The Indiana Department of Insurance (IDOI) published amendments to a rule that determines how certain health care providers obtain medical malpractice coverage through the Patient’s Compensation Fund (PCF).
“The original version of this rule would have required all physician practices to legally incorporate,” explained Julie Reed, ISMA general counsel. This would have eliminated sole proprietorships, partnerships, limited liability companies, etc.
“The ISMA opposed this requirement and it was removed from the rule. Entities now can obtain PCF coverage through their existing business entity,” said Reed.
The new rule applies to insurance policies issued or renewed after May 17. However, the IDOI has granted a grace period until June 21.
|New surcharge rates from the Indiana Department of Insurance
|2011-12 PCF surcharge
rates for physicians
Independent ancillary providers
Physicians are assigned to risk classes by specialties and pay a fixed PCF surcharge based on that class. Historically, non-physician health care providers could “share” underlying insurance limits with employers under the same policy.
But starting in 2008, all licensed nurse practitioners, nurse midwives, certified registered nurse anesthetists, psychologists, podiatrists, dentists and optometrists (“Independent Ancillary Providers” or IAPs) were required to file individually with the PCF to be considered a qualified provider. That meant those professionals had to purchase separate individual malpractice insurance policies unless their employers were hospitals or nursing homes.
This year, physician assistants and clinical nurse specialists were added to the definition of IAPs.
In the past, PCF surcharges for IAPs were a percentage – most recently 110 percent – of their underlying commercial policy premiums. Under the new rule, IAPs pay a percentage of the physician class 1 (family physician) rate, currently $2,648.
In many cases, this will be less than previous costs. In the future, when physician surcharge rates change, IAP rates will change proportionately. Part-time IAPs pay reduced surcharges.
“The critical thing to understand about this new rule is that no individual can include other individuals or employees under their insurance policy,” Reed said. “An individual policy is meant to cover only the named individual, but entities like corporations, partnerships, LLCs, sole proprietorships, etc. may include non-licensed employees in their qualification.”
Ancillary providers, medical directors
Any licensed health care provider or entity that is not a hospital, nursing home, physician or IAP is designated as an ancillary provider (AP). Under the new rule, PCF surcharge rates for APs are decreasing from 110 percent to 100 percent of the underlying commercial policy premium.
Hospitals and nursing homes now may include a non-employed medical director in their qualification as long as the contracted medical director provides no direct patient care. Coverage is limited to duties performed in the medical directorship.
Business entities with “doing business as” (DBA) designations must list the DBA initially on the certificate of insurance coverage. There is no added cost to do this, but if the DBA is added later, a $100 fee is required. If a claim is filed against an unlisted DBA entity, it may be too late to add a DBA entity for that claim, and the DBA may not have PCF coverage.
For questions, contact Reed at (800) 257-4762 or (317) 261-2060.