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Enjoying the Ride? Print E-mail
Written by Jeffrey Herschler   
Friday, 20 July 2012 08:10

   roller coaster
Med Mal Roller Coaster

The cyclical nature of the medical malpractice insurance industry is well documented. Check out this excerpt from the digital archive at CBS Life & Health Library, just nine years ago, when we were on the other end of the wave:

"Medical malpractice claims have held steady, yet insurance premiums have skyrocketed. This pattern can be attributed to the cyclical nature of the commercial insurance business. We are in the midst of a classic hard insurance cycle. The first such crisis, which was particularly acute in the product liability and medical liability sectors, occurred in the mid-'70s. The second crisis, dramatically detailed in the 1986 Time magazine cover story entitled Sorry, Your Policy Is Cancelled was more..."(click HERE to read more of the 2003 story).

According to Matt Gracey, President of Danna-Gracey, a medical malpractice brokerage firm with offices in Delray Beach and Orlando, the current soft market in medical malpractice is characterized by the following:
  • Low rates: Up to 60% lower than 2005;
  • More choices of insurers; much more competitive climate due to the favorable claims cycle;
  • Loose underwriting; claims are more often overlooked by insurers.  
  • Expanded coverage; lots of bells and whistles on standard policies!
Sounds good! Let the good time roll, right? Not so fast, says Gracey. With a hard market ahead, it makes sense to get ready for the inevitable. And the market might be turning sooner rather than later. 

There are already some ominous signs. For example:
  • Loss ratios are increasing as pricing decreases; many insurers are over or approaching a "combined loss ratio" of over 100%. 
  • Reserve takedowns dwindling; insurers have been using claims reserves to bolster their losses, thus allowing them to keep their pricing as low as possible.   
  • Market shrinking as doctors retire, sell out to hospitals, or go bare.
Meanwhile the 2003 Tort Reform law is being challenged in Florida's Supreme Court and there are serious concerns that the law will be struck down. But they are working on Tort Reform at the national level (see House proposal would reform medical liability), so why worry? Says Gracey, "For years the House has passes great versions of Tort Reform, which all fail to get the 60 votes needed in the Senate. This one will go the same way. This is just election year posturing to show doctors that Republicans are trying and it's the Democrats' fault."

To get ready for the next medical malpractice storm, Gracey recommends the following:
  • Move to high ground! Insure with highly rated, financially solid companies that have a track record of being committed to Florida's doctors in more difficult market conditions. 
  • Plan now to avoid being uninsurable, or not able to afford coverage;
  • Examine coverage options; get an independent expert to review your coverage for gaps. 
  • Examine bare options and reexamine your asset protection plan. 
In closing, Gracey has one last piece of advice: "Enjoy the party while it lasts!"

Last Updated on Friday, 27 July 2012 10:26
What the ACA Decision Really Means for the Future of Medicare & Medicaid Print E-mail
Written by Paul Gionfriddo   
Monday, 16 July 2012 07:44

Our Health Policy Matters         

A column focusing on federal, state and local health policy  

In the wake of the Supreme Court's decision on the Affordable Care Act, the future of the two biggest government health insurance programs - Medicare and Medicaid - just became much more interesting.

The Affordable Care Act made significant changes to both programs, and they will change the landscape of federally-financed health care in the future.

Most noteworthy, it closed the Medicare prescription drug donut hole. This is no small matter to the 3.6 million people who benefitted in 2011 alone.  Altogether, they saved $2.1 billion in drug costs, an average of over $600 per person, according to the Center for Medicare and Medicaid Services (CMS).

In addition, Medicare recipients are receiving a whole new set of free preventive services, including annual physicals.  In the first five months of 2012, CMS reported that 14.3 million recipients received at least one free preventive service as a result.

But these benefits didn't come without a cost.  And even before the passage of ACA, the Medicare Trust Fund was slowly bleeding out its reserves.

The Medicare Part D Drug Benefit program, enacted in the early 2000s, added about $1,870 - or 15% more - to the average benefit a Medicare beneficiary received in 2011.

In part because of this added benefit, according to the 2012 Report of the Medicare Trust Fund Trustees the Medicare Trust Fund lost $19 billion last year.

So Congress did two things to constrain Medicare costs.  The first was to impose a reduction in physician payment rates by 31% beginning in 2013.  The Affordable Care Act savings assumed that this reduction would be put into effect; however, the "doc fix" forestalled this in 2012, as it has in every year for the last decade.

The second - approved in ACA - was to cap rate increases for Medicare providers in the future. The combination of these two cost saving measures is significant.  Medicare today costs about 3.7% of GDP.  With the cost-saving measures in place, its share of GDP is still expected to grow to 6% by 2040, and to 6.7% by 2085. 

This is pretty high.  Without the cost-saving measures, however, Medicare costs rocket to an almost unsustainable 10.3% of GDP over the next seventy-five years.
Can Medicare be fixed?

The answer is yes.  According to the Trustees' report, it would take a Medicare tax increase of 0.67% to individuals, and 0.67% to employers, to guarantee the future of Medicare as we know it for the next 75 years.  In other words, for every hundred dollars in Medicare taxes we currently pay, we would need to add 67 cents more.
Is saving Medicare worth those 67 cents to the 80 million of us who will be insured by the program in 2030?

ACA's changes to the Medicaid program were even more significant.
Medicaid is an important safety net program not just for elders and lower income people, but for most health providers, too.  Medicaid today makes 60% of all payments to nursing homes, and 37% to community health centers, 35% to public hospitals, 26% to behavioral health providers, and 17% to hospitals overall.

ACA increased the eligibility standard for Medicaid to 133% of poverty - approximately $30,000 in yearly income for a family of four today - beginning in 2014.  It also mandated states to do the expansion, which would add 17 million people to the program by 2016, bringing the total number of Medicaid recipients to 52 million.

However, the court ruled the mandatory Medicaid expansion unconstitutional, leaving it up to the states.
Click HERE to read the entire blog post.

Last Updated on Friday, 20 July 2012 08:20
The Next Challenges in the Affordable Care Act Print E-mail
Written by Marcum Healthcare   
Saturday, 14 July 2012 15:58

How health care providers should begin planning for the impact of the Affordable Care Act now that the Supreme Court has upheld the mandate

The Supreme Court’s 5-4 decision to uphold the individual mandate of the Affordable Care Act, ACA is generally viewed as a positive outcome for hospitals, physicians and other health care providers.  However, the Supreme Court’s ruling and many original provisions of the ACA raise significant concerns for health care providers.   

Both the American Hospital Association and the American Medical Association issued formal press releases praising the decision to uphold the individual mandate. The AHA said “Today’s historic decision lifts a heavy burden from millions of Americans who need access to health coverage. The promise of coverage can now become a reality.”   

The AMA said “We are pleased that this decision means millions of American can look forward to the coverage they need to get healthy and stay healthy.” 

However, the AHA also signaled that it sees deficiencies in the ACA. It said “Now that the Supreme Court has made its decision, hospitals will continue their efforts to improve the law for patients, families, and communities.”  

Increased Revenue and Payment Cuts

On one hand, the ACA’s insurance coverage for 32 million uninsured means additional revenue for providers. Additionally, the CMS chief actuary projected $575 billion in Medicare payment cuts for hospitals, skilled nursing facilities, long term care hospitals, inpatient rehabilitation facilities, hospices and home care agencies. 

A 2010 Rand study estimated that net income for US hospitals would decrease by $11.3 billion despite a $75.2 billion increase in revenue from the newly insured. The decrease in net income resulted from the additional cost of services for the individuals who gained coverage.  

The Rand study also projected that physician revenue and net income would increase but those increases would be seen largely by physicians who deliver primary care services to Medicare patients.

Changing Payer Mix. Lower Margins        

According to Matt Bavolack, Director of Marcum’s Health Care Group, “One area of great uncertainty and concern for providers is a changing payer mix.”  He noted that 16 million of the 32 million people who are expected to gain coverage will be covered by Medicaid.  Medicaid payment rates are usually lower than Medicare rates and certainly lower than commercial rates. 

“Providers may see rapidly eroding operating margins,” says Bavolack  “The unit cost of services could go up because of increased demand from additional patients while lower Medicaid payment rates may mean less revenue per unit of service.”   

Mark Fromberg, another partner in Marcum’s Health Care Group adds that “The mix of commercial insurance plans could also change.  Large employers have said they will continue to sponsor coverage for their employees which is comforting to providers, but millions of people are likely to obtain commercial coverage through the health insurance exchanges.”  Fromberg continued “The companies that offer coverage through the exchanges and the benefit levels in those plans could cause an undesirable shift in a provider’s payer mix.”

A Pathway for Health Care Providers

The Affordable Care Act has started to reform the country’s health care system and unless it is repealed or modified, the Supreme Court’s decision means the pace of new regulations and other changes will increase going forward.  The most significant changes are now less than 18 months away.  Health care providers need to fully understand how the ACA will affect their services and the patients they see, and they need to begin planning for the changes that will occur.  

For more about Marcum's Healthcare Industry Service Group, visit

Marcum offers industry leading expertise across a wide range of specific areas including SEC, Alternative Investments, Retail, Manufacturing, Construction, Health Care, Technology, Governmental Entities and many others.

About Marcum LLP
Ranked among the top 15 firms in the nation, Marcum offers the resources of more than 1,100 professionals, including more than 150 partners, in 23 offices throughout New York, New Jersey, Massachusetts, Connecticut, Pennsylvania, California, Florida, Grand Cayman, China, Hong Kong and Shanghai. The Firm's presence runs deep with full service offices strategically located in major business markets. Marcum is a member of the Marcum Group, the gateway to a group of organizations that provide a variety of professional services including accounting and advisory, technology solutions, recruiting, and wealth management. These organizations include Marcum LLP; Marcum Technology LLC; MarcumBuchanan Associates LLC; Marcum Search LLC; Marcum Financial Services LLC; and Marcum Cronus Partners LLC.

Michael Curto
Phone: 954.320.8030
Email Michael

Mark Fromberg
Phone: 954.320.8050
Email Mark
Last Updated on Sunday, 15 July 2012 08:57
"Automated hovering" in health care Print E-mail
Written by Harold Pollack   
Friday, 13 July 2012 10:42

If you are interested in novel approaches to improve health behaviors within and outside the formal healthcare system, there's no better group to watch than the University of Pennsylvania's Center for Health Incentives and Behavioral Economics.  If you are not familiar with their work, the July 5 New England Journal of Medicine perspectives piece, Automated Hovering in Health Care - Watching Over the 5000 Hours is worth a look.

Authors David Asch, Ralph Muller, and Kevin Volpp start out with a simple but powerful observation about how medical care (and systems outside medical care) must change to better promote health:

The dominant form of health care financing in the United States supports a reactive, visit-based model in which patients are seen when they become ill, typically during hospitalizations and at outpatient visits. That care model falls short not just because it is expensive and often fails to proactively improve health, but also because so much of health is explained by individual behaviors, most of which occur outside health care encounters. Indeed, even patients with chronic illness might spend only a few hours a year with a doctor or nurse, but they spend 5000 waking hours each year engaged in everything else - including deciding whether to take prescribed medications or follow other medical advice, deciding what to eat and drink and whether to smoke, and making other choices about activities that can profoundly affect their health.
The authors also note three developments which offer promise that our health system can do better:
  • Payment mechanisms that reward providers based on patient health outcomes
  • The proliferation of new computer and communication technologies
  • Deepening understanding of behavioral economics
Click HERE to read the entire blog post.

Excerpt from: The Incidental Economist

Contemplating health care with a focus on research, an eye on reform.
Last Updated on Monday, 16 July 2012 07:49
Quality Healthcare: The Future of Medicine Print E-mail
Written by Heather Miller   
Monday, 09 July 2012 07:21

The government has taken an active role in shaping the way that healthcare will be provided in the future. The historic first step taken by Congress was to pass the controversial Patient Protection and Affordable Care Act ("ACA"), signed into law by President Obama in 2010. Congress will continue to pass legislation that will force physicians to practice medicine in a manner that will focus on better quality of care while reducing costs.

After Congress passed the ACA legislation, private insurers reacted, as expected. Within the past few weeks alone, Aetna launched a new program in Connecticut and New Jersey that will offer incentives to primary care doctors to oversee a patient's overall health; Anthem Blue Cross and Blue Shield in Connecticut announced an innovative, primary care program that will allegedly dump an extra $1 billion or more into primary care; and UnitedHealth Group announced that it intends to replace its current fee-for-service payment model. UnitedHealth Group, the nation's largest health insurer, intends to compensate hospitals and physicians for reaching certain quality goals. Currently, only 1%-2% of UnitedHealth Group's 26 million commercially insured members are covered by its value-based payment contracts. UnitedHealth Group plans to change this statistic at a staggering rate.

By the year 2015, UnitedHealth Group intends to apply value-based payment contracts to up to 50%-70% of its commercially insured members. It plans to use several approaches for these types of contracts, including compensating providers in part through a bonus mechanism. If physicians meet certain quality metrics, they are compensated. If they don't meet those metrics, pay increases could be withheld, according to the proposed plans. Eventually, this contract model will include most high-volume hospitals and medical groups. Hospitals will be measured by their readmission rates, mortality rates for certain conditions, hospital-acquired infection rates, and patient satisfaction; physician measures may include inpatient admissions, emergency department visits, and preventive screenings.

By making these changes in payment methodologies, the private health insurers are fundamentally changing their relationship with healthcare providers. Essentially, they will be increasing their financial support for those providers who help manage their patients' overall health, eliminate duplicative services, and boost preventative efforts. The insurers' ultimate goal in adopting these incentive programs is to advance the quality of healthcare, lower costs, improve coordination of care, and promote a more accessible and efficient experience for patients. The only way these goals can be achieved is if people are kept out of hospitals and physicians get more involved in patient care.

While these changes sound great in theory, meaningful improvement in the quality of care provided continues to remain on the shoulders of patients, who need to be active agents in their own healthcare. Patients will need to be rewarded for healthy behavior (or penalized for unhealthy behavior). The truth remains that quality healthcare is limited by the choices patients make when they walk out of a physician's office.

About the author: Heather Siegel Miller is Senior Counsel in the Miami and Boca Raton offices of Broad and Cassel. She is a member of the Firm's Health Law Practice Groups. Click HERE to read the rest of the bio.

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