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DATA DRIVES INNOVATION, BUT HOW?

Data flow is a core consideration for any organization, but insurance providers are discovering more and more that their data usage is affecting every aspect of operations. From underwriting to claims assessment, firms have to be able to optimize data analytics and gain actionable insights faster and more efficiently than ever before in order to remain one step ahead of the competition and provide the best service to clients. This is especially true in the medical professional liability field.

Optimizing data usage requires many considerations. According to ComputerWeekly, it is predictive analytics that is delivering the value that firms need, and as such, insurance providers have to invest in a core solution that provides swift, reliable and customizable reports on their data. The main goal here is to drive innovation toward identifying risks sooner and increasing the overall quality of service to customers by weeding out fraud and loss.

With a predictive analytics solution in place, more insurance providers will be able to adapt to the big data trend as well, in order to boost efficiency despite large volumes of information coming in at a faster pace, and the overall restructuring of how data usage has to occur in order to derive the most value.

What data should be used?

In order to optimize data usage with predictive analytics in light of the big data boom, companies have to consider the what, why and how, according to ITPRoPortal. When it comes to business analytics solutions, the first question that needs to be asked is, “What data should be used?” The short answer is “all of it,” but that doesn’t really provide any insights.

For most firms, the key will be to optimize insights by providing as much information to the predictive analytics solutions as possible when generating reports. The advantage is that these tools can handle larger amounts of this resource, as they organize, assess and utilize it faster and more efficiently.

Why go predictive?

With several advanced analytics solutions on the market, some firms may question why predictive is the best way to go. In the professional liability insurance market, being able to predict and avoid loss is far more useful than any other form of analytics, ensuring that firms are eliminating risk and fraud before it happens, rather than reacting to it after the fact. This optimizes the overall returns and helps boost the total quality of service over time, to increase the provider’s reputation and help bring in more clients as well.

With an optimized business intelligence platform, insurers won’t even have to worry about the data being used- simply define the parameters and develop complex, yet easy-to-follow reports every day.

How is the data and analytics trend changing?

This is almost a two-part question, because understanding analytics and big data trends requires knowing how they are evolving and how to optimize the tools used to adapt when necessary. With the right business intelligence solution in place, firms will be able to gain a level of sustainable action that will ensure smooth data usage over time and optimize the insights achieved faster. This leaves more time for assessment and tweaking of the processes as time goes on to ensure that a high standard of quality is maintained.

Modern analytics expectations are plentiful, requiring a strong approach to ensure optimized workflow at all times. Predictive analytics solutions provide that quality and promote growth and profit for long-term goals, not just the short-term demands of the market. By investing now, more insurance providers will have the tools in place and be ready to go when predictive analytics become a necessity rather than an advantage.

 

FLAWS IN MEDICAL EXAMINER PROCESSES AFFECT INSURANCE CLAIMS

Insurance claims, from workers’ compensation to life insurance, are heavily impacted by the processes and integrity of medical examiners, physicians, nurses and other healthcare professionals. However, certain failings, or un-followed guidelines, are affecting the quality of work being performed, presenting issues in the accuracy of claims filed and increasing risk for the providers. Furthermore, according to Claims Journal, in the case of life insurance, it can leave the cause of death unanswered or even allow killers to walk free.

Claims Journal reported on a finding in North Carolina that cut corners, and other shortcomings in death investigations, are increasing legal and insurance claims risks. In one instance, a widow almost got away with murdering her husband after his death was initially ruled a car accident.

“People can get away with murder if the medical examiners don’t do their job,” Ella Grant, the victim’s mother, told The Charlotte Observer. “Their job is to check bodies from top to bottom. That did not happen.”

The Charlotte Observer recently launched an investigation into medical examiner practices and medical professional liability in these instances. The news source found that:

•Medical examiners fail to examine bodies in one of every nine cases, despite state rules that      require them to view every corpse.
•Nine times out of ten, medical examiners don’t visit death scenes, a step that national experts say is key to investigations.
•Elderly deaths get little scrutiny. Some North Carolina counties go years without performing autopsies on older victims.
•Families often wait months for rulings, which delays insurance payments and increases emotional stress.

In order to change these odds, insurers may need to increase their own scrutiny into claims fraud in order to increase the pressure on examiners and the medical community at large.

The key to optimizing underwriting and claims fraud detection is better utilizing data in these operations. Predictive analytics can play a critical role in this change, enhancing the speed and accuracy of analytics modeling and providing answers sooner, that can help assessors identify risk factors and avoid approving a potentially fraudulent claim.

Of course, some of the issues lie within the medical examiner operation structure as well, but insurance providers can reduce the risk to themselves and help the situation by optimizing their side of the equation. Advanced business analytics solutions can play a key role in these changes.

 

FALSE CLAIMS SETTLEMENT SHOWS POWER OF PREDICTIVE ANALYTICS

The power of predictive analytics lies not solely in the power to identify fraud risk, but rather in the ability to act on that information faster. Capturing real time data, and utilizing it to enhance underwriting processes, to assess and target claims fraud is a powerful tool for insurance providers, but the real value comes from being able to act on that insight faster, cutting off fraud before it causes true financial damage.

For some insurers, this can prevent millions in losses.

The Baptist Health System settlement in Florida highlights this risk and potential reward. The Department of Justice revealed that the network of hospital and medical providers agreed to pay a $2.5 million settlement on allegations of violations of the False Claims Act. These allegations include fraudulent filings by two neurologists within the system for unnecessary services and drugs against Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program between September 2009 and October 2011. The claims stemmed from misdiagnoses of numerous patients.

“These health care providers did not only violate the laws of the United States – they violated the trust placed in them by their patients,” said Inspector General of the U.S. Office of Personnel Management Patrick McFarland.  “Federal employees deserve healthcare providers, including hospitals, that meet the highest standards of ethical and professional behavior. Today’s settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that may put the health and well-being of their patients at risk.”

The DoJ noted that this settlement marks a success for the Health Care Fraud Prevention and Enforcement Action Team initiative, a multi-departmental effort to reduce fraud in the Medicare and Medicaid systems. Since its enactment in January 2009, the initiative has been able to recover $19.1 billion through False Claims Act cases, with around $13.6 billion of that amount from cases involving fraud against federal healthcare programs.

For insurance providers, this case is an important milestone in the recovery of lost funds through claims fraud, but the best way to fight these illegal activities is to address them before they even happen in the first place. Investing in a high-quality business intelligence platform, integrating predictive analytics with underwriting and claims management processes, can provide a strong foundation for claims assessment and loss prevention. The ability to detect fraud before it causes a loss, rather than fight to recover funds after the fact, places a powerful tool in a firm’s arsenal, optimizing workflow around active retention, rather than reactive recovery

Ultimately, there is more to medical professional liability insurance optimization than predictive analytics software, but adding such a useful tool can help drive the progress providers need to kick start their other initiatives and start cutting their lossesturning up the value of underwriting, a serious area in need of improvement for many insurers.

EXPECTED CHALLENGES IN THE WORKERS’ COMPENSATION INDUSTRY

Workers’ compensation insurance is evolving currently, with changes at the state and federal level in the form of new legislation, regulations and the healthcare bills, affecting insurers’ workflow. As these challenges hit home, providers will need to adapt and overcome them by changing the way they approach claims management, underwriting and other key processes. One way to accomplish such effective adjustments is to invest in high-quality predictive analytics solutions to drive innovation and efficiency in data management and insights. However, insurers will need to keep their eyes on several other trials on the horizon which will affect workers’ compensation in general, as well as their operations to effectively provide coverage.

According to Insurance Journal, there are 10 challenges on the horizon for workers’ compensation, and better understanding them will give insurance providers stronger ground to approach the future of their industry from- potentially turning these challenges into opportunities. Below are a few of these trends.

Wages

With the average U.S. worker’s salary remaining stagnant over the last year, the low wages that professionals are seeing are affecting workers’ compensation rates.

“Salary stagnation or low growth of wages will have a telling impact on the workers’ comp industry in the future, for the simple reason that payroll growth is necessary in order to have premium growth,” John Leonard, President and CEO of MEMIC, told the news source. “If you consider that payroll is one of the basic components of developing a premium for a risk, once you have no growth or low growth, that has a capping effect, so to speak, in terms of premium growth.”

Leonard further noted that the split in medical and indemnity costs has been affected by this change. Prior to the recession of wage growth, 60 percent of the average workers’ compensation claim was attributed to indemnity payments. However, today the ratio has reversed, with only 40 percent going toward indemnity and 60 percent of claims dollars to medical costs.

“So if, in fact, there is slow or no wage growth, we’re going to see a continuing imbalance in terms of the growth of the medical component with no growth on the indemnity side,” Leonard concluded.

Affordable health care

The Affordable Care Act could be a considered a success or a failure, depending on which side of the fence you sit, but in terms of workers’ compensation, it could present a new risk in the form of non-work related injury claims.

John Leonard noted to the news source that due to the change in healthcare insurance, professionals who are injured in their time off may wait until they are back at work to report the incident- in such a way that would qualify it as a workers’ compensation case. This type of fraud will present a unique risk to insurers, as it is increasingly difficult to identify. Furthermore, physicians will need to be wary of a reduction of reimbursement rates from Medicare- which will have a compounded effect on medical professional liability insurance risks.

“Combined with the growth in Medicaid– where reimbursement rates are quite low– there is some concern that providers might start to find ways to get their patients’ injuries covered by workers’ comp, a concept called cost shifting,” said Leonard, according to the report. “That is potentially a bigger concern, but right now the whole thing is uncertain.”

Worker age and health

General concern over younger professionals entering the workforce is also expected to have an effect on insurers. Harry Shuford, Chief Economist for NCCI, noted that younger employees, rather than older ones, should be a bigger worry regarding health risks, due in part to the skills gap, and a general lackadaisical approach to employment in younger generations. In fact, Shuford noted, that even middle-aged workers seem to be more of a risk than older ones.

Ultimately, these changes will affect the way insurers need to approach risk assessment and claims fraud, and investing in the right business analytics solution will help to support this movement.

NEW TYPES OF PRACTICES SHAKING THINGS UP IN THE MEDICAL PROFESSIONAL LIABILITY WORLD

For professional liability insurers, the medical industry may not seem to change much, but on the other end, a storm is brewing that could shake the foundations of innovation. Insurance providers may need to broaden their audience pool and consider the offerings they have beyond the scope of traditional care centers in order to harness the growth that is occurring within the industry and start seeing some improvements within their own.

According to Insurance Business America, the health care industry is on an upward trend, despite the decrease in general practitioners, because of new interest among emerging businesses classes operating under the general umbrella of medicine. In fact, the U.S. Bureau of Labor Statistics has predicted growth in the industry, with nearly 2.3 million new jobs opening up between 2008 and 2018.

“A lot of agents that specialized in small practice doctors will need to find different ways of keeping their doors open,” Brad Rosgen, Healthcare Practice Leader at Brad & Wilcox, told the news source. “That means expanding to things they may not have worked on in the past, including home healthcare or outpatient services.”

Areas of the industry such as in-home care, hospice, anesthesiology and tele-medicine are expected to boom, while the traditional practices are closing their doors or shrinking in general.

“It’s not something a lot of people think to go after,” Rosgen noted, regarding hospice care. “It’s a fantastic business to write from a risk standpoint and carriers typically provide rates that are aggressive, but fair.”

In fact, many of these areas are so new for insurers that there is a lot of room for expansion. Loose underwriting guidelines increase the need for communication with clients, and require firms to provide significant “value-adding services,” according to the news source. This means focusing on the tools that will optimize service, and deliver high-quality policy options to firms. In order to accomplish this, insurers are going to have to look more closely at their own operations, and investing in a business intelligence platform that will support these changes.

“(Medical professional liability) is definitely an area of growth. Competitive as it is, it is still a high-growth industry and will continue to be, as the population grows,” Rosgen also said to the source. “If you’re not already, it’s definitely an area to get into if you want to keep pace with the general rate of the economy and have something new or fun to talk about every time you visit a client.”

Rather than running new services at high risk, insurers will need to deploy advanced business analytics solutions that will help them optimize workflow around these changes and deliver high-quality claims and policy management services at reduced risk to themselves. These improvements will provide the foundation for future growth and improve the chances of success for providers branching out into new territory, as both the professional liability insurance field, and healthcare, continue to evolve.

MORE LAWSUITS BRING INCREASED PROFESSIONAL LIABILITY RISKS, RATES

Lawsuits against nurses are on the rise, according to Business Insurance, and the trend could drive up medical professional liability rates if it continues. This risk is being driven by nurses taking on primary caregiver roles more frequently across the Unites States, practicing at higher levels of care than before.

“Underwriters are going to start deploying more aggressive underwriting criteria because these nurse practitioners are practicing at much higher levels than they have historically,” said Ron Calhoun, managing director in Aon Risk Solutions, a healthcare practice in Charlotte, N.C., according to the news source. “Right now, the market for nurse practitioner professional liability coverage is competitive. The markets that play in this space have not seen enough catastrophic outcomes to change.”

Some insurers have reported re-underwriting nurses insurance policies, addressing new risks – particularly for those in high-impact practices. On average, nurse practitioners pay $2,000 a year for $1 million per occurrence and $3 million aggregate in professional liability coverage. Some insurers have noted that these rates could increase by as much as 50 percent, with some even reporting classifying nurses at rates closer to those of family practitioners at $13,000 a year.

These changes will have a critical impact on policy management needs, and insurers will have to adapt quickly in order to continue offering competitive rates while still accommodating for their own needs. The key to continuing to offer the best service to clients and still optimizing internal operations around fee and risk changes is to invest in high-quality business analytics solutions that will drive the efficiency and value of business intelligence. For most providers, predictive analytics holds the answer.

Predictive analytics solutions allow insurers to focus on broader data sets and optimize the value they derive from that data, minimizing the effort to maximize information gathering. This helps expedite claims management processes, underwriting and other critical areas of operations without risk increasing. Furthermore, providers are able to leverage enhanced insights to identify risk faster and eliminate problems before they result in loss.

The optimization of business intelligence allows insurers to also start leveraging data to better protect their clients in the first place. As nurses take on higher-risk roles in their practices, the number of lawsuits leveraged against them could increase. However, with enhanced analytics, firms will be able to minimize risk and establish improved fraud detection strategies to reduce the chance of illegitimate suits being successful.

Ultimately, insurers need to invest in predictive analytics software to future-proof their operations anyway. Those in the healthcare professional liability field can do so now to leverage these tools for growth and service improvement. Taking the right steps now to optimize service moving forward will help insurers provide the best coverage and plans on the market, attracting clients as the liability field grows more unstable due to increased risk and costs for nurses. This will help drive firms’ competitive edge as needed moving forward.

5 TRENDS CHANGING HEALTHCARE PROFESSIONAL LIABILITY INSURANCE

Healthcare insurance and professional liability coverage are often influenced by the same trends and technologies. As the insurance market evolves, challenges occur that are best resolved by IT innovation. According to Insurance & Technology, IT has to take a “transformative role,” providing the guidance for firms to achieve compliance, growth, customer satisfaction and the evolution of the insurance industry as a whole.

Delving deeper into how IT influences the growth of the industry, many firms are turning their attention toward their business intelligence platform and the analytics strategies. By investing in stronger business analytics solutions and focusing on optimizing the use of data, insurers are able to leverage trends more effectively and start shifting from a reactive risk management strategy to a proactive one. However, several trends are influencing the direction that providers are able to take with predictive analytics, and understanding them all will help firms make a decision regarding IT investments and the future of their operations.

Data usage

How firms are using data is one of the biggest changes the insurance industry is seeing today, particularly with regard to claims management software. According to Insurance & Technology, insurers want to see improved management of big data, but are also focused on centralizing their data in order to streamline access and it’s use. Actionable insights are key for growth, and streamlining the organization and control of information will help firms provide a stronger foundation for underwriting and other claims-related processes.

As reliance on data increases, and insurers focus on leveraging it more effectively, they also need to optimize the secondary issues regarding data- such as storage.

The cloud

As firms focus on overall data management to boost their operations, investing in expansive solutions, not only for the analytics side, but storage and other aspects of proper data house keeping, the cloud becomes a more enticing solution. Many insurers are turning away from legacy systems and embracing cloud computing for increased flexibility and scalability in their data management processes. These efforts don’t just improve storage capabilities, however. The cloud offers improved access to data for predictive analytics solutions, expediting workflow and helping firms build their computing potential for underwriting and claims management needs.

Changing mindsets

According to the news source, one major trend that insurers are seeing lately is a shift from a B2B mindset to one focused on B2C. With insured parties viewed more like an individual rather than a business, firms are able to focus their data gathering and usage, focusing on individual risks and loss potential. This also allows insurance providers to optimize customer service, offering a stronger experience to individual clients. The spike in available information has changed not only the potential for insurance service quality, but the expectations of the customer, and it is important for firms to meet those expectations.

Emphasis on quality

The quality of operations is the biggest focal point for insurers. Firms want to minimize risk and the potential for loss, improve customer service and drive the value of data by enhancing their capability for insight. Predictive analytics offers gains in all of these areas by increasing the potential of data, not just the amount or quality of insights. By expediting data analytics processes, and gaining the ability to derive more from these areas of operation, insurance providers are able to then directly impact the quality of service they are providing customers, and the quality of their own actions to increase profits.

Compliance

Compliance regulations are also evolving at the same time, however, and providers that don’t keep them in mind may face a struggle later on. Luckily, high-quality analytics solutions help achieve full compliance regarding data privacy and help firms leverage their information to the fullest extent without worrying about keeping up with the relevant laws.

FIRST OF IT’S KIND REPORT HIGHLIGHTS PROFESSIONAL LIABILITY RISKS FOR COUNSELORS

In conjunction with CNA, the Healthcare Providers Service Organization and AON Affinity have released a study on the professional liability risks within the counseling industry, and general risk exposure of the profession. “Understanding Counselor Liability Risk” assesses the risk management tactics of the counseling industry, specifically professional liability, licensing board investigations, deposition assistance and record request claims.

“HPSO and CNA are dedicated to educating counselors regarding their risk exposures,” HPSO President Michael Loughran stated in a release. “The first of it’s kind, the report provides counselors with vital information regarding claims impacting their profession and arms them with risk management recommendations that can help them manage these risks.”

Bruce Dmytrow, Vice Preside of Risk Control for CNA, went on to explain that this information is key for identifying loss causes and developing stronger strategies for risk management and related issues that counselors face throughout their careers.

For the majority of counselors, the key risk factor they face on a daily basis is the severity of malpractice claims. While the actual volume of these claims is low in comparison to other health care industries, the average cost of these claims exceeded $176,712, the report found. However, over half of counselors are able to successfully defend themselves from licensing board complaints, with the majority of claims in the marital/family counseling field.

An interesting fact for some to consider is that the number of claims filed against older counselors- aged 51 years or older- was significantly higher than any other demographic at 71.9 percent. Data such as this is critical for insurance providers offering professional liability coverage to counselors.

Over the last eight years, the trend of liability claims has been on the rise as well, the survey found, with the average paid indemnity rising from a low in 2004 of about $50,000 to, after a brief spike in 2006, more than $200,000 in 2012.

Another potentially useful, yet isolated fact, is that of the two most severe claims seen over the past 10 years, one occurred within the alcohol and drug treatment field, while the other was unconnected to the actual medical practice of the counselor in question.

For insurers, investingan improved business intelligence solution and deploying high-quality analytics to assess this type of data, and more directly relevant information from their clients, is critical for handling claims risk trends.

MEDICAL PROFESSIONAL LIABILITY OUTLOOK GOOD

Insurers have a positive outlook on the future of the medical professional liability sector, with several current trends and technologies at play improving this viewpoint. While concerns over liability exposure and claims fraud are still growing, the general outlook remains bullish, according to Business Insurance.

“I generally view (the health care industry) as a growing sector of the U.S. economy,” Peter Eastwood, president of Berskhire Hathaway Specialty Insurance Group, told the news source. “We have an opportunity to provide customers with a high-quality balance sheet to which they can transfer risk. The medical professional liability business is a profitable segment of the commercial property/casualty market even with the decline in premium. Institutions are retaining more risk. This shows it’s an industry that is very invested in risk management. This is a positive sign in helping to drive positive results.”

Eastwood noted that the continued slight decline of premium volume indicates that the market has begun to bottom out, balanced at a more “appropriate combined ratio.” He believes rates won’t go any lower, and that a rapid increase in rates could occur due to the Affordable Care Act.

Of course, with the possibility of rates leveling out, firms need to focus on the projected increase in malpractice claims that the ACA is believed to herald. AON Risk Solution’s Hospital and Physician Professional Liability Benchmark Analysis noted that hospital professional liability costs average out to about $2,940 per occupied bed last year.

Profits could rise, as Eastwood predicted, but this doesn’t make the challenges that rising liability costs could present any less threat to operational integrity. Insurers will need to double down and prepare for increased numbers of claims, both fraudulent and legitimate. Additionally, more providers will have to focus on their underwriting and policy management operations in order to improve control over loss and risk analysis.

Analytics as a growth driver

In order to drive the improvements insurers may need to have to balance the risk and benefits the next years may bring, they will have to invest in high-quality business analytics solutions that focus on advanced analysis of claims and client data. Advanced analytics opportunities will be critical for helping firms become proactive in tackling risks, but other advanced business intelligence solutions will also be key to rounding out stronger, more efficient operations.

The equalization of rates, potential for increased liability costs and changes occurring in the healthcare sector came to a head in 2014, and insurers have to prepare to adapt regardless of which direction the tides turn. Investing in a high-quality business intelligence platform now will give providers the time they need to become accustomed to the new approach to analytics and data insights, while better preparing them for the needs of healthcare providers in the future. As an essential part of the economy and welfare of the nation, this should be a major concern for all.

MEDICAL PROFESSIONAL LIABILITY INSURANCE NEEDS GROW FROM PPACA ADOPTION

As a result of the Patient Protection and Affordable Care Act, many healthcare facilities and providers are finding their risks and liability concerns growing. From data security to stop-loss needs, these issues are having an impact on operational integrity and overall workflow that could translate into a reduction in the quality of patient care if a firm isn’t careful. Additionally, firms cannot hold off on implementing the PPACA, resulting in rushed or incomplete deployment of the strategies needed to address these concerns, such as advanced business analytics solutions.

According to the 14th annual Captive Insurance Market Study from the Captive Insurance Companies Association, many providers are beginning to look at captives as a way to optimize their medical stop-loss coverage in particular, Business Insurance reported. The survey found that 12 percent of respondents already write stop-loss coverage in their captives, 8.3 percent reported that they likely will do so within the next three years and 18.1 percent noted that using their captive for stop loss was possible within the next three years. However, regulatory issues, justification of benefits and low interest rates continue to plague healthcare facilities with regard to stop loss and captives use.

Many providers will find that they need to turn to their insurance provider to help moderate these issues and optimize performance around captives use. According to the report, 98 percent of respondents perceive the value of their relationships with their insurer as excellent or moderate, yet only showed some degree of satisfaction regarding other processes such as claims handling, policy management and regulatory compliance.

Beyond actual operational issues there were other considerations plaguing healthcare insurance in relation to the PPACA. Business Insurance recently reported that data security and privacy is another concern providers and insurers need to pay special attention to. As more patient information goes digital, and that data is being used for predictive analytics and other advanced business intelligence processes, firms need to ensure that they are optimizing their privacy and security performance. Nearly 90 percent of healthcare organizations reported at least one data breach over the past two years, but the number of groups reporting five or more has dropped by 5 percent and continues to fall, while the estimated economic impact of these breaches declined by 17 percent.

For insurers, the continuation of these improvements means investing in the best possible business intelligence solution for their needs.

Ultimately, optimizing the predictive analytics solutions and platforms in use will help insurers provide the best service they can to clients while focusing on the trends necessary to match performance, security and privacy needs and maintain compliance with the PPACA. Healthcare operations can ill afford to be reduced in their efficiency, and optimized insurance offerings will help them maintain course and grow, to offer the best care to the nation that they can. Over time, this will help to reduce the threats that are being seen by healthcare innovations and regulatory changes.