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Professional Liability Insurance and Nurse-Midwifery Practice SARAH D. COHN, C.N.M., J.D. A certified nurse-midwife is an in- dividual educated in the two disciplines of nursing and midwifery and certified according to the requirements of the American College of Nurse-Midwives (ACNM). Nurse-midwifery practice is the independent management of the care of essentially normal newborns and women antepartally, intrapartally, postpartally, and gynecologically within a health care system that provides for medical consultation, collaborative management, or referral and is in accord with the functions, standards, and qualifications for nurse-midwifery practice as defined by the ACNM.i The American College of Nurse-Midwives was incorporated in 1955 in New Mexico and functions as a trade association for nurse-midwives in the United States. In the early 1970s the college began to certify nurse- midwives for beginning competency that is, certification took place after completion of an approved educational program of study; the certif- icate was not renewable. At the time the examination of graduating students was begun, a mechanism was created for retroactively certify- ing nurse-midwives already in practice. The ACNM has certified ap- proximately 3,900 nurse-midwives since then. Of these, approximately 2,500 are members of ACNM (the number is higher if student members are included). Nurse-midwives differ from so-called lay midwives in several re- spects. Training is the first difference: nurse-midwives must complete 104
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INSURANCE ED ~RSE-MIDWIFERY PRACTICE 105 an approved educational program, and candidates for certification may not take the certification examination unless their program director affirms that they have completed basic preparation. The ACNM main- tains a set of core competencies and approves educational programs. Raining for lay midwives is not standardized. Background is the second difference: nurse-midwives must have a current R.N. (registered nurse) license from a jurisdiction in the United States at the time they take the certification examination. The states in which nurse-midwifery is prac- ticed may also require an active nursing license; in fact the majority of states regulate nurse-midwifery practice as part of nurse-practitioner regulation. Although many lay midwives are also nurses, nursing quali- fications are not a requirement for practice, even in those states that regulate lay midwives. A third difference is the requirement for physician collaboration: nurse-midwives are required (by the ACNM and many states) to main- tain a collaborative relationship or practice agreement with a qualified physician who can provide service to patients if needed. This require- ment does not mean that the nurse-midwife must be employed by a physician or that the physician must be on the premises to supervise, but it does mean that the nurse-midwife must have made necessary referral arrangements. Lay midwives have Tong found it difficult to arrange qualified medical backup, and some of them practice without it, using the local emergency room as the referral site. A fourth difference is in scope of practice: as the definition of nurse-midwifery makes clear, nurse-midwives provide prenatal, delivery, and gynecological care to women and initial care to infants. Lay midwives may provide some prenatal care and perform deliveries, but they do not provide follow-up care. Deliveries by lay midwives invariably take place outside the hospi- tal; nurse-midwives deliver babies both in and out of hospitals, depend- ing on the practice. Nurse-midwives serve thousands of women and families across the country. The ACNM sponsors a study of nurse-midwifery practice ap- proximately every five years. Surveys from 1976-1977 and 1982 have been published by the ACNM; data from the 1987 study have been collected and are being tabulated. As of 1982, the ACNM had certified 2,550 nurse-midwives; 1,684 responded to the survey.2 Respondents reported that they were practicing in every state but Indiana3 and were performing deliveries in every state but Idaho, Indiana, and North Dakota. Fourteen percent performed home deliveries; an additional 12 percent performed deliveries in nonhospital birth centers. Respondents reported 68,165 deliveries, or 1.8 percent of all deliveries in the United States during 1982.4
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106 MEDiC~ P~FESSiON~ I: VOILE ~ Some of the data on patient characteristics are already available from the survey (Table 11. They show that nurse-midwives' patients tend to be slightly older, of lower parity, and somewhat better educated than the total population of childbearing women. One exception is the dispropor- tionate number of women under age 15: nurse-midwives delivered four times as many women under age 15 as their general distribution in the population of providers would suggest. These data should be examined in light of practice requirements: nurse-midwives generally treat low- risk patients and are unlikely to manage patients with hypertension, a very low hematocrit, or gestations of more than 42 weeks without physi- cian consultation.5 Nurse-midwives working in the region comprising Arizona, Nevada, New Mexico, and Utah conducted the highest mean number of deliveries per year.6 The ACNM does not collect data on the number or percentage of patients for whom care is reimbursed by Medicaid. TABLE 1 Mothers Whose Babies Were Delivered by Nurse-Midwives (N-Ms) in the 12 Months Prior to the 1982 American College of Nurse Midwives (ACNM) Survey and All Mothers Who Delivered in the United States in 1977, by Age, Parity, and Education Percent Distribution of All Deliveriesb Maternal Characteristic Percent Distribution of Deliveries by N-Msa Age (283 Reporting practices) Under 15 1.2 0.3 15-19 15.3 16.8 20-29 59.0 65.0 30-39 22.6 17.1 40 + 1.9 0.8 Total 100.0 100.0 Parity (274 Reporting practices) One 45.1 42.1 Two or three 43.5 47.2 Four or more 11.4 10.7 Total 100.0 100.0 Education (215 Reporting practices) Less than high school 18.1 26.2 Completion of high school 30.2 44.9 More than high school 20.6 16.3 College degree or more 31.1 12.6 Total 100.0 100.0 aData reported by directors of nurse-midwifery practices who were U.S. residents and respondents in the ACNM survey, Nurse-Midwifery in the United States: 1982 (Washing- ton, D.C., 1984). Calculated from data published in Vital Statistics of the United States, 1977. Vol. 1, Natality. DHHS Pub. no. (PHS) 81-1113 (Hyattsville, Md., 1981).
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iNSURANCEAND~RSE-MIDWIFERYPRACTiCE 107 PROFESSIONAL LIABILITY INSURANCE FOR NURSE- MIDWIVES In the 1982 survey only 47 respondents, or 4.4 percent, did not carry professional liability insurance.7 Ofthese,24 (51.1 percent) were work- ing in the U.S. military and thus were covered under the Federal Tort Claims Act. This act permits malpractice claims to be brought, but the defendant must be the United States; the plaintiff may not name indi- vidual defendants. More than half (53 percent) of the 1,018 nurse- midwives who gave information on their insurance coverage stated that they carried a personal policy only; 31 percent carried a personal policy and were also insured by an employer's policy. The ACNM began offering a professional liability insurance policy for its members in 1974. In 1976 approximately 625 nurse-midwives were insured. By 1983 the number of insured had risen to 1,400; by late 1984 it had reached 2,400. The individual premium was less than $250 in 1983.8 Between 1977 and 1982, ACNM members paid more than $230,000 in premiums; during the same period, the insurer paid losses or accumulated reserves on open cases totaling $1.1 million. In 1984, with a new insurance carrier, premiums began to rise rapidly for nurse- midwives, whose mean annual income was $22,982.9 Between 1974 and 1984, the ACNM professional liability insurance offered was occurrence based.~° Beginning in 1981, $1 million per claim protection was avail- able for purchase. In 1984 the commercial carrier that was insuring nurse-midwives canceled the master policy. The ACNM found another commercial car- rier, but policies with that company were canceled within a year. At the time these policies were canceled, about 1,400 nurse-midwives were insure. The last company has become insolvent and is now adminis- tered by a trustee. During 1984 and 1985, the ACNM began to explore three options for ACNM-sponsored professional liability insurance. First, it continued to try to find a suitable commercial carrier, as this was the option that seemed the most responsive to membership needs. Second, it considered setting up a captive insurance company in a suitable U.S. or foreignjurisdiction. Finally, it considered the possibility of being unable to offer any policy. At the same time, the federal legisla- tion that became the Risk Retention Act was proposed and supported by the ACNM. In July 1986, after approximately one year without an ACNM-spon- sored professional liability insurance policy, the ACNM membership was offered a commercial policy by a consortium of insurers led by CNA Insurance Company. The maximum amount of insurance a nurse-mid- wife can buy is $1 million per cIaim/$1 million annual aggregate. The
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108 MEDiC~ P~FESSiONAL CITY: VOLUME ~ policy is of the cIaims-made typed a reporting endorsements will be payable for any nurse-midwife who leaves the company and does not have other coverage. The insurance consortium agreed to offer the insurance for at least several years to avoid the problem of a cancelation after one or two years, with the resulting reporting endorsement pay- ment for every insured if no subsequent company offered prior acts coverage.l4 As with commercial cIaims-made insurance offered to physicians, premiums under the ACNM policy rise for five years until the policy is considered mature. The maximum policy costs approximately $6,000 per year. In contrast to physician policies, there is no gynecology-only rate; nurse-midwives who choose this insurance pay the same premium whether or not they are performing deliveries. Also in contrast to physi- cians' insurance, the cost of the policy is the same in every state, and the consortium does not offer a rate for part-time practice. The 1982 survey data show that only 55 nurse-midwives (5.2 percent) had ever been sued.~5 This low rate is in sharp contrast to the 70 percent of obstetricians reporting suits in the latest survey by the American College of Obstetricians and Gynecologists (ACOG).~6 The ACNM claims data (which include information only from policies handled by the ACNM-sponsored insurer and not from other commercial policies) were analyzed by actuaries when ACNM was examining the possibility of sponsoring an insurance company. Their reports indicated that the claims rate and severity data were insufficient for setting premiums. Some actuaries have used these same data to project very high pre- miums for nurse-midwives; the justification for this practice appears to be that when data are insufficient, nurse-midwifery risk is rated at a percentage of obstetrician risk. That percentage in turn can be an estimate that may be inflated to protect the insurer from unanticipated Tosses. These professional liability insurance problems have affected the practice of nurse-midwifery, its structure and integrity, and job oppor- tunities for nurse-midwives. They have also created difficulties for nurse-midwives in obtaining hospital privileges and have increased the costs of nurse-midwifery services to patients. Effects on Structure of Practice In 1985 when the ACNM master policy was canceled for the final time, many groups of professionals were having liability problems. The ACOG master policy was canceled at about the same time; however, physicians could still obtain insurance in the states in which they practiced, albeit often at high rates. For nurse-midwives the situation was different. For
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INSURANCE AND ~RSE-MIDWIFERY PRACTICE 109 example, in Connecticut, then and now, there are three commercial carriers that insure obstetricians; none of these carriers will insure a nurse-midwife who is not employed by a physician insured with the company. This requirement forced out of business two nurse-midwifery practices that had hired physicians to provide medical coverage for them when needed. When the nurse-midwives were unable to buy profes- sional liability insurance at any price except as employees, the practices were closed. A nurse-midwifery practice that employs physicians rather than vice versa is considered by some to be innovative and desirable. Yet without insurance, practice, although not legally prohibited (most states do not require health care professionals to be insured), is practically imposs- ible. Nonhospital birth centers, another innovation in care, were dras- tically affected by the loss of both their own policies (institutional) and the ACNM master policy; those centers that survived generally rely on their professionals to find and carry professional liability coverage. Now that commercial insurance is again available to nurse-midwives through a consortium, it is tempting to believe that practices can con- tinue to develop. Hospitals, however, generally require that their non- employed professional and medical staffs carry professional liability insurance; when a minimum amount is specified, it is usually $1 million per cIaim/$3 million annual aggregate. At this time, the consortium does not offer insurance to nurse-midwives in excess of $1 million per cIaim/$1 million annual aggregate, an amount that is insufficient to satisfy many hospitals. Hospitals will therefore deny privileges unless the nurse-midwife can find other insurance. Nurse-midwives in some states have been successful in seeking to be insured by the state joint underwriting authority. Premiums for this coverage vary from state to state. Effects of Insurance Surcharges Some liability carriers have imposed premium surcharges on physi- cians who employ or work with nurse-midwives. Data collected by the ACOG in 1987 showed that 7.7 percent of the 1,648 respondents em- ployed nurse-midwives in full- or part-time staff positions; 19.5 percent employed nurse-practitioners. Of the 127 who employed nurse-mid- wives, 47 percent had had a professional liability surcharge imposed.~7 An ACNM survey of nurse-midwives found that approximately 10 percent of physicians associated with nurse-midwifery practices had experienced surcharges. Of the 1,229 nurse-midwives responding, 899 were in clinical practice; 78 of them reported that their practices had been affected by physician surcharges, and 13 reported that their prac-
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110 MEDiC~ P~FESSiONAL CITY: VOILE ~ tices had been closed. Twenty-five insurance companies were named by the nurse-midwives, many of them physician owned. The amounts charged ranged from $94 to $23,000 per physician annually.~9 Changes In Practice In May 1988 two nurse-midwifery students reported on a study they had done on the effects on nurse-midwifery practice of changes in profes- sional liability insurance costs and coverage.20 Data from the 300 ques- tionnaires that were returned and analyzed indicated that the average insurance premium amount of $4,000 was about 14 percent of a nurse- midwife's gross income. Sixty-four percent of nurse-midwives were working full time; 21 percent were working part time. In 78 percent of the practices the employer paid the insurance premium; in 16 percent nurse-midwives paid their own; and in 6 percent they split the costs. Seventy-two percent of the respondents had increased their patient-care fees the preceding year; the average cost of prenatal care and delivery was $1,300 per client. The study noted that, although health insurance premiums had risen 114 percept between 1984 and 1988, nurse-midwif- ery fees had risen 18 percent and nurse-midwifery income had risen 7 percent. Respondents were asked about the effects of insurance costs on their techniques of practice. Twenty-one percent stated that they were order- ing more diagnostic ultrasound testing; 20 percent said they were doing more nonstress testing; 19 percent reported more laboratory testing; and 16 percent said they were doing more electronic fetal monitoring. Thirteen percent of the nurse-midwives responding were giving up nurse-midwifery practice: 34 percent of them cited the increased cost of coverage and 6 percent cited the decreased amount of coverage as the reasons. In answer to another question, more than 30 percent of nurse- midwives indicated that there were fewer job opportunities than there had been before the costs of insurance rose and coverage decreased. The study was not extensive enough to determine trends in the avail- ability of nurse-midwifery services to Medicaid patients; for example, the survey questions regarding fee for service did not produce the de- tailed information needed to trace such trends. CONCLUSION For the average nurse-midwife, who earns a gross salary of $30,000 per year and pays $5,000 for professional liability insurance off the top, there may not be enough money left to adequately pay other practice and living expenses. Although an obstetrician's premium averages 10 per-
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INSURANCE AND ~RSE-MIDWIFERY PRACTICE 111 cent of his or her annual gross income, that gross income averages $296,000.22 Nurse-midwives whose physician-employers pay their pro- fessional liability insurance premiums are under pressure to earn their salary plus the insurance expense; this is an economic fact of life, but it may have the eject of decreasing job opportunities for nurse-midwives. Unless nurse-midwives find a way to balance insurance premiums and salaries, it will be difficult for those who are so inclined to establish practices in more remote areas of the country and among poorer pa- tients. REFERENCES AND NOTES 1. These two definitions were accepted by the board of directors of the American College of Nurse-Midwives in January 1978. 2. American College of Nurse Midwives (ACNM).1984. Nurse-Midwifery in the United States: 1982. Washington, D.C., p. 1. 3. Ibid., p. 25. 4. Ibid., p. 39. 5. Ibid., p. 50. 6. Ibid., p. 40. 7. Ibid., p. 37. 8. Cohn, S. 1984. The nurse-midwife: Malpractice and risk management. J. Nurse- Midwifery 29:316-321. 9. ACNM. 1984; see note 2. 10. For an annual premium, the insurance company will insure professional liability claims made or suits brought involving incidents that occurred during the policy year, no matter how many years have elapsed when the claim is made. 11. ACNM testimony before the Senate Committee on Commerce, Science, and ~anspor- tation, March 4, 1986, p. 4. 12. For an annual premium, the insurance company will insure professional liability claims brought during the policy year, as long as the incident also occurred during that year or during a prior year in which the same company provided insurance. The annual policy will not cover claims brought in a later year if there is no policy active with the same company (and no reporting endorsement or prior acts coverage—see notes 13 and 14). 13. A reporting endorsement insures claims brought after the expiration of a claims- made policy; it is usually a one-time premium to provide so-called tail coverage for the prior year or years covered by a claims-made policy. 14. An insured person who moves from one professional liability carrier to another, both operating under a claims-made format, may obtain from the new company reporting endorsement coverage for claims brought on earlier incidents. This is called prior acts coverage. 15. ACNM. 1984; see note 2. 16. American College of Obstetricians and Gynecologists (ACOG). 1988. Professional Liability and Its Effects: Report of a 1987 Survey of ACOG's Membership. Washing- ton, D.C., Table 18. 17. Ibid., Tables 11 and 12. 18. Data reported verbally by Gail Sinquefeld at the 33rd ACNM annual convention, Detroit, Michigan, May 1988.
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112 MEDiC~ PROFESSIONAL [iABlLiTY: VOLUME 19. Ibid. 20. Patch, F. B., and S. Holaday. 1988. Effects of changes to professional liability insur- ance and certified nurse-midwives. Paper presented at the American College of Nurse-Midwives 33rd annual convention research forum. Detroit, Michigan. 21. ACOG. 1988, Table 16; see note 16. 22. Ibid.
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