The market for provider reinsurance could see premiums increase 15 to 30 percent this year, according to a survey by the reinsurance brokerage firm ReSource Intermediaries.
Amid health reform and consolidation trends, providers have been buying more and more reinsurance coverage (or provider excess insurance), especially hospitals and health systems entering accountable care contracts or launching their own health plans.
The San Francisco-based ReSource, an Integro subsidiary, surveyed thirteen of the largest reinsurance companies with services for health systems, and from their sales estimates that the provider excess insurance market could grow from $145 in 2012 to $180 million this year, and the HMO reinsurance market expected to reach $230 million this year.
"This changing paradigm is dramatic, essentially turning a hospital into a small health insurer, and as such a buyer of reinsurance," ReSource's health and accident practice leader Peter Robinson said in a media release. "The market for provider excess insurance is experiencing explosive growth as this type of contracting becomes more common."
One provider excess loss plan offers providers coverage of commercial, Medicare, Medicaid and point of service patients, with deductibles from $15,000 to $1,000,000, coinsurance of up to 90 percent, and coverage limits of up to $5,000,000 per person per year.
The growth of the provider excess and HMO reinsurance markets is a sign of the decline of fee-for-service reimbursement, with hospitals and physicians looking for protection from the costs of caring for a few very expensive patients, and some including reinsurance as part of their accountable care contracts, Robinson said.