Insurance market conditions for U.S. health care companies will continue to deteriorate in 2012, continuing a trend that began in the second half of 2011, according to a comprehensive report published today by Marsh.

Rates in most lines of insurance purchased by health care companies stayed flat or decreased in 2011, Marsh said in its report, Navigating the Risk and Insurance Landscape: U.S. Insurance Market Report 2012. But the market is now showing signs of leveling off, with rate decreases moderating, and some insurers are expected to push for rate increases in 2012.

In the overall U.S. insurance market, substantial catastrophe losses and reduced investment returns prompted many U.S. insurers to seek rate increases in 2011.

For Marsh’s U.S. health care clients renewing their insurance programs in the fourth quarter of 2011, rates for medical professional liability and managed care errors and omissions (E&O) were flat to down 5 percent; by comparison, rates were flat to down 10 percent in the fourth quarter of 2010. Pricing and terms remained competitive for HMO reinsurance and provider excess loss insurance. However, insurers have become more selective, favoring insureds with better loss experiences.

“Following several years of declining prices, commercial insurance rates appear to be leveling off entering 2012,” said Holly Meidl, U.S. Leader of Marsh’s HealthCare Practice. “As health care reform and the growing employment of physicians by hospitals changes the landscape for both insurable and uninsurable risks, the market is likely to become more challenging for insureds throughout 2012.”

In addition to information on insurance market conditions, Marsh’s report identified trends that health care risk managers should monitor:

• Declining reimbursements from the Centers for Medicare and Medicaid Services (CMS) and the tying of health care revenues to outcomes have prompted providers to consider new operating models, including becoming accountable care organizations (ACOs). Pursing “pioneer” status for ACO pilots carries risks, however, including clinical integration, data collection and development of appropriate measurements, new staffing models, and patient engagement in care.

• Though it still faces political and legal challenges, the Patient Protection and Affordable Care Act has added a number of compliance guidelines to an industry that is already heavily regulated. Health providers will now face more stringent patient safety measures, care protocols, coding and reimbursement audits, and case management guidelines.

• Complying with an array of state and federal data breach notifications laws, including the federal Health Information Technology for Economic and Clinical Health Act (HITECH), can be costly for health care organizations. More than 150 health care breaches were reported in the last two years, resulting in notifications to nearly 5 million individuals.

Marsh’s annual U.S. Insurance Market Report, provides detailed information on commercial insurance market trends and conditions for all major classes of business and more than two dozen industry and specialty lines, as well as reports for other regions and for multinational insureds globally.