A new article in HFM Magazine looks at how a lagging economy may complicate the medical malpractice claim reserving process for self-insured hospitals. Here’s an overview:
The financial markets took a severe downturn between October 2007 and March 2009, resulting in the lowest investment returns in decades. With this financial instability, questions regarding the appropriate discount rate used in financial reporting of medical malpractice reserves by self-insured hospitals became common. Should the discount rate be maintained at levels consistent with historical rates, or should it match the current market conditions? What source(s) should hospitals look to in selecting a discount rate? Does any official guidance exist on this issue? What dollar impact will a change in the discount rate have on the discounted reserves recorded? Should such reserves be discounted at all?
The full article is available here.