Medical malpractice insurance is a must-have for any physician, but as many practice managers know, higher coverage limits aren’t necessarily a good thing. Experts say that high limits can lead to plaintiffs seeking higher judgments, and because tort reform caps on the amount plaintiffs can be awarded vary from state to state, bigger limits aren’t always better.
So how do you determine what level of insurance coverage is appropriate for your practice? Here are some issues to consider:
- Hospital credentialing requirements and insurance plan requirements are a good baseline to start with, says Laura Palmer, senior industry analyst, MGMA Innovation and Product Design. “In a state that has tort reform and damage caps, practices traditionally cover what the insurance plans require,” Palmer notes.
- Joan Hablutzel, senior industry analyst, MGMA Innovation and Product Design, adds that certain specialties might need to carry higher insurance limits than others. “Surgical specialties and anesthesia carry higher limits than primary care,” she notes. “For private practices, we look at insurance limits based on specialty.”
- However, consideration of what might happen if a judgment in excess of coverage limits is granted is an important part of the process, says Joe Laden, MGMA member, president, Ohio River Valley Associates, LLC, Louisville, KY.“If the physician owners choose too little insurance, and in the future there’s a judgment [in excess of coverage limits], they’ll be personally liable for it,” he notes. “Each physician has to consider personally what he or she would do in the case of an excess judgment.”
- Retha Reeves, MGMA member, consultant, Cardiology Consultants of Houston LLP, recommends finding an insurance broker who’s familiar with malpractice insurance in your area. “Call them and tell them, ‘I’m not buying your product today, but I understand you do a great job of educating your clients.’ And get the information that you need.”
- Reeves adds that organizational structure can also offer you some protection; limited liability corporations and limited liability partnerships, for example, might give your organization an advantage when it comes to malpractice suits.
- Palmer recommends that practice managers become very familiar with their physicians before purchasing insurance.
- Physicians fresh out of school often have lower premiums than physicians who have been practicing for decades —especially if the more experienced physician has been involved in a malpractice suit before.
- Reeves suggests that administrators new to the field or a specific region find another practice manager in the area who can provide information. “Call successful practices and ask who they use,” she says. “Find an administrator who is well-versed, well-seasoned and who likes to mentor or talk and take him or her out to lunch. That’s one of the quickest ways to get the good, bad and ugly about insurance companies.”
- Practice managers should also familiarize themselves with different types of malpractice coverage: tail coverage, claims-made vs. occurrence-made malpractice insurance and more. And if physicians are considering moving their organization to a new location, malpractice coverage costs are something they might want to consider in the decision-making process because premium rates can vary based on location.