Options for purchasing provider excess insurance

Healthcare Financial Management, July, 1996 by William D. Dyer, Ira J. Forkish

Receiving Payment on Claims

Claims are not necessarily paid in accordance with quotations from the broker or managing general underwriter, so provider organizations should request a specimen contract. A specimen contract is the definitive contract upon which an organization's reimbursement will be based. In one case, an insurance broker included a clause in its specimen contracts - but not in its proposals - that reduced the policyholder's reimbursement by 50 percent if the claim was not reported within 60 days. Because of the financial implications of a contract's terms, it is essential that legal counsel carefully review all specimen contracts.

To gain a better understanding of how a prospective broker or managing general underwriter will respond to claims, provider organizations should give brokers or managing general underwriters three claims examples and request that they adjudicate the claims. Also, financial managers should contact the claims reviewer that the insurance company has assigned to the account to gain a thorough understanding of how claims will be handled and how quickly they will be paid.

Summary

Healthcare provider organizations have many options when designing an appropriate provider excess insurance package, including the option of purchasing coverage independently, from a managing general underwriter, or from an insurance broker. In each case, due diligence must be exercised to ensure complete coverage at the best price.

William D. Dyer is president, Healthcare Plus Insurance Services, Inc., El Segundo, California, and a member of HFMA's Southern California Chapter.

Ira J. Forkish is executive vice president, Healthcare Plus Insurance Services, Inc., El Segundo, California, and a member of HFMA's Southern California Chapter.