January/February - West Virginia State Medical Association

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WV Medical Insurance Agency | NEWS Medical Professional Liability Insurance Frequently Asked Questions/Points of Concern This article is a mixture of information about medical professional liability insurance dealing with frequently asked questions and issues we have observed over the past months. The information provided herein is an overview of these issues and not intended to bind any insurance company to the views expressed by the West Virginia Medical Insurance Agency. Should you have a question with a specific set of facts that applies to your practice, we suggest you submit that information to us for presentation to your insurance carrier to receive a specific response. (1) Tail Insurance Extended Reporting Endorsement coverage, more commonly referred to as tail insurance, is a frequent topic of discussion. Most carriers have “55 and 5” requirements for free tail at retirement. This means three important criteria must be met to receive free tail at retirement. The individual retiring (a) must be at least 55 years of age, (b) must be insured by the carrier providing the free tail for the most recent 5 consecutive year period and (c) must retire from the practice of medicine. While the first two points are very easily understood, the third presents some issues. Doctors frequently ask “if I change practices and my new role (generally as an employee) comes with my insurance coverage being provided and I meet the age and length of coverage requirement, why can I not get free tail coverage from the carrier I am leaving since my old carrier has no exposure for my new position?” The key point of the third requirement is that the individual must retire or cease the practice of medicine to receive free tail coverage. The following was written by David Rader, the Mutual’s President and CEO, and will hopefully provide you additional information needed to answer questions regarding the Mutual’s DDR policy. “The way the ‘free’ tail works is: the Mutual, and most other carriers (but not all), set up a special fund to meet the needs of certain policyholders who might have special issues. We call this the DDR fund, named for the fact that the Mutual uses these monies to assist physicians (or their estates) who have died, become disabled or chose to fully retire (DDR – Death, Disability & Retirement). To set up this fund, the Mutual’s actuaries determine how much will be needed each year to meet these special needs. The Mutual then places monies into this fund and we draw out of that fund whenever a policyholder dies, becomes disabled or retires under certain specific definitions. If the Mutual did not have these stringent retirement restrictions, we would not be able to properly determine the amount to be set aside each year. All the policyholders pay a bit of their premium into this DDR Fund so that a very small number of policyholders can be assisted when they have a special situation.” “We only set aside funds for those who fully retire – not those who merely wish to move to another carrier and continue working. If we handled the DDR in that manner, we would need to have a much larger fund and that would drive everyone’s premium up substantially.” (2) Part-Time Coverage What is considered a part-time practice? In most circumstances, when a practice is limited to 20 hours or less per week (as an average week), then insurers will offer a part-time discount which allows a premium to be discounted. All factors related to the practice should be considered when trying to determine how many hours are worked, such as, but not limited to, time spent conducting: office hours, hospital visitations, and medical records charting. A second concern is: why is a greater discount not provided if you work only 10 hours per week? While there may not be a specific answer to this, it could be asked why insurers do not charge for hours worked in excess of 40 hours per week (we don’t get this question much!), when most full-time physicians do work in excess of 40 hours per week. It seems to be an underwriting judgment to not increase premium in excess of 40 hours as well as to not provide a larger discount or credit for hours worked less than 20. Further, we believe it would lead to an additional administrative expense to try to monitor hours worked by doctors which would create unnecessary barriers between insurers and their clients. 40 West Virginia Medical Journal
WV Medical Insurance Agency | NEWS Continued (3) Locum Tenens The key element here is utilization of locum tenens. An individual physician is generally allowed to utilize up to 90 days of locum tenen coverage each policy year. But note this factor: locum tenen physicians are replacements for the existing insured physician, while he/she is attending CME, on vacation, or away from the practice temporarily for illness or injury. Locum tenen coverage is not to be utilized to allow the physician being replaced to practice medicine elsewhere. This could have the effect of potentially providing coverage for multiple physicians at the same time with the same limit at one premium; this is not the intent of your policy. One of the biggest problems in granting locum tenen coverage is making sure the carrier has adequate time to evaluate the replacement physician. The underwriting process is sacred ground for insurers; they need time to be able to evaluate the risk they will insure. Locum tenen coverage is a feature offered by carriers, which is frequently utilized by physicians, but working with carriers when it is needed is essential. We recommend a minimum of 2 – 3 weeks advance notice (submission of an application) be given to insurers. (4) Collaborative Agreements While state law allows practitioners to enter into collaborative agreements (i.e. nurse practitioners being supervised by physicians), insurance carriers do not generally like to insure these arrangements. Why you ask, well the answer is directly related to the arrangement. State law allows for autonomy in medical practice to the benefit of nurse practitioners. Insurance carriers providing medical professional liability insurance to doctors are concerned about the practice of their insured physicians; therefore, if the supervisory responsibility of physicians is to supervise a nurse practitioner who has autonomy to make his/her own medical decisions, how can the insurer adequately protect this layer of medical practice which is not controlled by its insured and why would it want to provide such protection when it has not underwritten the risk. Insurance carriers writing physicians do insure nurse practitioners, but almost always as employees of their insured. With this arrangement they believe the adequate level of control is provided by their insured for the duties performed by the nurse practitioner and they will receive an adequate premium for the exposure, as well as being better able to successfully defend the practice against claims. This article is the first in a series of articles designed to answer the most frequently asked insurance questions. A specialized insurance agency dedicated to meeting the medical professional liability insurance needs of physicians. West Virginia Medical Insurance Agency: Steve Brown, Agency Manager; Megan Hughes, Account Executive; Robin Saddoris, Account Manager and Evan Jenkins, Executive Director, West Virginia State Medical Association. Formed by physicians for physicians We will evaluate your professional liability insurance needs and provide a specialized source of information and data for your insurance buying decisions. West Virginia Medical Insurance Agency 4307 MacCorkle Avenue, SE, Charleston, WV 25304 1-800-257-4747 • 304-925-0342 • 304-925-3166 (fax) Extensions: Steve – 22; Megan – 29; Robin – 17 January/February, 2009, Vol. 105 41
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January/February - West Virginia State Medical Association

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