Most physicians will agree that their livelihood depends on the success of their practice. Although professional liability insurance will protect the insured from errors and omissions in their day to day patient contact, there are additional insurance options that will also protect against loss from many other unforeseen acts that can be devastating to both the physician’s practice and their reputation. For a healthcare provider, understanding the differences between coverages, knowing what is needed for for their specific situation, and obtaining high-quality, cost-effective coverage will give physicians the peace of mind to focus on what is most important; delivering the best care possible to their patients. Let’s take a closer look at some of the additional policies and protections that are available to physicians and their practice
Property and General Liability
As the owner of a business, most physicians recognize the need to carry property and general liability insurance for their practice. This type of policy can be purchased separately from the primary professional liability policy, or as an additional coverage to an existing policy. A Business Owner’s Package, or BOP, is typically suited for a small practice and offers comparable coverage that a homeowner’s policy would provide. It includes property insurance, liability protection, business interruption insurance and crime insurance. There are a wide range of options available under a BOP policy and, in some cases, other exposures, such as cyber liability and EPLI can be included in these policies for an additional premium.
Workers Compensation Insurance
State laws require that employers who employ a minimum number of employees must carry workers compensation insurance, commonly referred to as ‘workers comp’. This type of insurance covers medical expenses and lost wages in the event that an employee is injured on-the-job. Workers comp functions under a “no fault” status, meaning that benefits are paid regardless of who was responsible for the accident. Each state mandates the required minimum that employers are required to carry as well as the percentage of the employee’s salary to be paid in the event of a claim. Some types of employees are excluded from workers comp insurance, including independent contractors, business owners, and volunteers. Many policies also include liability coverage which protects an employer in the case of damages awarded stemming from the workers comp claim.
RAC Audit Defense
The Recovery Audit Contractor, or RAC, is a program developed by the federal government in conjunction with the Affordable Care Act of 2011. The program seeks to randomly audit Medicare and Medicaid billing practices in which significant fines and penalties can be assessed for errors, intentional or accidental. Coverage under these types of policies or policy add-on’s provide for defense costs and civil fines and penalties coverage for alleged billing errors, including RAC Audits, Qui Tam Plaintiff and Commercial Payors. Important to note, when audit findings are appealed, the findings are found to be erroneous in approximately half of all cases and the judgment is overturned. Therefore, having appropriate coverage is paramount to avoiding costly regulatory fines when a physician has been audited. Additionally, many policies also provide defense for other medical regulatory violations, including HIPAA, EMTALA and Stark violations.
In today’s ever-increasing environment of electronic data transmission, including electronic medical records, telemedicine, emails, ect., many experts have recognized the increasing liability associated with cyber risks from medical information being available on the internet. Most malpractice insurance carriers either offer cyber liability as a part of an existing policy or they offer stand-alone policies through a partnership with another carrier. Additionally, the limits of included cyber liability insurance often cap at $50,000 per occurrence. Since the liability costs associated with a breach of information can well exceed these limits, many practitioners are purchasing additional limits to protect themselves. The protection of patient privacy now rests on the shoulders of the physicians and any breach of this privacy puts physicians at risk of great financial loss.
The most common types of threats to cyber liability are third-party hackers. Hackers have gained traction in recent years, as evidenced by the many data breaches seen in the media. This type of risk, albeit serious, is much less likely than simple negligence of the business owner(s) and employees. A misplaced flash drive, a computer left on overnight, a forgotten laptop; all of these scenarios leave the physician at risk for breach. Although the first line of defense is maintaining IT security and establishing protocols to prevent exposures, having a cyber liability policy and/or limits in place protects the physician from negative outcomes stemming from data breaches.
What does a cyber liability policy cover? First and foremost, the policies provide for damages stemming from third-party losses and network privacy. For example, if patients’ protected medical records are inadvertently made public or hacked, the patient has a legal right to sue for damages. A cyber liability policy would defend and pay any damages, up to the stated limits, associated with this type of breach. Additionally, the policy will cover first-party losses as well. For example, loss or damage to electronic data, loss of income associated with data breach, cyber-extortion losses and notification costs, which can be extremely high. Cyber liability policies also cover advertising or media costs that are required to protect your professional reputation as a result of data breach.
Employment Practices Liability Insurance
Every employer faces the possibility of employment-related liability claims being brought against them by past, current or future employees. The claims are typically a result of the following; discrimination, sexual harassment, wrongful termination or discipline, negligent compensation, promotion or hiring decisions, breach of contract for employment, emotional distress or mental anguish, invasion of privacy, libel or slander, and/or employee benefits mismanagement. As expected, practices with large numbers of employees should be more concerned about EPLI, but even in a small practice, the risk can be present. These policies usually have limits ranging from $1 million to $25 million and are typically on a “claims-made” basis and usually have a deductible.
Life and Disability Insurance
A physician’s most important financial asset is their ability to earn a high income. That income is used to pay-off medical school, provide for their families’ life-style today, and fund a future retirement. So, protecting that income is vital. Life insurance and disability insurance can offer a solid safety net for a fraction of a physician’s annual income.
Individual and Group Life insurance can be used by a physician, as many people do, to provide an income should they die prematurely. Life insurance can also be used to fund a buy-sell agreement between co-owners of a practice, protecting the integrity of the practice and providing income for the buy-out.
Individual and Group Disability insurance is vital for a Physician. It provides income protection in the event of a disability causing a loss of income. A Physician disability policy with medical specialty language in the contract is paramount. A Physician policy should offer proper classification of your occupation or medical specialty, and an “own-occupation” definition tailored to fit your needs. Key Employee Disability Insurance can protect a practice against financial loss, by paying disability benefits to the practice, in the event of a key-employee disability. Business Overhead Expense Insurance covers medical practice expenses such as employee salaries, rent/mortgage, and insurance premiums in the event of a Physician disability resulting in loss of income.
As business owners, physicians in private practice must take into consideration all of the necessary coverages available to protect their income, practice and reputation. Working with an independent agent, such as Diederich Healthcare, give practitioners the added advantage of having all of their policies through one agency. This allows the agent or broker to have a complete knowledge and understanding of the needs of the physician and the business in order to continually monitor the practice status and to ensure adequate coverage is always in place. An agent will also have the ability to shop your coverage throughout the market each year, which provides the most cost-effective coverage available.To contact the author, call 800-457-7790 and ask for Matt Thompson.