach. Additionally, compliance with various Patient Compensation Fund laws and regulations must be assessed and understood.
Cyber risk remains a significant concern, as is other billing fraud. In October 2020, the Department of Justice charged 86 medical professionals with submitting $4.5 billion in allegedly fraudulent telemedicine claims to Medicare and other government insurers. Cyber risk means telemedicine platforms must be technologically sound, with secure internet connections well-protected by firewalls and other measures like passwords and employee training. Procedures also must be developed for properly identifying patients (like date of birth or portion of a social security number). Continued reliance on third-party electronic medical record management and the massive amount of data stored in the cloud ensures healthcare data breaches will continue in 2021. The liability makes it an imperative to work with your broker on buying proper cyber limits and getting educated on how insurance supports your group’s cyber risk management efforts.
The Centers for Medicare & Medicaid Services (CMS) threw out a lifeline that included paying for virtual visits at the same rate as in-person visits during the coronavirus emergency.
“When the pressure’s on, it can be too easy to check the license but skim over a bad pattern of claims.”
2. Increased risk of cutting corners on credentialing as personnel issues mount.
While CMS opened the door wider to telemedicine’s practice across state lines with the coronavirus, it did not allow telemedicine to be practiced independently, without proper state credentials. The drive to act on the demand for service has broadened the boom in contracted healthcare services into 2021.
The pressure to replenish revenues while meeting pent-up and new areas of demand may have caused some worrisome relaxing of credentialing and privileging protocols. That’s a risk at any time. It has the potential to create a liability that could, at the least, degrade a practice’s quality and make professional liability insurance very costly for everyone. When the pressure’s on, it can be too easy to check the license but skim over a bad pattern of claims. Plus, under the “vicarious liability” theory of law, third-party employers – clinics, private practices and hospitals – can be sued for their contractors’ negligence.
Due diligence is imperative. Your broker should provide guidelines on best practices. Credentialing must be done before the medical provider is allowed to provide care. Privileging should be timely so the organization’s governing body approves privileges before care is provided. The approval process should be reviewed by counsel for updates or changes. And look for potential red flags, like unusually high loss runs in lower risk practices, job hopping and license suspensions in higher risk specialties. Professional liability coverage is under too much pressure to risk a bad hire.
“Look for a resurgence in the bundled payments trend in 2021.”
3. An accelerated shift from volume to value.
The pandemic slowed the transition in 2020 to the CMS reimbursement form of “bundled payments,” or the model private payers call “value-based care.” But providers got a harsh lesson in the cost of the still-common fee-for-service payment model when in-person patient volume slowed to a trickle. Look for a resurgence in the bundled payments trend in 2021 that’s likely to continue over the next several years.
Bundled payments are all about incentivizing better health outcomes. They build around target prices for “bundles” of services – like joint replacement or oncology care. The provider shares the risk with the payer, getting a share of the savings for coming in below the target, or paying back a share if it’s over. Ideally, efficiencies in care result when the number and cost of services within the bundle are reduced.
If switching to this payment model has taken on new allure, your broker can walk you through the process, including your best protections against the downside risks. Stop-loss insurance is one option. Conveners can also be helpful to serve as liaisons between bundle participants (multiple independent care providers) and those responsible for distributing the bonus or paying the penalty.
“Senior care will be pressured well into 2021, facing as-yet undetermined liability over COVID deaths.”
4. The straits of the senior care sector.
While 40% of COVID deaths occurred in senior care settings, many facilities did, in fact, protect their residents and staved off disaster. What made the difference? Their ability to stock up on personal protective equipment and masks for employees and residents. Stringent screening of everyone walking in the door. Education on best mitigation practices. And most importantly, through strict adherence to infection prevention protocols.
The right procedures and controls to prevent infections can make the difference in disease transmission. It’s a lesson that didn’t come soon enough for much of the industry but should be incorporated into clinical risk management improvements moving forward. Senior care will be pressured well into 2021, facing as-yet undetermined liability over COVID deaths. Many organizations will find coverage difficult to get – even at higher premiums and with exclusions for COVID. Those with strong broker relationships will be in the best position to weather this period and are cautioned to start early on renewals. This will help reduce exposures, give your broker a better story to tell in marketing your practice with insurers.
Then there is the especially precarious position of the senior care sector, accounting for some 40% of the coronavirus-related deaths in the U.S.
“The uncertainties of this model will create opportunities to get creative. They will also create risks.”
Success in 2021
In 2021, the healthcare industry will be challenged by the ongoing battle against COVID-19 and will need to find ways to counter its impacts, along with managing patient expectations for quality and safety. Exploring different payment and service models that better serve everyone’s interests should be a part of the strategic planning process. The uncertainties of this model will create opportunities to get creative. They will also create risks. Balancing both will be the challenge. A good broker will prove to be an invaluable partner in the process, ensuring your story is positioned positively with insurance carriers, your coverage is right-sized, and costs are tightly managed – in 2021 and beyond.
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