Health Care Group Newsletter — Summer 2016
Jason Flahive

Nine Business Insurance Policies That Every Physician Should Consider

Physician practices face not only clinical and financial risks, but also risks related to business. Fortunately, insurance can mitigate many of these risks. However, practice leaders may not be familiar with the different types of coverage available. Here are nine business policies that every physician practice should consider:

  1. Human Resource Malpractice
    Employee allegations of discrimination, wrongful termination and sexual harassment are not uncommon. Coverage is available to protect physician owners of the practice, human resource managers and the employees who committed the wrongful acts. Basic coverage extends to damages awarded to the employee-plaintiffs in the matter, while separate coverage may be purchased for legal defense fees.
  2. Misappropriation of Sensitive Patient Information
    The news media reports frequently about the unauthorized taking, or disclosure of, sensitive patient data. The exposure of the information may be accidental (computer system failure), or committed by an employee or a non-employee hacker (cyber breach, identity theft). In addition to providing the usual coverages (damages, legal fees), insurance policies may help affected patients recover from the incident by restoring their impaired credit.
  3. Employee Theft
    Insurance coverage for this risk provides protection if an employee steals or embezzles money or property from the practice. The theft of money may come from either accounts payable or accounts receivable. The minimum recommended base coverage is $100,000. The insurance carrier for this coverage (and many of these other coverages) should work with the practice to minimize the risk of an employee misappropriating practice assets.
  4. ERISA Fidelity Bond
    This risk involves a special form of employee theft. The Employee Retirement Income Security Act (ERISA) requires that the practice, as the sponsor of its staff retirement plan, carry an insurance policy to protect against employee theft of the plan’s assets. The policy covers the employees who are managing the plan in a fiduciary capacity as well as those who invest in the plan’s assets. The minimum required coverage amount is $500,000 or 10% of the plan assets, whichever is less. This policy often can be included as an endorsement to the general purpose employee theft coverage.
  5. Practice-Engaged Vehicles
    Insurance protection is required for vehicles engaged in practice businesses under two circumstances.First, the practice may own ― and buy traditional insurance coverage for ― vehicles used by its physicians and staff to carry out business responsibilities. Second, it is also possible that employees may occasionally use their own automobiles to make bank deposits, pick up medications and test results and run other errands for the practice. To protect against injury to an employee or third party in this latter situation, it is necessary to maintain non-owned auto insurance. The typical coverage limit is $1 million and accompanied by limits on which staff may use their personal cars for which types of practice business.
  6. Business Overhead Expenses
    If a physician in a small or solo practice cannot work because of a disability or other problem, overhead expenses such as staff payroll, office rent and utilities will continue to be incurred. It is possible to buy an insurance policy that will provide the cash flow required to cover these expenses, allowing the practice to continue operating. The policy is marked by a 30- to 90-day waiting period between the start of the disability and the initial benefit payment. Typically, this coverage will pay overhead expenses for one to two years.
  7. Umbrella Protection
    This policy protects against claims that exceed the coverage limits on any of the other types of insurance that the practice may carry. It may also fill in policy gaps, such as legal fees incurred to defend claims against the practice.
  8. “Key Man” Coverage
    This coverage applies to the lives and working abilities of practice members essential to its ongoing success. Typical examples are the physicians and other employees who are sources of significant revenue.
  9. “Directors & Officers” Coverage
    Getting the right policy for your role as a physician entrepreneur and executive is very important. The scope of the liability for doctors is wider than most realize. You have all of the conventional medical practice related issues such as HIPAA compliance, Medicare and Medicaid billing regulations, and of course the policies and procedures related to care delivery itself. Add to that responsibility for issues ranging from waste disposal and employment policies, to accounting and tax reporting, and you begin to see the tip of the iceberg we are trying to avoid and protect you against.

For more information on business insurance policies for your practice, contact us at 312.670.7444. Visit ORBA.com to learn more about our Health Care Group.

The Ins and Outs of a Winning Billing and Collection Process

Claim denials can be a major source of frustration for physicians and their practice managers, and can have a real impact on cash flow and the financial performance of a practice. If office procedures are good in gathering correct information and submitting clean claims, you can still expect to see at least 5% of denials for claims. So, how can you conquer the issue? Read on.

Set a Goal for Perfection

The goal should be for your practice to have its claims accepted on the first submission. However, this requires taking steps much earlier in the revenue cycle.

To begin the process, identify and record the exact reason for every claim denial. This can be done quickly and easily by using a denial management module that is built into the overall practice management system. A variety of reasons will come up: The payer may insist that the stated diagnosis does not support the medical necessity of the services, or there may be missing paperwork in the documentation for the claim. The claim may be denied if the patient is not a covered beneficiary of the payer to whom the claim was submitted.

The various reasons that emerge should guide your practice to take two actions: 1) Make immediate efforts to correct the errors and reverse the denial, and 2) modify your practice processes to prevent the errors from occurring in the future.

Do Not Ignore Denials

There are several possible responses to a claim denial. For example, once the root cause of the denial is established, try to correct and resubmit the claim. First, find any missing paperwork and add it to the claim. Change inaccurate codes to the right ones, or determine the patient’s correct insurer and submit the claim to it.

If the practice cannot fix the reason for the denial, or the payer refuses to accept the correction, it may make sense to drop the matter and write off the charge. A write-off is necessary if the practice cannot locate the documentation to support the claimed service or if it turns out that the service was really part of a bundle that already has been paid separately and never should have been claimed in the first place. Nonetheless, this should be the last resort.

In the event that your practice makes what it believes to be appropriate corrections, but the payer still rejects them, the last option is to appeal the decision. You will need to contact the payer to learn its reasoning on the matter. Then, you must prepare persuasive arguments in support of the claim. As appropriate, gather additional relevant documentation, or obtain more expansive statements of medical necessity from your clinicians. Finally, file the appeal and follow up with the payer every two weeks until the matter is resolved.

Make Needed Changes

Your practice’s goal should be to avoid claim denials, so you will need to make systemic changes for the future. For instance, problems with incomplete documentation or improper coding may require retraining staff and clinicians. The people may be fine, but the processes they perform may need to be re-engineered. In that case, make sure your practice is getting all the right patient information before or during registration and you’re capturing and entering the correct charge codes in a timely manner.

Last, correct pre-adjudication edits returned by the claims clearinghouse on a daily basis. By following the above objectives, your practice will be well on its way to clean claims. As stated before, it’s critical that your practice stay on top of your billing and collections process. Your financial advisor can help you get on track.

For more information on refining your practice’s billing and collection process, contact us at 312.670.7444. Visit ORBA.com to learn more about our Health Care Group.

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