Reflections of the COVID-19 Pandemic 18 Months Later

 

Back in 2020, I volunteered to write an article the following year reflecting on how the COVID-19 pandemic impacted the medical professional liability marketplace from an exposure, coverage and claims perspective.  At that time, I was confident that we would be close to being post pandemic and that heard immunity would have been achieved.  Life as we once knew it would be returning to some level of normalcy. 

Now fast forward to August, 2021 and what I envisioned is certainly not the current state of reality.  On August 27, 2021, Florida reported its largest number of COVID-19 cases since the pandemic begin.  27,584 to be exact, with hospitals nearing full capacity.   People are still debating whether wearing masks should be a right or a mandate.   New variants such as the Lambda strain are emerging.  Other statesprimarily in the southeastthat have low vaccination rates are also seeing an increase in positive cases.  To date, children under the age of 12 are not authorized to become vaccinated, so the number of cases and hospitalizations involving this vulnerable population is increasing at a rapid rate.   

With all of that said, the medical professional insurance industry is still going strong.  Since I am unable to offer a retrospective analysis of the marketplace as we are still facing the pandemic, I will share some observations of what I am seeing. 

Telemedicine.  From the onset of the pandemic, many providers and patients were not comfortable seeing each other in person due to their fear of getting exposed to COVID-19 along with quarantines that prohibited non-essential medical care.  While the digital revolution was already on its way before the pandemic due to the cost savings involved, convenience, and access to specialists from around the world along with providing access to care for people living in rural areas and those without transportation, COVID-19 accelerated telemedicine to a whole new level.  Using de-identified patient data from Amwell, Teladoc Health, MDLive and Doctor On Demand, the CDC found that about 1.6 million telehealth encounters occurred from January through March 2020 what the agency calls the “early pandemic period.” This was 50% higher than the approximately 1 million encounters during the same period in 2019.  In 2020 telemedicine services payable under the Medicare physician fee are now at the same rate as in person services. 

Real time virtual care also eliminates the risk of becoming ill while sitting in a waiting room with other sick patients. That is especially true with the more contagious variants of COVID-19 that are emerging.   Doctors can monitor their patients remotely limiting exposure to others.  As more COVID-19 patients became hospitalized, telemedicine helps to alleviate the strain in emergency rooms and clinics.  

As with any technological breakthrough, new challenges emerge.  Although these type of visits are efficient and often times ideal for follow-up visits when a physician patient relationship has already been established, they cannot replace all direct patient care.  Surgery, imaging, physical rehab, child birth, dental care, diagnostics, cosmetic procedures and treatment of injuries and other conditions still require direct patient care.   During the pandemic, many people chose to postpone or had no access to critical diagnostic tests such a colonoscopies, blood work, lung scans, PSA testing and mammograms.  These preventive screening delays may potentially lead to a population of people that are sicker than if these routine tests would have occurred when they were due.  If that will that potentially lead to claims since many of these healthcare providers were not accepting patients seeking procedures during that period of time has yet to be seen.  Telemedicine also increases data security risks so insurance carriers have developed virtual care products to address the full spectrum of exposures associated with real time doctor virtual consultations.   

In early 2020, there were valid concerns that the healthcare industry would be negatively impacted for years to come, but most of the renewals that I am working on are showing signs of exposure growth.  People are once again making appointments to see their physicians, scheduling diagnostic screenings, visiting their dentists and having cosmetic procedures done.  This despite of the fact that we are still fully engaged in the pandemic.  What is also trending upwards is the use of telemedicine and virtual care devices to track chronic conditions.  Healthcare providers receive an alert when an unusual symptom is observed triggering a real time patient care response.  Mental health consultations are also on the rise. 

Provider shortages.  The pandemic has impacted some regions harder than others.  During the periods of peak transmission in certain regions or cities, there was a call for healthcare providers to meet the demands of these patients.  Many nurses responded to this call for duty and became what is known as traveling nurses.   An unintended consequence of this is that competition was fierce to get these providers in their facilities and that created a bidding war.  Many of these providers are now getting paid 200% to 300% more than what they were making while working for their previous employer.   Once they experienced these salary increases along with having a flexible work schedule, many have chosen to continue on as traveling nurses.  This is causing a severe nursing shortage in many facilities and hospitals since they cannot find people to fill these vacant positions especially in rural communities.   This leads to quality of care concerns that may ultimately lead to medical professional liability claims.  One positive is that some of the lowest paid providers in the healthcare industry (such as nursing assistants at senor living facilities) are seeing salary increases.  Despite this favorable outcome, this leads to concerns that an already struggling industry that is facing financial pressure due to increased insurance rates, staffing issues due to COVID-19, potential litigation concerns, reduced occupancy due to COVID-19, increased PPE and sanitation costs and reduced governmental reimbursements.  The future of the senior living industry is facing troubling uncertainties. 

Claims frequency and severity.  The insurance industry is recognized as a cyclical business that shifts between periods of profitability and loss.  There was an upward trend in loss severity through 2019 and many medical professional liability carriers were seeing combined ratios exceeding 100%.  This created pressure to increase rates to protect their surplus.  Then COVID-19 hit.  The 2020 frequency and severity figures dropped slightly from 2019 but all indications point to the fact that this may be a short-lived scenario.  There is a backlog in the court system and many incidences reported have not been filed as claims but that could rapidly change as we transition out of the pandemic.  The industry as a whole is still healthy and there is still some room to take down reserves but that is a finite resource.  Whether the market is firm or hard is a subject for debate but there is no evidence that it will transition to a soft market anytime soon even though we are starting to see increased competition in some classes of business that were nearly impossible to place just a year ago, such as senior living facilities.  There continue to be concerns about how social inflation, income disparity, litigation funding and immunity statues, among other factors, will impact future settlements.  In addition to rate increases, we are seeing higher deductibles and retentions on many of the quotes that we receive along with reduced excess limits.  The classes of business where I am seeing the most significant rate increases are medical staffing providers (allied and physician), foster and adoption care, correctional care, distressed podiatrists, inpatient detox, hospitals and stand-alone excess and umbrella. 

Contract terms.  By now, most MPL policies contain pandemic exclusions.  Some are more restrictive than others.  Some apply to GL only (to avoid 3^rd party transmission claims), some are absolute PL and GL exclusions while others allow for claims to be filed for negligent care of COVID-19 patients.   Most senior living policies contain absolute exclusions and for them there is an added layer of protection due to immunity statues.  These immunities will continue to be challenged so the future is uncertain.  Some admitted carriers have elected to remain silent on COVID-19 and have not added exclusionary language beyond what was already built in to their coverage contract.   Despite these added exclusions, this does not provide absolute protection for insurance carriers.  Most of this language was added to 2020 policies when they came up for renewal.  Due to the statue of limitations, there may still be time to file claims for COVID related claims for injuries that occurred prior to the exclusionary language being added if written on an occurrence based contract or if reported as an incident prior to the renewal on a claims-made contract.  Only time will tell if the immunity protections granted will stand up to future litigation.

Vaccines.  As of now, probably our best line of defense to avoid the transmission of this virus other than isolation is to become fully vaccinated.  When the vaccines first became available, people waited for hours to receive their first dose.  Since getting vaccinated remained a personal choice, the demand for COVID-19 vaccines decreased before herd immunity was achieved in the US.  That, along with vaccine scarcity in other countries, have allowed the Delta variant to rapidly spread in our country and throughout the world.  As we enter into a year and a half since the announcement was made that we are in a global pandemic, the push for mandated vaccines is becoming prevalent in the US.  Similar to how the US handled the tobacco crisis, people that elect to remain unvaccinated may soon give up rights.  Can they travel to certain areas, show up at their place of employment, care for patients in a healthcare setting, remain active in the military, attend sporting events and concerts, provide services at a senior living facility as an employee or volunteer?  Pfizer received FDA approval on August 23, 2021 so I anticipate that a push towards vaccine mandates will occur.  Once the vaccine mandates are approved, that could potentially open up new pockets of liability that expand beyond the healthcare industry.   Pfizer is strongly discouraging the off label use of vaccinating children under 12 so we still have a large sector of our population still not eligible to receive vaccines. 

There are several comprehensive data reports available from top level experts that provide a detailed snapshot and analysis as to where we are now as an industry but so much could change going forward since we are still facing this pandemic.  Maybe by August 2022, that this COVID-19 global pandemic will have run its course and that the number of new cases will be significantly reduced along with effective treatments available.  We can only hope!   

Sources of information: 

Conning, Inc. Source @ 2021 S&P Global Marketplace

Conning, Inc. Source @ 2021 S&P Global Market Intelligence

Assured Research approximations based on various data sources

Florida Department of Health and Human Services reported data to the Center for disease control and prevention (CDC) on August 27, 2021

U.S. Food and Drug Administration (FDA) on August 23, 2021