American Academy of Ophthalmology Web Site: www.aao.org
Malpractice Insurance: What a Difference Two Decades Make
This year, the Ophthalmic Mutual Insurance Company (OMIC) celebrates its 20th anniversary. To mark that milestone, EyeNet interviewed Joe R. McFarlane Jr., MD, JD, the chairman of OMIC’s board, about the changes he has witnessed in the practice of ophthalmology and the field of risk management over the past two decades.
Dr. McFarlane, from a risk management standpoint, how has the practice of ophthalmology changed over the past 20 years?
Changes have occurred in three major areas. First, the way doctors practice has changed. More doctors are practicing as subspecialists, with over 50 percent extending their training into a subspecialty. In addition, 20 years ago most ophthalmologists were in solo practice; today 63 percent are in a group practice.
Second, the arrival of managed care in the early 1990s and its impact on reimbursement have required ophthalmologists to work more efficiently, use more ancillary personnel and, in many cases, start participating in comanagement relationships. Reimbursement has decreased significantly: Ophthalmologists today are paid one-fourth to one-third what they were paid for a cataract operation in 1987, despite the fact the procedure has become more technically difficult.
Third, the availability of new procedures and new drugs that weren’t available 20 years ago—from refractive techniques to injections of VEGF inhibitors for neovascular age-related macular degeneration—have helped countless patients, yet each carries certain risks that may open up ophthalmologists to a potential lawsuit.
What were the major issues in liability coverage that faced ophthalmologists in 1987, when OMIC was formed?
There were two main challenges. The first was simply obtaining medical malpractice insurance. In the 1980s, CIGNA had stopped insuring ophthalmologists in Florida, starting a trend where many eye physicians could not obtain a policy . . . period. This was a motivating factor in forming OMIC in 1987.
The second challenge involved the costs of malpractice insurance. Twenty years ago, ophthalmology was considered a low-risk specialty, yet ophthalmologists felt they were being charged too much for malpractice insurance. OMIC was determined to offer less expensive policies.
What are the major issues in liability coverage that face ophthalmologists in 2007?
Affordability of medical malpractice insurance is the number one challenge today. While reimbursement has been relatively flat, office expenses are going up, and medical malpractice costs have increased across the board. Many ophthalmologists are looking for a policy that is affordable but also one that will be there for them as the years go by. Several companies have left the business—St. Paul, for example, in 2001. We think that OMIC prices its policies affordably, and we will always be there and excel at what we do.
What changes have occurred in the nature and outcome of ophthalmic malpractice claims over the past 20 years?
The number one claim for ophthalmologists in 1987 is still the number one claim today, and that is cataract surgery.
Twenty years ago we thought RK could result in a lot of malpractice claims, but that fear never materialized. However, today, our number two claim involves refractive surgery. These procedures are elective, and usually provide excellent results. However, patients pay for these surgeries themselves, which leads to high expectations. We are also just now learning of some of the long-term complications of refractive surgery, which are being reflected in new allegations and lawsuits. For example, some patients are developing postrefractive ectasia years after the procedure; this condition not only compromises vision, but also may need to be treated with a corneal transplant. Indeed, there have been some multimillion dollar indemnity payments associated with ectasia; while OMIC has had some cases, our losses have been modest in comparison.
Another emerging subspecialty that may generate claims is ophthalmic plastic surgery. These physicians are performing procedures such as face-lifts, liposuctions and face peels with a CO2 laser, which could result in a lawsuit.
New ways of treating glaucoma, with the emphasis on target pressures and visual fields, have resulted in an increase in claims in this area.
Finally, one of the big medical-legal risks in pediatric ophthalmology is the treatment of retinopathy of prematurity or ROP. These infants may survive but end up blind, and there is a lifetime of potential income that must be paid if an ophthalmologist is found negligent. Since there are so many health care providers involved in the care of premature infants, the possibility of failed communication and getting lost to follow-up is significant. For example, the ophthalmologist could accurately diagnose the infant’s condition, determine that the baby needs to be examined again in a week, and then learn upon arrival at the neonatal intensive care unit that the infant was already discharged. If the infant is not seen on schedule and ROP progresses, the family may end up suing the hospital, the neonatologist and the ophthalmologist. Jury verdicts have been as high as $20 million in non-OMIC cases.
And although we haven’t seen this yet, I predict that in the future we will have claims with the multifocal and accommodating IOLs that are being implanted for cataract and refractive purposes. Informed consent is a major component of this surgery, and if it hasn’t been given, claims will likely result.
The other procedures that may place ophthalmologists at risk for a lawsuit are intraocular injections of Kenalog for AMD, which have been linked to cataract formation and increased intraocular pressure. These side effects must be taken care of appropriately—otherwise there is the risk of being sued.
What trends are you seeing in ophthalmic claims frequency and severity?
For a number of years, extending from the late 1990s through 2003, claims frequency was increasing to the point where it appeared that one ophthalmologist in six or seven was receiving a written claim for damages. Suddenly, in 2004, the claims frequency decreased to one in 11 or 12, and that trend has continued through 2007. This is great news for ophthalmology.
There are some possible reasons for this. There is speculation about the tort reform measures that a number of states have passed in recent years. Texas, for instance, passed Proposition 12, which changed the state’s malpractice environment. Second, the media has been exposing how lawsuits can affect doctors and can increase the cost of care because malpractice policies are becoming more and more expensive. This may serve as a deterrent.
Yet while frequency of claims is decreasing, the severity of the claims that are won has increased, indicating that plaintiff attorneys will concentrate on cases that will bring in the most money. These are cases where an individual becomes blind in one eye or experiences a bilateral loss of vision. Severity will increase with inflation—individuals will be paid more because wages cost more, and it is more expensive to defend a case because defense attorneys charge more. So there are fewer claims, but the indemnity payments tend to be higher.
One thing we are proud of at OMIC is that our indemnity payments, in comparison to the rest of the industry, are significantly less. We think the reason is that our board of ophthalmologists understands the risks, knows what a case is worth, and knows when to settle a case vs. take it to trial.
What contributions has OMIC made to ophthalmic risk management?
We now insure about 35 percent of those ophthalmologists who are eligible for our insurance, and we set the standard in the industry for ophthalmic risk management. In fact, we make all our documents available for download at www.omic.com to any ophthalmologist who wants them. These documents range from specific risk management recommendations to advertising to comanagement to handling retinopathy of prematurity. We also send out blast e-mails and other communications when there is breaking news on certain drugs such as Kenalog or Lucentis.
We offer courses at the Academy’s Annual Meeting each year, at state and subspecialty meetings, and online through our Web site. We want to help our ophthalmologists practice in such a fashion that they are less likely to be sued.
On a final note, I have really enjoyed my association with OMIC. From the beginning, the company has done nothing but work hard for the benefit of ophthalmology in general, and I am proud of OMIC’s accomplishments. I am proud of where it is now, and it will be even better in the future.