Medical Insurance Planning for a Healthy Practice in 2021
By Max Schloemann

With the coronavirus pandemic accelerating a shift toward telemedicine, 2020 was a year of tremendous change in the medical industry. This year will be no different, with the Biden administration promising to shift the regulatory landscape. Insurers are still playing catch-up with these surprising developments. For practitioners, there are real and unsettling questions as to what awaits in the future. Practitioners will find a new and evolving landscape in searching for liability insurance for 2021 and beyond.

Despite a lot of uncertainty, insurers and regulators have started to show their cards as to what changes the medical industry can expect, with higher rates being number one on the agenda. For practitioners, the following are four key considerations for 2021. 

• Medical malpractice insurance rates are going up. Based on the data we’re seeing so far, rates for new policies or 2021 renewals will increase an average of about 10%, with some specialty classes going up more than others. While internal medicine and family practice rates are only increasing around 5%, look for general surgery insurance to go up about 15%, with some specialties and hospitalist rates going up as much as about 20%. This is largely due to payouts for claims increasing across the board and rising legal defense costs. Unfortunately, even doctors who haven’t had a claim in the last five years will likely see increases. Some practices that have had fewer patients, such as those doing elective treatments, may be wondering where their rate reductions are, as revenues are down from lower patient volumes in 2020. But insurers and actuarial firms seem to have priced this in and are expecting these practices to be even busier in 2021.

• Telemedicine will start to cause insurance changes. It’s going to continue to gain traction, not only with providers but also with patients, who have gotten more used to it. Even a COVID vaccine is unlikely to stop the trend, as telemedicine is more efficient and allows doctors to see more patients. 

The most immediate concern with telemedicine is that now, with the national emergency, doctors may be legally allowed to conduct telemedicine with out-of-state patients, but their insurers usually are not covering it, unless the provider is licensed in the state where the patients are located. The pandemic has caused states to allow for a nonlicensed physician to treat patients within the state, even without a license in the state where the patient is located, but underwriters typically require that the physician be licensed in that state. Since these are temporary conditions, insurance carriers have not yet adapted to the law and allowed it, thereby limiting the law’s usefulness. It’s still an open question whether some insurance companies will lead the way on modifying policies to cover out-of-state telemedicine or whether new regulations could be passed that may require coverage. To expedite getting malpractice coverage for telemedicine across state lines, physicians should secure licenses in the states in which their patients are located, a process which in many states is as simple as paying a modest fee.

Could telemedicine cause an increase in rates as well? That’s a possibility, because if there are more patients seen, there could be more potential liability caused by sheer numbers. Also, insurers have expressed concerns that telemedicine leaves more room for doctors to misdiagnose or fail to notice significant medical issues, since there is no in-person physical exam. However, insurers don’t really know yet whether this concern will be borne out by more claims. It could happen that telemedicine causes rates to go up, but the industry seems to be waiting for more information.

• Cyber liability issues keep growing. Physicians and medical practices should look into additional coverage for cyberattacks. This coverage is usually included on liability policies up to a certain point, but higher limits of liability and more robust coverage should be considered. We’ve seen even small practices become targets for hackers that view health care practitioners as soft targets and are typically looking for ransom after gaining access to private data. HIPAA and other regulations require measures to be taken to protect patient data. Exposure for physicians and medical practices includes liability for the loss of personally identifiable information of patients as well as business interruption and other issues. This coverage may be too limited on many malpractice insurance policies, so take a careful look at these policies and consider additional coverage in our world of expanding cyberthreats.

• Growth in medical cannabis and Ketamine recommendations. Nothing about 2020 slowed the trend toward legalization of cannabis, both for recreational and medical usage. Look for growing institutional acceptance in 2021 and for insurers to offer policies that are carved out to specifically cover the professional liability for doctors who certify that patients meet the requirements for the state’s medical marijuana program, as standard malpractice policies are usually not sufficient for this exposure.

2020 saw a rise in depression and other mental health issues that are treated by prescription drugs. Ketamine is being used to relieve pain and treat depression. While there have been well-publicized problems and huge legal settlements related to abuse of opioids for pain medicine, the number of prescriptions for Ketamine, which was previously known more for its (illegal) recreational use, appears to be increasing. It remains to be seen how this will affect coverage in 2021, but look for movement in this area from insurers as well. Medical practices using Ketamine-assisted psychotherapy need specialized malpractice insurance policies.

Although 2021 will bring much more change to the industry, doctors who stay a step ahead and do some early planning can have a healthy practice. Private practice physicians should seek expert medical professional liability insurance advice from a knowledgeable broker, to cover their unique practices.

— Max Schloemann is a 12-year medical insurance industry veteran and the founder of MEDPLI, a national medical malpractice insurance brokerage. The company’s clients include more than 200 doctors and surgeons, as well as physician assistants, nurse practitioners, and health care entrepreneurs.