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Insurance Abstract
A new business method involving the algorithmic use of data from
a wide variety of sources to provide the actuarial information needed
to accurately assess the exposure liability and risk probabilities
associated with the performance of any specific medical (or other)
procedure or service. The major factors include, but are not necessarily
limited to, 1) the procedure, 2) the physician or individual, 3)
the patient (procedure recipient), and 4) regional or geographic
considerations. In the case of medical procedures, an algorithmic
actuarial determination of a per-procedure, one-time application
insurance policy specific to the procedure, physician, patient,
and location of region (e.g., state, county, city, etc.), as well
as any additional risk factors which my be applicable.
Insurance Claims
1. A method for providing insurance services comprising the steps
of:assigning a first numerical factor related to risks associated
with a particular service, proposed by a service provider, to be
provided to a prospective services consumer;assigning a second numerical
factor to information reflecting a prospective services consumer's
personal history;calculating, using computing means, an insurance
premium for an insurance policy providing coverage expressly related
to said particular service, said calculating including the use of
said first numerical factor and said second numerical factor.
2. The method of claim 1 further comprising the step of issuing
said insurance policy to said service provider.
3. The method of claim 1 wherein said particular service is a medical,
surgical or dental procedure.
4. The method of claim 2 wherein said particular service is a medical,
surgical or dental procedure.
5. The method of claim 1 further comprising the steps of assigning
a third numerical factor to information reflecting jury award statistics
and calculating said insurance premium through use of said third
numerical factor.
6. The method of claim 2 further comprising the steps of assigning
a third numerical factor to information reflecting jury award statistics
and calculating said insurance premium through use of said third
numerical factor.
7. The method of claim 3 further comprising the steps of assigning
a third numerical factor to information reflecting jury award statistics
and calculating said insurance premium through use of said third
numerical factor.
8. The method of claim 1 further comprising the steps of assigning
a fourth numerical factor to information reflecting said service
provider's qualifications for providing said particular service.
9. The method of claim 2 further comprising the steps of assigning
a fourth numerical factor to information reflecting said service
provider's qualifications for providing said particular service.
10. The method of claim 3 further comprising the steps of assigning
a fourth numerical factor to information reflecting said service
provider's qualifications for providing said particular service.
11. The method of claim 4 further comprising the steps of assigning
a fourth numerical factor to information reflecting said service
provider's qualifications for providing said particular service.
12. The method of claim 5 further comprising the steps of assigning
a fourth numerical factor to information reflecting said service
provider's qualifications for providing said particular service.
13. The method of claim 6 further comprising the steps of assigning
a fourth numerical factor to information reflecting said service
provider's qualifications for providing said particular service.
14. The method of claim 7 further comprising the steps of assigning
a fourth numerical factor to information reflecting said service
provider's qualifications for providing said particular service.
15. A method for providing insurance services comprising the steps
of:assigning a first numerical factor related to risks associated
with a particular service, proposed by a service provider, to be
provided to a prospective services consumer;assigning a third numerical
factor to information reflecting jury award statistics and calculating
said insurance premium through use of said third numerical factor;
andcalculating, using computing means, an insurance premium for
an insurance policy providing coverage expressly insuring said services
provider related to said particular service, said calculating including
the use of said first numerical factor and said third numerical
factor.
16. The method of claim 15 further comprising the step of issuing
said insurance policy to said service provider.
17. The method of claim 15 wherein said particular service is a
medical, surgical or dental procedure.
18. The method of claim 16 wherein said particular service is a
medical, surgical or dental procedure.
19. A method for providing insurance services comprising the steps
of:assigning a first numerical factor related to risks associated
with a particular service, proposed by a service provider, to be
provided to a prospective services consumer;assigning a fourth numerical
factor to information reflecting said service provider's qualifications
for performing said particular service, and calculating said insurance
premium through use of said fourth numerical factor; andcalculating,
using computing means, an insurance premium for an insurance policy
providing coverage expressly insuring said services provider related
to said particular service, said calculating including the use of
said first numerical factor and said fourth numerical factor.
20. The method of claim 19 further comprising the step of issuing
said insurance policy to said service provider.
21. The method of claim 19 wherein said particular service is a
medical, surgical or dental procedure.
22. The method of claim 20 wherein said particular service is a
medical, surgical or dental procedure.
Insurance Description
BACKGROUND OF THE INVENTION
[0001]1. Field of the Invention
[0002]Applicant's invention generally relates to the field of insurance.
Specifically, the proposed invention is a method to determine the
cost of a one-time project, service, task, event or procedure professional
liability insurance policy hereinafter referred to as a "procedural
policy".
[0003]2. Background Information
[0004]Professionals are expected to have comprehensive knowledge,
skill, education or training in their particular area of expertise.
Virtually every professional area has their own standard of conduct
by which acts or omissions are compared. By not living up to these
standards, one may be held civilly liable for any damage or harm
to another person or business.
[0005]Professional liability insurance, a specialty coverage that
extends to both W2 employees and 1099 subcontractors, protects a
business from a client's claims for errors or malfeasance. Such
insurance may cover legal defense costs, even if the claim(s) are
frivolous, as well as adverse judgments and court costs (up to the
coverage limits on your policy).
[0006]Medical malpractice insurance covers physicians and other
health care providers in the medical field for liability claims
arising from their care and treatment of their patients. According
to the Insurance Information Institute, the cost of medical malpractice
insurance has been rising, after almost a decade of essentially
flat prices. Rate increases were precipitated in part by the growing
size of claims, particularly in urban areas. Among the other factors
driving up prices is a reduced supply of available coverage as insurers
exit the medical malpractice business because of the difficulty
of making a profit and rapidly rising medical care costs. In sum,
the American Medical Association claims that "[o]ur nation's
medical liability system is broken."
[0007]Jury Verdict Research, a database of more than 202,000 verdicts
and settlements, reports that between 1999 and 2000, the latest
year for which statistics are available, the median malpractice
jury award rose 43 percent. The average award is now a whopping
$3.5 million.
[0008]According to the December 2002 Issue Brief written by Emily
V. Cornell (support provided by the Maternal and Child Health Bureau,
Health Resources and Services Administration, U.S. Department of
Health and Human Services), in some states, medical liability insurance
carriers are getting out of the market, leaving either a few carriers
with extremely high rates or no carriers at all. For example, many
Southern Nevada doctors say soaring rate increases in medical malpractice
insurance, some to $200,000 annually from $40,000, are forcing them
to close their practices, retire early or double their patient load.
Nevertheless, the insurance carriers that remain are quoting physician's
rates double or triple those of the previous year. There is little
consensus between major interest groups on the nature of the malpractice
problem, its severity, its solutions, or the proper role of government,
state or federal, to solve it. The loss of affordable medical malpractice
insurance for providers could eventually turn into a loss of affordable,
accessible healthcare, especially for high risk medical specialties
such as obstetrics and neurosurgery, or in communities that are
considered medically underserved.
[0009]According to a June 2003 report to congressional requesters
by the U.S. General Accounting Office entitled "Medical Malpractice
Insurance: Multiple Factors Have Contributed to Increased Premium
Rates," losses on medical malpractice claims make up the largest
part of an insurer's costs, and this, in turn, is the primary driver
of rate increases in the long run. (hftp://www.gao.gov/new.items/d03702.rDdf.)
[0010]The most basic challenge for liability insurance is keeping
coverage available. New research suggests that for any turnaround
to take root significant reforms in the liability system need to
occur. No prior art is directed to any such significant reforms.
[0011]Today's internet infrastructure along with the extensive
collection of data and use of data mining programs allow for the
development of a new business method, to be named "procedural
policies" herein. The proposed invention describes the algorithmic
use of data from a wide variety of sources to provide the actuarial
information needed to accurately assess the exposure liability and
risk probabilities associated with the performance of any specific
procedure, e.g., a medical operation, in a particular context.
[0012]The term "procedure" herein describes any professional
task, service, event, project or procedure which involves a unique
set of individuals, entities, institutions and circumstances. The
term "procedure" is most often used in relation to a medical
procedure; however, in the context of this invention, the term procedure
could also be applied to a broader range of professions. Examples
might include dental procedures, a legal case for a lawyer, a building
design for an architect, or a project for an engineering professional.
[0013]No known prior art--with or without the effective and novel
use of actuarial values--is remotely directed to any such significant
reforms:
Contextual Information
[0014]U.S. Pat. No. 6,937,990 issued to Walker, et al. on Aug.
30, 2005 and is entitled "System for syndication of insurance."
It is a system for facilitating a syndicated sale of an insurance
policy. The system employs a processor and a storage device connected
to the processor, and a data receiving device and data output device
connected to the processor. The processor executes a program to
receive information relating to the insurance policy, and to transmit
for electronic viewing by a potential buyer an invitation to offer
to buy a share in the underwriting of the insurance policy. The
share has associated therewith a risk cost assessable to the buyer
if payment is made on a claim under the insurance policy. The processor
receives offers to underwrite the share of the insurance policy;
each offer includes information identifying collateral against which
the risk cost may be charged in the event of payment on a claim.
The transmission of the invitation and the offer to buy a share
may advantageously be made on the Internet.
[0015]The proposed invention makes an actuarial determination of
the premium for the issuance of a policy to cover specifically a
single procedure using a range of risk determinants. The proposed
invention does not provide any mechanism for the offer of shares
in the policy and, thus, distributes the risk through the automated
creation of an underwriting syndicate, as in the Walker patent.
While syndicated underwriting of the insurance policies may well
be accomplished by using this method and utility, the only overlap
between the two inventions is use of computers and internet.
[0016]U.S. Pat. No. 6,879,959 issued to Chapman, et al. on Apr.
12, 2005 and is entitled "Method of adjudicating medical claims
based on scores that determine medical procedure monetary values."
It is a method of adjudicating a medical claim by providing requirements
for a first claim and a second claim, receiving a medical claim
for a medical procedure, setting a first score for the first claim
and a second score for the second claim to an initial value, comparing
components of the medical claim to the requirements of the first
and second claims, changing the first and second scores for each
one of the components that match one of the requirements and for
each one of the requirements that is missing from the components,
and selecting the first or second claim based upon predetermined
criteria applied to their respective scores to determine either
a monetary value of the medical procedure for a medical service
provider associated with the medical procedure or a monetary value
of medical coverage for a patient associated with the medical procedure.
[0017]While the Chapman patent describes a method for real-time
processing of medical procedure pre-approval, medical claim submission
and claim payment amount determination, it has nothing to do with
the actuarial determination of a premium for a one-time procedural
policy application, like the proposed invention, which takes into
account the range of the unique combination of risk factors associated
with the issuance of a procedural policy, as described in the present
invention.
[0018]U.S. Pat. No. 6,871,990 issued to Kansal on Mar. 22, 2005
and is entitled "System and method of assessing and rating
vendor risk and pricing of technology delivery insurance."
The patent describes a ratings system method for determining the
cost of an insurance policy or surety bond based on the probability
that the vender bidding on the project would fail to perform or
default on delivery of a technology project, and thus, leveling
the bidding "playing field" by adding a cost premium for
higher risk bidders. In the Kansal patent, rating factors are used
to determine the relative risk between vendors in order to perform
a risk/benefit analysis in determine the bid selection instead of
simply choosing the lowest bid.
[0019]Some characteristics of the Kansal patent may resemble aspects
of the present invention, in that additional risk factors are used
for a cost/benefit analysis associated with competitive bid consideration.
While various risk factors are considered, these factors are not
used to determine a procedural policy premium for the unique combination
of circumstances. However, while the use of the applicable risk
factors is analogous, the Kansal patent is not designed for either
the same application nor does it take into account the broad range
of risk factors described in present invention.
[0020]U.S. Pat. No. 6,862,571 issued to Martin, et al. on Mar.
1, 2005 and is entitled "Credentialer/Medical malpractice insurance
collaboration."
[0021]The Martin patent describes the use of credentialing information
in the medial malpractice insurance application process. While credentialing
may well be one of the factors used in the determination of the
procedural policy premium, it represents only one of several diverse
factors many of which are not associated with the physician or health
care provider at all. The process described in the '571 patent could
be used to provide input information for use in procedural policy
actuarial determination but does not cover the scope of the present
invention scope nor is it sufficiently comprehensive to be considered
an alternative to the procedural policy business method or utility.
[0022]U.S. Pat. No. 6,272,471 issued to Segal on Aug. 7, 2001 and
is entitled "Method and apparatus for deterring frivolous professional
liability claims. U.S. Pat. No. 6,615,181 also issued to Segal on
Sep. 2, 2003 and is entitled "Digital electrical computer system
for determining a premium structure for insurance coverage including
for counterclaim coverage."
[0023]Both of Segal's patent, i.e., the '471 and '181 patents provide
a method for providing and publicly advertising a malpractice counterclaim
insurance policy as an offensive tactic to deter the filing of baseless
or frivolous lawsuits. The counterclaim insurance method not only
provides the resources to mount a counterclaim suit, but also publishes
the names of the professional carrying the policy publicly for the
purpose of deterring one from filing frivolous lawsuits against
the professional.
[0024]The methods of the '471 and '181 patents do not provide the
same function, nor perform their functions in the same manner as
the proposed procedural policy invention. The '471 and '181 inventions
do not provide for professional liability insurance that specifically
covers a unique combination of circumstances and the related risk
factors associated with these circumstances as a one-time policy
for that particular situation, as opposed to a calendar-based umbrella
policy as embodied in current medical malpractice insurance.
[0025]U.S. Pat. No. 6,584,446 issued to Buchanan, et al. on Jun.
24, 2003 and is entitled "System for underwriting a combined
joint life and long term care insurance policy which is actuarially
responsive to long term care demands and life expectancies of the
individual insureds."
[0026]This invention provides a method for determining insurance
premiums for insurance in which the coverage covers the combination
of specified long term care benefits with a joint and last survivor
life insurance product in such a way that the specified benefits
are actuarially responsive to the insureds' actual long term care
requirements as well as their life expectancies.
[0027]The appropriate risk factor related to a particular set of
circumstances, in this case, life expectances and long term care
benefits, are also taken into account in the proposed invention.
However, the application of the '446 patent is not professional
liability nor is it linked to a specific procedure (e.g., healthcare),
project (e.g., engineering) or case (e.g., legal).
[0028]U.S. Pat. No. 6,456,979 issued to Flagg on Sep. 24, 2002
and is entitled "Method of evaluating a permanent life insurance
policy." The '979 patent teaches a method of evaluating a permanent
life insurance policy, including the steps of establishing a benchmark
cost of insurance value, obtaining a policy illustration, resolving
an illustrated cost of insurance value from the policy illustration,
and comparing the benchmark cost of insurance value with the illustrated
cost of insurance value. Gender-based risk values reflect the differing
mortality rates experienced between males and females over a lifetime.
Lifestyle-based risk values may acknowledge dangerous activities
such as tobacco use, job occupation and the like. Pricing method
risk values are based on the statistical evidence that affluent
individuals generally lead healthier lifestyles while also purchasing
substantial policy values.
[0029]Like other (and previous) related methods, the method of
the '979 patent makes use of the particular set of risk factors
related to, in this case, life expectances. However, again, the
application of the '979 patent is not professional liability nor
is it linked to a specific procedure (e.g., healthcare), project
(e.g., engineering) or case (e.g., legal), like the proposed invention.
[0030]U.S. Pat. No. 6,088,677 issued to Spurgeon on Jul. 11, 2000
and is entitled "System for exchanging health care insurance
information." The Spurgeon patent is an information-exchange
system that controls the exchange of business and clinical information
between an insurer and multiple health care providers. For example,
the information-exchange system provides for the preparation, submission,
processing, and payment of claims over the local area network and
with push technology over the Internet. In addition, prior authorization
requests may be initiated in the provider computers and exchanged
over the information-exchange system for review by the insurer computer.
[0031]While a system of the '677 patent could be used to provide
some of the information related to the range of risk factors that
are used to determine a premium for a policy, it does not describe
a system and method to perform actuarial determination of the costs
associated with the various related risk components for the determination
of the cost of one-time procedural, project, or case insurance policy,
as taught in the present invention.
[0032]U.S. Pat. No. 6,163,770 issued to Gamble, et al. on Dec.
19, 2000 and is entitled "Computer apparatus and method for
generating documentation using a computed value for a claims cost
affected by at least one concurrent, different insurance policy
for the same insured." The Gamble invention pertains to a method
for a computer system to calculate a financial attribute of a first
insurance policy affected by the presence of a concurrent second
insurance policy or multiple policies, specially where insured contingencies,
risks, and/or perils of the two policies are different, but where
the benefits of one policy reduce a claims cost of the other policy.
The resulting savings in a claims cost of the first policy can then
be used to reduce premiums charged to consumers, to add additional
benefits and/or coverage at no additional premium charge to consumers,
and/or to increase the insurance company's profitability. While
this invention does incorporate an actuary-based algorithmic determination
of claims costs and policy premiums, it's application relates to
the affect of multiple policies for the same insured. It does not
apply to the one-time application of the range of the unique combination
of risk factors associated with the procedural policy as described
in the present invention.
[0033]U.S. Pat. No. 5,523,942 issued to Tyler, et al. on Jun. 4,
1996 and is entitled "Design grid for inputting insurance and
investment product information in a computer system." The Tyler
patent pertains to the development of a computer-based system and
common user interface for use by an insurance agent during the sales
process for entering personal client information and specific product
interests for a variety of products, and the subsequent processing
of this insurance and investment product information. More particularly,
the Tyler invention pertains to a system and method for requesting
and entering either quoted or actual information on insurance and
investment products, such as, annuity, life and disability insurance
and investment products. This system allows for the automated calculation
and determination of insurance or investment product which conform
to the combined personal information and product information.
[0034]The proposed invention does algorithmically determine a specific
policy premium given a range of risk determinants, in a somewhat
analogous manner as described in the Tyler patent. However, the
invention does not essentially match personal information with existing
insurance or investment products, but rather makes an actuarial
determination of the premium for the issuance of a policy to cover
specifically the single procedure in question under the unique set
of circumstances
[0035]U.S. Pat. No. 6,865,567 issued to Oommen, et al. on Mar.
8, 2005 and is entitled "Method of generating attribute cardinality
maps." This invention provides a novel means of minimizing
response time and resource consumption when optimizing a query in
a database, and other like structures. The invention has also applications
in pattern recognition, message routing, and in actuarial sciences.
However, the proposed invention is substantially different: The
proposed invention might well benefit from the use of a database
query optimizing algorithm, such as the one described in the Oommen
patent when specific data inquiries are generated in order to obtain
the data required to generate actuarial determination used to compute
the procedural policy premium. The Oommen patent describes a method
and system for optimizing database queries which may have application
in actuarial determination. Unlike the proposed invention, however,
it does not perform the same function, nor provide the same benefits
as the proposed invention.
[0036]U.S. Pat. No. 6,009,402 issued to Whitworth on Dec. 28, 1999
and is entitled "System and method for predicting, comparing
and presenting the cost of self insurance versus insurance and for
creating bond financing when advantageous." The Whitworth patent
describes a system for predicting, comparing, and presenting a cost
of self insurance versus a cost of insurance using a computer system
and novel programs to 1) estimate a cost of self insurance by processing
self insurance information; 2) estimate a cost of insurance and
savings realized by replacing self insurance with insurance by processing
insurance information; 3) adjust the savings where the cost of self
insurance is not equal to an average cost of self insurance; and
4) a) generate and provide an indication of the cost of a liability,
the cost of insurance, and the savings; b) determine a plurality
of payout patterns for a premium financing mechanism employed to
pay for the insurance, and c) provide an indication of the payout
pattern.
[0037]Some of the methods used to determine the cost of liability
for comparison to the cost of insurance may incorporate actuarial
determinations. However, unlike this patent, the proposed invention
describes a method and system which determines the cost associated
with a procedural policy for a unique set of risk-related variables,
as described above, while the Whitworth patent provides a mechanism
for the comparison of options related to the liability cost self-insurance
versus the cost of insurance itself.
[0038]U.S. Pat. No. 5,933,815 issued to Golden on Aug. 3, 1999
and is entitled "Computerized method and system for providing
guaranteed lifetime income with liquidity." The object of the
Golden patent, using a computer system and computerized methods,
is to: 1) implement and administer a program to provide guaranteed
lifetime income to a person based at least on an initial contribution
of assets while providing the person a measure of liquidity in the
assets; 2) optimize the use of retirement assets while providing
the retiree with guaranteed income for the remainder of his or a
joint annuitant's life; 3) automatically allocates an initial contribution
of assets, such as from an IRA or retirement plan, according to
a desired payment plan among a series of guaranteed financial vehicles
with a determinable market value and at least one life contingent
financial vehicle.
[0039]On the other hand, the proposed invention has nothing to
do with optimizing the use of retirement and other assets to provide
guaranteed income. As stated previously, the goal of the proposed
invention is to perform actuarial determination of the costs associated
with the various related risk components, described below, for the
determination of the cost of one-time procedural insurance policy
as described above.
[0040]U.S. Pat. No. 5,878,405 issued to Grant, et al. on Mar. 2,
1999 and is entitled "Pension planning and liquidity management
system." The Grant patent describes a pension-based liquidity
management data processing system that supports participant decision
making and flexibility with respect to loans, contribution rates,
and retirement spending. It describes a system which is designed
to: (1) monitor pension-based liquidity while enabling maximum pension-based
liquidity allowed within regulatory limits, and that operates in
conjunction with a new or existing pension plan; and (2) interface
with any new or existing prior art credit card system to efficiently
distribute disbursements, information, and collect payments while
allowing a variety of card companies to compete within a given plan.
[0041]The Grant patent is unrelated to actuarial determination
of the costs associated with the various related risk components,
described below, for the determination of the cost of one-time procedural
insurance policy as described in this proposed invention.
[0042]U.S. Pat. No. 5,191,522 issued to Bosco, et al. on Mar. 2,
1999 and is entitled "Integrated group insurance information
processing and reporting system based upon an enterprise-wide data
structure." The Bosco patent describes an integrated information
storage processing and reporting system for processing and supervising
a plurality of group insurance accounts constructed with a single
enterprise-wide relational data base. This system provides sales,
underwriting, administration and actuarial functions through integrated
program-controlled data processing systems specific for each function
and communicating with a group insurance account data bank. Each
function is accessible through a single integrated workstation.
[0043]While a system of this type could potentially be used to
perform to store and process information related to the issuance
of procedural policies, this patent does not describe a system and
method to perform actuarial determination of the costs associated
with the various related risk components, described below, for the
determination of the cost of one-time procedural insurance policy
as described above.
[0044]U.S. Pat. No. 6,802,810 issued to Ciarniello, et al. on Oct.
12, 2004 and is entitled "Care Engine." This patent describes
an invention that addresses certain problems associated with healthcare
management by providing a clinically sophisticated, comprehensive
solution to improve the quality and manage the costs of care. The
present invention includes software applications and services that
are broadly organized under three product/service offerings including:
(i) application tools for identifying potentially problematic patient
cases before they become effective problems, (ii) case and disease
management applications and programs for managing problematic and
complex cases and (iii) applications and services to improve overall
risk underwriting profitability.
[0045]While information derived from the use of the Ciarniello
patent may provide data which could be used by the proposed invention,
the Ciarniello patent does not perform actuarial determination of
the costs associated with the various related risk components for
the determination of the cost of a one-time procedural insurance
policy, as described in the proposed invention.
[0046]U.S. Pat. No. 5,764,923 issued to Tallman, et al. on Jun.
9, 1998 and is entitled "Medical network management system
and process." The object of the Tallman invention to provide
a medical network management system and process system based on
understanding and managing the process of care, in an integrated
manner, from the onset of patient perception of possible needs.
It additionally is intended to 1) allow beneficiaries to obtain
appropriate care, at the appropriate time, from an appropriate provider;
2) effectively reduces utilization and costs, while increasing user
satisfaction and overall quality of care; and 3) uses unique information
systems to help guide patients through and manage the process of
care, thereby assuring quality health care.
[0047]Like the Ciarniello patent (U.S. Pat. No. 6,802,810, "Care
Engine"), information derived from a system based on the Tallman
patent may provide data that could be used by the present invention.
However, it does not perform actuarial determination of the costs
associated with the various related risk components for the determination
of the cost of a one-time procedural insurance policy, as described
in the proposed invention.
[0048]U.S. Pat. No. 5,915,241 issued to Giannini on Jun. 22, 1999
and is entitled "Method and system encoding and processing
alternative healthcare provider billing." The Giannini invention
describes a method and system to standardize, encode, and process
healthcare provider billing, which handles encoding, describing
and processing fee charges for specific procedures of non-conventional
medicine. The process and system compiles provider and patient data
by geographical location, specifically by state, for any alternative
practice and produces a universal set of codes to identify fees
falling within a legal or regulatory scope associated with a provider's
practice. This patent addresses the problem in adequately coding
and facilitating payment of claims typically not included in standard
procedure coding due to the non-conventional nature of the treatments.
[0049]While the Giannini system does obtain and compile provider
and patient data related to patient billing by geographical location,
it does not differentially analyze risk components associated with
either the regional awards averages or risks associated with specific
procedures as is described in the proposed invention.
[0050]U.S. Pat. No. 6,704,644 issued to Kobayashi, et al. on Mar.
9, 2004 and is entitled "Consultation business support system."
This patent describes an expert system to guide the handling of
inquiries from insured clients including, but not limited to, accident
reports, questions, complaints etc. The system provides preprogrammed
guidance to the insurance personnel, which guides the inquiry answers
and provides the pertinent inquiry-related information to facilitate
administration of such client inquiries.
[0051]The Kobayashi patent is unrelated to actuarial determination
of the costs associated with the various related risk components
for the determination of the cost of a one-time procedural insurance
policy, as described in the present invention.
[0052]U.S. Pat. No. 5,995,939 issued to Berman, et al. on Nov.
30, 1999 and is entitled "Automated networked service request
and fulfillment system and method." This invention relates
to automated service request and fulfillment systems, particularly
systems in which requests are made and fulfilled over a computer
network. More specifically, the invention describes the use of computers
by professionals, such as doctors, and "sponsor" computers
at the sites of service providers such as test labs or insurance
companies, which are interconnected with a mail server system that
exchanges e-mail messages via the Internet or a similar network
which also convert data records into a "universal" format
and thus facilitates the information and service or other request
communication.
[0053]While such an interconnected information infrastructure as
in the Berman invention might facilitate communications and data
exchange related to the use of procedural policies, the Berman patent
does not involve actuarial determination of the costs associated
with the various related risk components for the determination of
the cost of a one-time procedural insurance policy, as describe
in the proposed invention.
[0054]U.S. Pat. No. 5,301,105 issued to Cummings, Jr. on Apr. 5,
1994 and is entitled "All Care health management system."
The Cummings, Jr. invention is a fully integrated and comprehensive
health care system that includes the integrated interconnection
and interaction of the patient, health care provider, bank or other
financial institution, insurance company, utilization reviewer and
employer so as to include within a single system each of the essential
participants to provide patients with complete and comprehensive
pre-treatment, treatment and post-treatment health care and predetermined
financial support therefore.
[0055]Like U.S. Pat. No. 5,764,923 ("Medical network management
system and process") and U.S. Pat. No. 6,802,810 ("Care
Engine"), information derived from a system based on the Cummings,
Jr. patent might be used to provide data which could be used by
the proposed invention. However, the Cummings, Jr. invention does
not perform actuarial determination of the costs associated with
the various related risk components for the determination of the
cost of a one-time procedural insurance policy, as described in
the present procedural policy invention.
[0056]U.S. Pat. No. 5,191,522 issued to Bosco, et al. on Mar. 2,
1993 and is entitled "Integrated group insurance information
processing and reporting system based upon an enterprise-wide data
structure." This patent describes an integrated information
storage processing and reporting system for processing and supervising
a plurality of group insurance accounts was constructed with a single
enterprise-wide relational data base. The system provides sales,
underwriting, administration and actuarial functions through integrated
program-controlled data processing systems specific for each function
and communicating with a group insurance account data bank. Each
function is accessible through a single integrated workstation.
[0057]While a system of this type could be used to store and process
information related to the issuance of procedural policies, this
patent does not describe a system and method to perform actuarial
determination of the costs associated with the various related risk
components for the determination of the cost of a one-time procedural
insurance policy as described in the present invention.
[0058]The above-described, contextual methods and systems may fulfill
their respective, particular objectives and requirements, but needs
addressed by the present invention remain. Needed is a method that
represents a potentially significant reform in the professional
liability insurance system, especially but not limited to the medical
liability system that is also effective and equitable to all parties
involved.
[0059]The present invention, in a unique manner and providing a
unique result, includes a method for determining (for all involved
parties) the appropriate cost of a one-time procedural insurance
policy.
SUMMARY OF THE INVENTION
[0060]It is an object of the present invention to provide a method
for reforming the professional liability system, especially but
not limited to the medical liability system.
[0061]It is another object of the present invention to describe
the algorithmic use of data from a wide variety of sources to provide
the actuarial information needed to accurately assess the exposure
liability and risk probabilities associated with the performance
of any specific procedure, task, event, project or service.
[0062]It is another object of the present invention to utilize
existing collections of data and data mining programs in practicing
a new business method, the results of which practice facilitates
the more informed pricing of insurance policies in a manner which,
more than ever before possible, avoids unduly favoring, or penalizing
either the insurer(s), or the insured(s) through lack of use of
such information.
[0063]In satisfaction of these and related objectives, Applicant's
present "Procedural Policy" invention provides a system
and method for integrating a range of pertinent risk factors associated
with a specific service, task, project, event or procedure including,
but not limited to [0064]1) The Procedure--the risks associated
with providing the particular service, task, project, event or procedure
itself (in the case of a medical procedure, the known risk and complication
factors), [0065]2) The Service Provider--the history, skills, experience
and competency of the professional(s), services provider(s) or physician(s)
involved in the service, task, project, event or procedure (in the
case of a medical procedure, certification, experience success/failure
history), [0066]3) The Service Recipient--Risks associated with
the service recipient fall into two broad categories: [0067]a) service
recipient's current status, complicating or procedure-related historical
factors (e.g for a medical procedure; medical status, history and
family history), [0068]b) the service receiver's litigation propensity
as relates to financial, litigation, credit or criminal history,
and [0069]5) Location--location specific risk fall into three categories:
[0070]a) jury award statistics for the particular local or region,
and related to the specific event or procedure at-issue. [0071]b)
regulatory or legislative considerations, such as tort reform legislation,
which may limit awards for certain damages, [0072]c) In the case
of medical procedure, the hospital in which the procedure is being
performed, utilizing such input as mortality and morbidity rates
[0073]Real-time access to these risk factors allow for the actuarial
determination of a professional liability policy cost for the unique
combination of risk factors associated with a specific task, project,
service, event or procedure. Thus, the present invention provides
a first line of risk management insurance that also reduces the
costs associated with carrying medical malpractice "umbrella"
insurance for those procedures which are consider "schedulable".
[0074]The present method for the first time makes possible the
appropriate pricing of event-specific insurance policies ("procedural
policies") which, in turn: (1) avoids the de facto, per-event
higher insurance premiums (or even insurance unavailability) unavoidably
arising from presently employed premium setting methods; (2) makes
insurance coverage available (albeit at a per-procedure higher premium)
for individual events or procedures which, if the insurance for
same were aggregated with that for other, lower-risk procedures,
may make undertaking the event or procedure an uninsurable event,
or cost prohibitive for a service provider; and (3) facilitates
the providing of lower insurance premiums (relative to present rate
structures) for specific events the circumstances of which, after
use of the proposed systems and methods, are shown to justify such
a lower premium.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
[0075]The present invention will be described with reference to
medical procedures specifically, but may be extended to use in non-medical
contexts.
[0076]There are different kinds of risks reflected in medical statistics,
or epidemiology. An absolute risk is the actual probability of some
event or procedure affecting someone in a particular population.
For example, one can assert that the actual risk of a recipient
contracting HIV or other viral infections can be calculated as the
product of the prevalence of the disease in the donor population
and the chance that the donor is in the window period at the time
of the donation. (Risk=(prevalence.times.window period in days)/365).
[0077]Absolute risk is different from relative risk. A relative
risk is a comparison between two (or more) risks. In general, it
is more accurate to look at absolute risks when deciding on an event,
procedure or a treatment, because it is more revealing of the true
or actual probability of something happening.
[0078]The proposed invention involves the algorithmic use of data
from a wide variety of sources to provide the actuarial information
needed to accurately assess the exposure liability and risk probabilities
associated with the performance of any specific medical (or other)
procedure to be performed. The major factors include, but are not
necessarily limited to, the following components:
[0079]1) The procedure: Most procedures have an inherent risk associated
with their performance. Examples include factors such as the risk
of infection, failure rates, adverse reactions, etc., as well as
the history of the procedure itself. The majority of these procedures
have a long history and these statistical risks are well understood,
whereas relatively new procedures will have a less defined success/failure
record and long-term effects history.
[0080]2) The physician or individual: Examples include: the individual's
performance history, the individual's general experience level,
the numbers of times the individual has performed the specific procedure,
the physician's overall and specific success rate, as well as the
individual's litigation history.
[0081]3) The patient (procedure recipient): Risk associated with
the patient includes such issues as the patient's overall health
and, as such, the patient's unique complicating factors. In addition,
patient factors include but not limited to the probability that,
given an adverse result, the patient will seek to monetary damages.
This risk may depend on a number of factors, including the patient's
current economic situation, credit/criminal/litigation history,
etc.
[0082]4) Location or Regional considerations: Significant variation
occurs between different locales related to the average size of
jury awards, the litigation history, etc., as evidenced in the different
risk rating associated with various counties for region specific
reasons exemplified by differences in various types of insurance
rate for different counties. For example, coastal regions tend to
have higher HO policy rates, densely populated areas have higher
auto insurance rates, etc. Malpractice insurance rate increases
vary significantly from state to state, in large part reflecting
the strength (or weakness) of each state's protections against eye-popping
settlements exemplified by recent state legislation related to tort
reform which serve to regulate awards for certain types of damages.
In addition to regional or state related considerations, the choice
of hospital impact the outcome risk, given the variation in morbidity
and mortality rates vary between hospitals for different types of
procedures.
[0083]In the case of medical procedures, the proposed invention
is an algorithmic actuarial determination of a per-procedure, one-time
application insurance policy specific to the procedure, physician(s),
patient, and location of region (by state, county, city, etc.),
as well as any additional risk factors which my be applicable.
[0084]In a typical medical application or embodiment, the following
broad risk factor categories are representative of the risk categories
used to determine the cost of the procedural policy. These factors
include 1) patient risk factors, 2) physician risk factors, 3) procedure
specific factors, and 4) location specific risk factors.
[0085]1) Patient Risk Factors: Collectively, patient specific history
is used to determine "patient risk factors." The patient-specific
factors may include two broad subcategories: i) medical-related
history, and ii) other history factors. The medical history information
is used to determine relevant medical issues, which may be considered
relevant to the risk associated with the procedural outcome for
a medical perspective. A thorough medical history is critical to
assessing the applicability and risk of a specific procedure given
the patient-specific set of medical factors, e.g., history of heart
disease, diabetes, high blood pressure, etc. These factors relate
directly to the expected outcome of the procedure. These factors
are also considered under the "procedure risk factors,"
described below.
[0086]Additional patient risk factors are obtained through the
use of a patient's personal information, such as social security
number and/or driver license's number and a properly executed information
release form to provide access to such information. This information
is entered into a computer in the physician's office or at a hospital
and is used by a risk assessment system to critically review and
assess various databases for such relevant information, e.g., litigation
history, credit history, driving record, criminal history, etc.
Basically, the patient information used would include any information
that may be influential or have an effect on the assessment of the
risk of litigation by the patient. Collectively, patient specific
history is used to determine "patient risk factors".
[0087]2) Physician(s) Risk Factors: In this embodiment, these factors
would typically be on file and automatically updated. The physician(s)
related information includes such factors as the doctor's litigation
and subsequent outcome record, general experience level, experience
specific to the procedure to be performed, certification, etc. In
many cases, information for multiple physicians would be accounted
for (e.g., a surgeon and anesthesiologist).
[0088]3) Procedure Risk Factors: Any medical procedure, especially
invasive procedures, has inherent risks associated with its performance.
For example, for genetic amniocentesis, the overall procedure-related
pregnancy loss may be 1/200. The risk of infection is approximately
1/1000. These factors, as well as all other risk factors associated
with any procedure, must be taken into account in any actuarial
determination of risk. Additional confounding factors exist related
to the patient's medical history (discussed above under the "patient
risk factors" section), which may increase certain procedural
risk factors.
[0089]There are also procedures in which the ability and time required
to assess damage and, therefore, liability on the part of the physician
may vary significantly. For example, damage to a newborn caused
during delivery may take considerably longer to assess (>10 years)
than the damage due to infection when removing an appendix. This
presents an additional element to the actuarial determination of
the procedural risk factor.
[0090]4) Location or Region Specific Risk Factors: Different regions
of the country have different probabilities associated with not
only the likelihood of assigning liability to a physician but also
with the assessment of the size of the award for damages. In Texas,
for example, in the Corpus Christi area, juries are more likely
to find in favor of and assess greater damage awards to an injured
patient, than would a jury in Houston.
[0091]In addition, many states have enacted tort reform legislation
which limits jury awards associated with professional liability
and thus, reducing economic risks. For example, tort reform in Texas
caps jury awards for "non-economic" damages to $250,000.
[0092]Further, significant variability in mortality and morbidity
rates associated with different hospitals for the same medical procedures.
As such, location specific risk factors could include the choice
of hospital.
[0093]In addition, some complicating health factors are region
specific. An example is the documented increased incidence of asthma
in the Houston area. These regional related health factors could
also be included in a comprehensive risk factor analysis.
[0094]As such, actuarial determination of state, regional locale
or hospital specific risk factors should be considered and included
in determination of the cost of any procedural policy.
[0095]The above four major risk factor categories are not, nor
are they meant to be, exclusive or exhaustive. There may additional
risk factors that could be included given the particular situation.
[0096]Once the appropriate risk factors have been determined and
actuarial probabilities have been assigned, the projected financial
exposure for performing any single procedure can be determined.
The cost of coverage for the single procedure, with the particular
patient, particular physician(s), at a particular location , etc.,
can be determined prior to the performance of said procedure and
a liability policy covering that procedure under the unique circumstances
can than be purchased and issued.
[0097]This method of the present invention is applicable to a wide
range of professional liability, including, for example, various
medical procedures including, but not limited to, elective and scheduled
procedures. It can also be implemented as a first line of liability
coverage that potentially reduces the umbrella coverage requirements
associated with medical malpractice insurance. As such, this model
can also be applied to a wide range of additional liability areas,
e.g., legal malpractice, construction, engineering, etc.
[0098]In its simplest form, practice of the present invention will
involve, in any given context, the user determining the factors
to be considered (or not to be considered) for insuring any particular
type of event or procedure as well as the weight to be given to
each such factor. For example, risks associated with pregnancy,
or likely pregnancy, will not come into consideration for prostate
treatment procedures. Also, the weight given practitioner experience
may be somewhat less when formulating premium factors for a particular
procedure which is considered relatively "simple", while
jury award trends for a particular area may be given greater weight
when considering a procedure which is known for high litigation
risks (obstetrics, for example). The result of this analysis will,
in more simple implementations, be some multiplier which will likely
be applied to a premium baseline reference to arrive at an event-specific
premium. Far more complex analysis may also be involved. However,
in any event, the present invention lies in applying actuarial and
contextual factors in the risk assessment and premium setting for
event-specific insurance policies ("procedural policies").
[0099]Although the invention has been described with reference
to specific embodiments, this description is not meant to be construed
in a limited sense. Various modifications of the disclosed embodiments,
as well as alternative embodiments of the inventions will become
apparent to persons skilled in the art upon the reference to the
description of the invention.
[0100]It is, therefore, contemplated that the appended claims will
cover such modifications that fall within the scope of the invention.
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