Know Insurance Coverage Pitfalls to Prevent Gaps, Problems
Consider full cyber coverage
EXECUTIVE SUMMARY
ASCs must make sure they obtain appropriate insurance coverage and structure.
- They should ensure physicians and surgeons obtain appropriate coverage and adequate limits.
- Review physicians’ insurance claim history and best practices.
- Consider punitive damage coverage and how the deductible will be structured.
The main insurance issue for ASCs is making sure they have appropriate coverage and structure. This includes an alignment of insurance limits by ASCs and surgeons.
“Make sure physicians and surgeons have appropriate coverage in place and adequate limits,” says Sarah Logue, MSM-RMI, RPLU, CPCU, AU, ASLI, senior vice president and medical facilities division leader for OneBeacon Healthcare Group in Richmond, VA.
Here’s an example of how a surgeon’s inadequate coverage can affect a surgery center: “Suppose you have a surgeon doing orthopedics in the surgery center, knee replacement surgery, and the center is in a state or place where the surgery center is more conservative in its tolerance for risk and carries a $2 million limit on personal liability. But the surgeon only carries a $1 million limit,” Logue offers.
Then, there’s a mistake and complications that lead to a patient injury. The patient files a claim against the surgeon and ASC. During discovery, the plaintiff’s attorney learns that the surgeon had a $1 million limit, while the surgery center had a $2 million limit, she says.
“They’ll keep both in the claim, but target the surgery center more, to go after the higher dollar amount,” Logue explains.
It’s understandable that surgery centers are dependent on surgeons using their facilities, and they don’t want to be difficult, but they still must protect themselves from liability, and the best way to do that is to ask surgeons to have the same limit in coverage, she adds.
One way surgery centers can exert influence over surgeons’ insurance coverage is through the credentialing process. They can review physicians’ insurance claim history and create best practices that encourage obtaining a certificate of insurance with certain limits and deductibles in place, she says.
“The claims history is a good indicator,” Logue says. “They can make recommendations based on what they prefer to see, including, number one, having the surgery center and surgeons carry the same limits.”
This means that if the surgery center has a $2 million limit per occurrence and a $4 million limit per year aggregate coverage, then the surgeon also has those limits.
Alternately, surgery center leaders might ask for those matching limits for surgeons in higher risk specialties, such as spine and orthopedic surgeries, Logue suggests.
Other insurance issues to consider are coverage for punitive damage, which is necessary in certain states, and coverage for sexual misconduct and physical abuse, she says.
ASCs should assess whether their deductibles are the right fit.
“Many centers carry zero deductible plans and some have $25,000 or $50,000 deductibles, and there are options where you can do indemnity only,” Logue says. “Look at the amount and how it is structured.”
Also, ASCs should pay attention to their insurance plan details. For instance, if their coverage offers legal defense coverage outside of the policy limits, that means they won’t use up their $1 million or $2 million policy limit on huge attorney bills.
“You could spend $250,000 on attorney fees and then only have $750,000 left to pay the claim,” Logue says. “If the defense is outside the limit, then the $250,000 in legal fees is paid outside the $1 million claim.”
ASCs also should request a certificate of insurance from their contracted anesthesiology group, she notes.
Sometimes, it’s the unexpected issue that causes the most problems. For example, Logue has seen claims in which surgeons brought their own type of product for a procedure, and the product wasn’t vetted by the ASC. In some cases, the product might not even be FDA approved, which could result in an insurer denying coverage in the event of an injury and lawsuit, Logue says.
“Some policies will say that if something is not approved by the FDA, then it’s excluded in the policy,” she says.
ASCs might find financial benefits to requiring a single insurer cover all or most of their insurance needs. This also could protect the ASC from insurance gap vulnerabilities, whereby neither policy will handle the claim.
“We do see situations where they separate out the general liability coverage from the medical professional liability of the surgery center,” Logue notes. “The general liability is when someone trips or falls in the parking lot.”
But when these two types of coverage are separated between two different carriers, they can produce gaps in coverage, she adds. “It’s a good plan to place them together and not split them out. You need a good broker who can make all of the comparisons.”
Another potential gap area involves insurance to cover cyberattacks.
“Consider having cyber coverage in place,” Logue recommends. “Medical malpractice insurers do offer that, and that’s one area where there’s a potential gap.”
When surgery centers carry cyber coverage, they should make sure they have enough coverage to handle all cyberattack expenses — not just the first $25,000 or $50,000, which might be offered in supplemental coverage, she suggests.
True insurance for cyberattacks should cover the cost of providing credit monitoring to everyone potentially affected by the attack. It should cover notification calls and letters about the breach.
“A lot of states have mandates on how to notify people, and you have to do this for every individual who could be affected, and that could add up pretty quickly if there are hundreds of thousands of people impacted,” Logue explains.
Cyber insurance also can pay for forensic tracking expertise to identify how the breach happened and what was affected. It also can pay for the cost of retrieving any lost information.
“Time is money in responding to a breach,” Logue says. “Usually, it is referred to as cyber coverage, and it’s very specialized, so you will want to consult with an agent or broker who specializes in cyber coverage.”
The main insurance issue for ASCs is making sure they have appropriate coverage and structure. This includes an alignment of insurance limits by ASCs and surgeons.
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