Securing insurance protection against fraud and abuse liability

Healthcare Financial Management, July, 1999 by Sheila Callison

Reliance on technology. A simple programming error in an organization's billing software or a systems malfunction can have enormous negative consequences. Fortunately, several systems offer clinical editing applications designed to improve payment and ensure regulatory compliance. In addition, organizations should incorporate into their corporate compliance programs provisions that designate who has responsibility for monitoring the compliance of outsourced staff (eg, consultants, systems integrators, on-line services staff, and data-entry service providers) who access various sensitive information systems.

Underwriter Concerns

An underwriter's first concern is that the organization seeking billing E&O coverage has a functional corporate compliance program in place. The organization's past history also is relevant to the underwriting process. Some of the historical factors underwriters consider include whether previous audits have occurred and, if so, the outcomes of those audits. An organization's overall business record and billing practices will determine whether a policy will be written.

Organizations planning or undergoing a merger or acquisition will need to be underwritten again to continue or extend insurance coverage to the new entity. Information regarding the billing system efficiency of each party to the merger or acquisition should be provided to the policy underwriter.

Purchasing Insurance

When seeking an insurance broker's assistance, provider organizations should ensure that the broker is up to date on the status of corporate compliance as it relates to Medicare and any recent regulations that may have been implemented. The broker should be able to provide all critical information about product features, including exclusions and limitations, determine the suitability of a product to the provider organization, and establish adequate coverage amounts based on the organization's Medicare and Medicaid business volume. Other questions that should be addressed during the insurance purchasing process include:

* Which insurance company will provide the coverage?

* What is the insurance company's rating?

* How will the coverage be written?

* What are the eligibility guidelines, limits, and premium minimums?

Conclusion

Healthcare organizations concerned about corporate compliance need to review securing appropriate insurance coverage as part of their corporate compliance program. New insurance products have been developed to meet the expanded needs of healthcare organizations.

a. For a discussion of coverage of defense costs associated with False Claims Act investigations and litigation that may be available under a standard endorsement to a D&O policy, see Witten, Jesse A., and Ryerson, Paul S., "Insurance Policies May Cover Costs of False Claims Act Litigation" on page 53 of this issue of HEALTHCARE FINANCIAL MANAGEMENT.

b. "Brown Tells Health Lawyers OIG Won't Treat Innocent Billing Errors as Fraud," July 1998.www.healthlawyers.org/brownhtm.> ABOUT THE AUTHOR