Transcript Slide 1

Richard J. Willetts, CPCU, ARM
Program Director
Addiction Treatment Providers Insurance Program
ADVERSE DRUG EVENT LIABILITY
AND
INSURANCE CLAIM TRENDS
IN OTPs
Malpractice Claims and Lawsuits are almost always
settled out of court
Very few methadone-related suits have been tried in
the U.S. ---- outcomes have not been favorable for
OTPs.
Adverse drug event claims in OTPs are a growing concern
for insurers.
Two general aspects of the industry are bringing increased
scrutiny to OTPs:
Significant increases in the overall number of
methadone-related deaths (incl. pain clinics)
Public information and news articles about methadone
increasingly negative about OTPs and the safety of the
medication`
Two overriding trends in OTP claims involving adverse drug
events:
1. Increased FREQUENCY of reported incidents and
claims made.
2. Increased SEVERITY of outcomes and settlements.
Observations about Increased Frequency trend:
Reduced stigma-----emboldened claimants.
Greater availability of information-----the internet.
More attorney involvement-----lots of hungry lawyers.
New causes of action-----cardiac, impaired drivers.
Observations about Increased Severity trend:
More attorney involvement-----driving up claim costs.
Greater availability of information-----the internet.
Patient demographic shift-----greater economic value of
lives of patients.
The Insurance Market Cycle
Insurance pricing and availability experiences cyclical swings
primarily based on the level of capital or surplus in the market
that is available to pay claims.
Surplus can be depleted slowly by a general increase in
overall claims and loss costs versus premiums collected, or it
can be depleted rapidly by a catastrophic event(s).
“Hard Market” is characterized by decreased competition
among carriers, higher rates, more stringent coverage terms
and conditions.
“Soft Market” is characterized by increased competition
among carriers, lower rates, and broader coverage terms and
conditions.
This graph highlights the last 3 “hard market” cycles, and shows that we
have been in a soft market since 2002. The 2009 results are expected to
continue lower.
This graph shows the sharp drop in ROE (return on equity) for insurance
carriers in 2008. The 2009 results are expected to continue to worsen. How
long will carriers lose money until the overall market starts to swing from soft
to hard?
OTPs are considered “sub prime” risks by insurance
carriers primarily due to the increase frequency and severity
trends, which cannot be offset by higher rates during a soft
market.
OTPs and other sub-prime risks will be the first industries to
feel the effect of the insurance market turn as some carriers
abandon the segment, remaining carriers increase rates and
limit coverage.
Individual OTPs have no control over the insurance market
cycle, but they can and should deploy risk management
strategies now to make themselves more attractive to
insurance carriers when the market hardens.
By implementing RM strategies now, an OTP can secure even
better pricing and terms during the remainder of the soft
market. They can also expect to have a better track record of
loss experience and be in best possible position to withstand
the inevitable hard market.
INSURANCE CLAIM EXPERIENCE WITH OTPs AND
HEALTHCARE PROVIDERS IN GENERAL, CLEARLY
SHOWS THAT
PROVIDING QUALITY CLINICAL CARE
IS THE MOST EFFECTIVE WAY TO MANAGE YOUR
LIABILITY EXPOSURE.
The Basic Tenets of
Risk Management
in a Healthcare Provider
(the four “C”s)
1. Stay CURRENT with scientific
and clinical information about
methadone and best practices
in OTPs.
2. Thoroughly COLLECT patient
info before and during treatment.
3 COMMUNICATE with patients
(e.g. informed consent), family
members, and other healthcare
providers.
4. CAREFULLY document
patient’s records.
A good Risk Management Culture starts at the top and
permeates an organization from top to bottom.
Consider putting a key employee in charge of risk
management for your OTP---provide top level support for this
person.
Continuous training and reinforcement of the rules and
guidelines of your organization are critical for all clinical staff.
Strive to provide top quality clinical care and pay
close attention to the basic risk management tenets
outlined. Make this a source of pride in your
operation.
You can’t avoid risk completely,
But you can manage it.