Healthcare Provider Insurance: Liability, Programs, Costs & More
September 28, 2020
What is Healthcare Provider Insurance?
A healthcare provider insurance program protects both the standard business and the unique risks of healthcare professionals and medical service providers who deliver essential health care services to individuals and businesses.
While insurance industry members recognize the difference, consumers sometimes confuse healthcare provider insurance with health care insurance plans. The latter is a health insurance program covering consumer health, wellness, and medical needs through individual and group health insurance programs.
The group health insurance marketplace is populated by government health insurance packages such as Medicare, Medicaid, TRICARE, and the Veterans Health Administration (VHA) medical services, and private health insurance plans from health insurance companies such as Aetna, Blue Cross Blue Shield, Cigna, Humana, Kaiser, and United. Both government and private health insurance providers operate using an annual open enrollment plan.
The Affordable Care Act (ACA) law, according to HealthCare.gov, the official site for the ACA, created a health insurance marketplace to control health care costs and medical expenses. Also operating on the open enrollment plan format, it has three primary goals:
The goals of the Affordable Care Act law are:
● Make affordable health insurance plans available to more people. The law provides consumers with subsidies ("premium tax credits") that lower costs for households with incomes between 100% and 400% of the federal poverty level.
● Expand the Medicaid program to cover all adults with income below 138% of the federal poverty level. (Not all states have expanded their Medicaid programs.)
Support innovative medical care delivery methods designed to lower the costs of health care generally.
Who Needs Healthcare Provider Insurance?
Healthcare providers fall into the broad categories of Primary Care, Nursing Care, Drug Therapy, and Specialty Care. Spread among and sometimes overlapping these categories are six groups of healthcare provider disciplines:
● Technologists and Technicians
Nearly all these disciplines require healthcare provider insurance programs that include Medical Malpractice insurance. The healthcare professionals in these disciplines work within a health insurance marketplace of often interconnected medical services businesses and facilities.
Examples of ordinary healthcare provider operations include:
● Hospitals and Clinics
● Residential Care
● Assisted Living Facilities
● Ambulance Services
● Counseling and Psychologists
● Imaging Centers
● Pharmacists and Pharmacies
● Medical Equipment Dealers
● Medical Equipment Manufacturers
● Pharmaceutical Products
Correctional Care Facilities
Types of Consumer Group Health Insurance Plans
Private-sector group health insurance plans and services that are not paid for by the government account for approximately 30 percent of total health care spending. Most include health insurance discounts for wellness programs. Health coverage is delivered through different types of group health insurance programs, including:
● Health Maintenance Organization (HMO)
● Preferred Provider Organization (PPO)
● Exclusive Provider Organization (EPO)
● Point-of-Service Plan (POS)
● Catastrophic Plan
High-Deductible Health Plan With or Without a Health Savings Account
Types of Healthcare Provider Insurance Coverage
There are both private and nonprofit entities with unique needs for healthcare provider insurance risk management services. As with all other businesses, the healthcare provider insurance marketplace requires the protection of standard business insurance coverages along with coverages specific to them. The information in this article is intended as a healthcare provider insurance guide.
Some healthcare providers’ urgent insurance needs include medical malpractice, management liability, EPLI, fiduciary liability insurance, and more. The following list, while not inclusive, provides details of the usual coverages found in healthcare provider insurance programs:
Issue: Medical professional liability insurance, sometimes known as medical malpractice insurance, is one type of professional liability insurance which protects physicians and other licensed health care professionals (e.g., dentists, nurses) from liability associated with wrongful practices resulting in bodily injury, medical expenses and property damage, as well as the cost of defending lawsuits related to such claims.
Overview: A medical professional liability insurance policy covers bodily injury or property damage as well as liability for personal injury such as mental anguish. The complexity involved in discovering negligence results in a higher percentage of premium dollars going toward defense and cost containment expenses. Medical liability insurers spend substantial funds investigating and defending claims where there is an adverse patient outcome not resulting from negligence.
There are two basic types of malpractice insurance—occurrence or claims-made. Many insurers write on a claims-made form basis where a policy in effect at the time a claim is reported responds for the loss, while the policy remains in force and during any applicable extended reporting period. The policy that was more popular in earlier times is occurrence-made, which covers a loss that "occurs" during the policy period, regardless of when the claim was made, and even after the policy has been canceled.
Errors & Omissions (E&O)
E&O protects medical practitioners from a variety of errors and omissions exposures. For example, a standard medical malpractice policy does not cover errors and omissions claims. E&O coverage mitigates exposures caused when a medical practice or facility provides such services as:
● Expert witness
● Billing operations
● Utilization review
● Managed care-related activities
● Management services
● Employee leasing
● Independent physician associations
● Surgery centers and laboratories
● Claims review
● Medical director services
● Not for profit operations
● Med spas
● Ancillary activities that are not typical to a medical practice
Directors & Officers
Directors & Officers (D&O) liability insurance covers an organization's directors and officers in the event of loss (damage and defense costs) from wrongful acts while representing the company. A D&O policy covers common liability exposures met by directors and officers. Examples include
● Corporate Mismanagement – Actions from employees or patients suing to hold the directors and officers liable and seeking restitution for financial loss due to practice mismanagement
● Unfair Exclusion from a Provider Network – As an example, a physician claims that directors and officers used age as a reason not to renew the existing provider agreement
● Breach of Duty, Loyalty, and Care, or Fraud – Liability claims for financial losses that allege a company's directors and officers failed to detect and prevent embezzlement or self-approval of bonuses and loans
Financial Condition Misrepresentation – Insurance regulators allege that the directors and officers misrepresented the financial condition of the corporation to induce new members
Sometimes referred to as FLIPs, fiduciary liability insurance plans cover actions (or failure to act) from senior corporate executives who hire positions from investment managers to payroll clerks who process the enrollment forms for employee benefit plans. FLIPs cover claims of mismanagement of employee benefit plans and plan assets. Typically, the actions cover bad investment decisions, negligent handling of plan records, and negligence in hiring plan service providers.
Workers' compensation insurance works the same for healthcare providers as with other businesses. Workers' compensation is mandated employer-provided insurance in most states. It offers benefits to employees who suffer a job-related injury or illness. Usually, when an employee accepts workers' compensation, they lose the right to sue the employer for negligence.
For a covered job-related injury or illness, workers' compensation provides medical expenses and rehabilitation services, including immediate and long-term medical treatment, surgery, hospitalization, nursing, medications, physical therapy, medical and surgical supplies, sick travel, laboratory tests, and other reasonably required treatments. Additional workers' comp coverage includes:
● Partial payment of lost wages for the time the worker is considered unemployable
● Lump-sum payment for permanent disability
● Burial costs and related services for fatal work-related injuries or illness
Monetary support to surviving dependent family members
As with many other business coverages, including Business Interruption insurance, COVID-related workers' compensation coverage for healthcare providers is currently an unresolved and contestable issue.
The COVID-19 pandemic presents a unique circumstance where the many jobs that are not typically considered hazardous have suddenly become very dangerous for the workers. Workers deemed essential, including health care workers, mass transit operators, and grocery store workers, are at a high risk of exposure to the virus while at work. But the more hazardous working conditions do not guarantee that a COVID-19 infection would be covered under workers' compensation in most states.
Cyber liability insurance covers data breaches, digital security issues, cybercrime, and hacking. It contributes to paying for legal fees, damaged networks, software, hardware, and related losses. When specified, some cyber policies cover HIPAA-related fines. Typical cyber insurance protects against losses and damages suffered from a breach or security event, causing loss, exposure, improperly shared, or patient data theft. Protection from ransomware attacks may be added or included in a policy. It is incumbent on the agent to review the need with the client.
Employment Practices Liability Insurance (EPLI)
EPLI is a critical coverage for healthcare providers such as medical and dental practices. Lawsuits from employees can potentially cripple or ruin a healthcare practice without adequate coverage. EPLI provides coverage for cases relating to these and other associated occurrences:
● Wrongful termination
● Wrongful hiring
● Failure to promote
● Breach of contract
Alleged sexual harassment
Also known as business property insurance, this coverage protects against loss or damage due to fire, lightning, and burglary events. Policies normally cover:
Umbrella and excess insurance policies are similar as they both offer additional layers of coverage above primary insurance policies. But they also differ in that an umbrella policy will cover some losses where no insurance exists. At the same time, excess coverage protects for losses that exceed the limits of primary insurance policies.
Additional Coverage Considerations
First Party Assault coverage pays up to policy limits for medical expenses or the repair or replacement of personal property due to an assault caused by a patient or client occurring on workplace premises.
Sexual Abuse / Molestation Coverage
Such coverage is written to protect vulnerable clients and the agencies that serve them. It is designed to pay for damages from any form of abuse, not just sexual abuse or vicarious liability. Also, such coverage can provide claim and legal defense expenses beyond the policy limits.
Personal Liability coverage
Medical malpractice is a form of professional liability insurance used in the medical field. Some healthcare professionals will require personal liability insurance rather than malpractice insurance. An example is a professional in the bodywork field whose service causes harm to a client. For instance. a client claims to have been burned by hot stones, has a rash or skin reaction from lotions or waxing, or was injured by accidental or inappropriate equipment use.
Bonds are required for DMEPOS (durable medical equipment, prosthetics, orthotics, and supplies) suppliers that provide Medicare/Medicaid-related equipment when working with the federal government. Also, healthcare professionals who offer Medicare or Medicaid services require a bond to ensure that the companies providing the equipment they use comply with Federal regulations.
First Aid Expense
First Aid Expense coverage pays, regardless of an insured's legal liability, for expenses incurred by an insured for first aid to persons, other than insureds, for bodily injury covered by the policy.
Healthcare Provider Insurance Costs
Estimating healthcare provider insurance’s average costs is difficult, if not impossible, given various coverages’ complexities. These include whether they are required or optional, plus state-by-state laws, the range in the number of employees, and the size of healthcare provider operations. Thorough underwriting performed by competent experts is the key to providing ample coverage at reasonable prices.
Best Healthcare Provider Insurance Programs
When seeking first-class healthcare provider insurance coverage and medical insurance programs, the Program Business Market Directory is where to start. There you will find established top tier providers such as USG Insurance Services. As a leading Medical and Healthcare Provider Insurance Program broker, USG offers innovative solutions for hard-to-place commercial insurance accounts.
USG has more than 200 employees. With its growing network of 20-plus branch offices nationwide and a $215+ million book of business, USG surpasses industry growth standards. It writes in all states, allows its Producer/Brokers to work in any territory and any coverage or account size. Its Specialty Divisions provide focused expertise and solutions for difficult coverages and risk classifications.