Making Sense Of Your Medical Malpractice Insurance Coverage

Anesthesia Medical Malpractice Coverage Explained

Medical malpractice is one of the most important but may be the least understood part for clinicians just entering the field of anesthesia. Previously, Bagmask.com has already had an interview with a provider undergoing a medical malpractice lawsuit, and we have written about how the law defines medical malpractice. 

This article will explain where a person can purchase medical malpractice insurance, what is covered under insurance vs what is not, the differences between occurrence-based insurance and claims-based insurance, and the differences between per-occurrence limits and aggregate limits. 

How Do You Purchase Medical Malpractice Insurance?

An individual or group can: 

● Buy insurance from a traditional provider 
● Buy insurance from a Risk Retention Group, which is a group of similar professionals providing insurance 
● Have the place of work (mainly a hospital) pay for insurance, similar to how businesses pay for their employees’ health insurance 
● If working for the Federal Government, such as the Department of Veterans Affairs, the government is self-insured against liability, so insurance is unnecessary 

What Is Covered?

● Medical damages-any damages caused by the alleged malpractice 
● Punitive damages-a payment where the alleged action was so egregious that additional costs are added onto the compensatory, as effectively a warning for other healthcare clinicians. 
● Arbitration costs-if the parties wish to go to court, then that settlement will be paid by the insurance 
● Settlement costs-if the parties wish to settle out-of-court, then that settlement will be paid by the insurance 
● Attorney costs and court costs-paying for a lawyer and any court fees will be paid by the insurance. 

What Is NOT Covered?

● Fees associated with sexual misconduct 
● Fees associated with criminal acts 
● Fees associated with inappropriate alteration of medical records 
● An insurer’s policy could be considered null if the provider were to lie on their application for the insurance 

What Is The Difference Between A Per-occurrence Limit And An Aggregate Limit?

Per-occurrence limit: the insurer will pay up to a certain limit per case. The industry standard per-occurrence limits policy is $1 million, so, if an individual case sum cost is $1.5 million, and the per-occurrence limit is $1 million, then the anesthesia provider will have to pay the other $500 thousand.

Aggregate limit: the total sum paid over a policy period, no matter how many claims are filed. The industry standard aggregate limit is $3 million. If a provider had 3 cases in a policy period that have a total cost of $3.2 million, and the total aggregate limit is $3 million, then the provider will have to pay the other $200 thousand. 

What Is Occurrence-based Medical Malpractice Insurance?

Occurrence-based insurance is insurance that covers a specific period where any treatment that occurred during that period is covered by the insurance company. As an example, a provider uses occurrence-based insurance for 10 years and then retires. He is sued for damages by a patient whose treatment took place during those 10 years. The physician is covered by the insurer because the treatment took place over those years. 

There are some positives to the occurrence-based model, where the premium rate (yearly payment to insurance) is steady. 

However, there are some negatives, as well. The higher starting costs compared to claims-based insurance means that it is more expensive for an anesthesia professional starting in the field to pay for it. Another problem is the problem of bankruptcy, where an insurance company could go bankrupt, and all the money put into the policy has no more use. The provider will have to pay for a new policy from another company. 

What Is Claims-based Medical Malpractice Insurance?

Claims-based medical malpractice insurance is where a provider  will buy insurance on a certain date, called the retroactive date. This date is the permanent start of claims-based insurance, where every year that the physician extends the insurance, another year is added to all previous years, starting with the retroactive date. The first year for claims-based malpractice insurance is the first year, but the premium cost does increase annually for about 5-7 years, after which the insurance premium costs plateau. The insurance provider also can be easily switched to another provider, with the same retroactive date, which enables continuous coverage. 

When an anesthesia clinician ends their career, they will have to pay a one-time fee called a tail. The tail is about 175 percent of the cost of the premium of the year that the provider  bought it. The tail covers the individual  if they were sued while they are in retirement. A positive is that insurance companies give free tails for passing away, permanent retirement, or if the provider gains a disability that prevents them from working. 

The positive side of the claims-based insurance model includes such as that if a clinician  were to change providers, the retroactive date stays the same and there is no lapse in coverage. Another positive is since the first year is cheaper in comparison to the occurrence-based model, it does help anesthesia providers  who are just starting practice. Finally, the claims-based is more versatile, where the providers  could add a higher policy limit or add coverage to the current plan. If the insurance company were to go into bankruptcy, the retroactive date coverage could be used.

The negatives of claims-based malpractice insurance include tail insurance, which is very expensive. The occurrence-based insurance does not have to buy a tail, in comparison. The policy limits are generally lower than the occurrence-based policies.

Written by Bagmask.com writer Alexander Korfiatis

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