Malpractice premium costs creep up as medical practices work to curb expenses

Medical groups are feeling the pinch of rising expenses in many areas, including the costs of medical malpractice insurance for physicians.

An Aug. 6, 2024, MGMA Stat poll found that nearly seven in 10 (68%) medical groups reported an increase in their doctors’ malpractice premiums since 2022, while 31% noted these costs stayed the same over the past two years. Only 1% of respondents noted they saw malpractice premiums decrease over that period. Among medical groups with increased premiums, there was an average 11% increase since 2022.

The poll had 311 applicable responses.

The poll results show an even greater share of medical groups facing higher premiums compared to what respondents reported in a June 28, 2022, MGMA Stat poll in which 62% of practices reported that premiums had increased for their physicians since 2020.

Liability coverage changes as industry shifts

Amid rapid consolidation and increased levels of employed physicians, the ways in which doctors are covered for professional liability has changed, too. According to Medscape’s 2023 malpractice report:

• About 88% of employed physicians don’t cover their own premiums.
• Only 7% of employed physicians pay for their malpractice premiums in full, and another 6% only pay part of the premiums.

Just like most other sectors, the insurance industry has quickly adopted artificial intelligence (AI) to assist in developing new actuarial models based on large datasets to “establish a more comprehensive understanding of risk factors” that enable “better and more specific underwriting decisions,” according to Risk Management.

Additionally, so-called “mega verdicts” have made headlines, as data from reinsurance group TransRe points to increasing numbers of large monetary amounts ordered in malpractice verdicts, as reported by Medscape: "2023 blew away every record previously set among high medical malpractice verdicts," said Richard Henderson, senior vice president for TransRe. "If we look at the 50 largest verdicts in 2023 and average them out, we have a higher monetary amount than any other year."

Get your money’s worth

Malpractice insurers often provide a variety of training programs for physicians toreduce the risk of medical errors and improve patient care. These programs are designed to mitigate potential claims and enhance the overall quality of healthcare.

Typical types of training offered by malpractice insurers include risk management training and legal and ethical training, sometimes with the potential to earn continuing medical education (CME) credits. This might be a helpful way to address topics such as communication, patient safety, informed consent, confidentiality and handling difficult conversations.

Tips to avoid lawsuits

A dual focus on quality and risk management in medical practices is a valuable driver of positive care outcomes and mitigating the potential for adverse events that lead to lawsuits. Cristy Good, MPH, MBA, CPC, CMPE, senior advisor, MGMA, offered these tips for reducing the chance of a lawsuit:

• Beware of disruptive providers in your practice who drive up malpractice claims.
• Beware of disruptive patients and terminate physician-patient relationship according to your state’s laws.
• Encourage communication between providers and patients.
• Create a “safe” space for peer review.
• Regularly update and refresh policies and procedures.
• Perform regular self-audits to ensure compliance.
• Perform root cause analysis (RCA) with aid of counsel to cover it under attorney-client privilege.
• Encourage operational improvement.

Proper coding and documentation are closely tied to avoiding liability issues. If you are overwhelmed with coding questions MGMA’s chart audit service team can help.

Additional resources

• 2024 Medical Coding and Billing Toolkit