More Complexity Ahead For the Healthcare Industry in 2019: Legal Issues, Structural Changes, Insurance Cost Increases & Decreases
This article was first published in Los Angeles Business Journal.
There’s never a shortage of unique issues facing the healthcare industry, and 2019 will be no different.
Topping the list in the year ahead will the opioid crisis and the use of medical marijuana. In terms of insurance, business and general liability cost is likely to continue to rise, while workers’ comp will continue its downward trend.
The following is an overview of hot button issues health care providers should prepare for in 2019.
Medical marijuana usage.
Twenty-nine states, including California, allow the medical use of cannabis to treat a wide range of conditions, including Multiple Sclerosis, Alzheimer’s, chronic pain and nausea. Despite a California law allowing medical marijuana usage, federal laws still prohibits it.
This discrepancy between federal and state laws presents a host of thorny questions for practitioners in 2019. Should they prescribe it? If so, what are the potential legal ramifications from federal authorities? And what does it mean from a medical malpractice standpoint?
One issue for physicians to consider in determining whether to prescribe cannabis is the unpredictability of enforcement of the federal law in states that permit recreational and/or medical usage. In practice, states allowing cannabis usage are typically left alone by federal authorities.
The opioid crisis continues to worsen.
A recent LA Times article notes that thousands of people are dying each year from an opioid-related drug overdose. To address the crisis, more than 20 pieces of legislation are currently under consideration in the California Legislature. As a result, 2019 will likely be a very busy year for the healthcare industry as it grapples with new laws.
The proposed legislation includes a five-day supply limit on medication for minors; electronic-only filling of prescriptions to reduce over-the-counter abuse; physician reimbursement for those who use drugs to treat addictions; easier access for law-enforcement officers to Naloxone, a narcotic antagonist medication; and more drug rehabilitation for youth to eliminate addiction at a young age.
If only a few of these bills pass, it’s likely to change the landscape in managing the prescription of opioid drugs and the overall business practices for California healthcare organizations.
Insurance premiums will likely increase.
Business insurance for medical groups, hospitals and other health care companies will likely rise in 2019. After a decade of falling prices, general liability and malpractice coverage most likely will increase over time for companies in the healthcare space.
There are several reasons for the price hikes. The insurance company, Ironshore, explains in a recent blog post that carriers will seek to offset higher costs elsewhere in their portfolio from catastrophic losses, including natural disasters such as hurricanes and fires.
Second, structural changes in the healthcare industry will drive up costs as the risk profile for healthcare companies changes. For example, as more physicians transition from independent contractors to employees, medical groups and other healthcare companies will be responsible for providing more benefits including worker’s compensation coverage.
In preparation for 2019, it will be important to review existing policies to determine the appropriate coverage levels and pricing. Working with an experienced business insurance broker that has access to leading insurers and deep expertise in the healthcare space will be essential for securing the best and most fitting coverage.
Workers’ Compensation rates will continue to fall.
While business insurance is likely to cost more, workers’ compensation is likely to cost less. That’s because the healthcare industry continues to have a better track record than almost any other industry with regard to workers’ comp.
According to Berkshire Hathaway Homestate Companies, since 2015, workers’ compensation rates have declined by the following: 40% for residential care companies, 23% for home health providers, 8% for nursing homes, 23% for hospitals, and 24% for physicians and medical groups. As a result of the past three years, we expect to see a continued decrease in pricing throughout the upcoming year.
In a declining rate environment, it’s also important for companies to shop around to get the best prices. A qualified business insurance broker can secure coverage at the most attractive price without sacrificing quality coverage.
By planning ahead for the changes to come in 2019, healthcare organizations can position themselves for success in a rapidly evolving market.
Learn more about Marsh & McLennan Agency’s healthcare practice group or receive a complimentary policy review.
As a Client Executive at Marsh & McLennan Agency’s business insurance division, Renee McDermott is focused primarily within the healthcare space and works to provide creative and industry-specific risk management solutions to her clients.