Workers’ Compensation is a form of insurance that is essentially a compromise between labor and management. The Workers’ Compensation Insurance policy provides wage replacement and medical benefits to employees injured or sickened in the course of their employment—either on the premises or away while acting on behalf of the practice. In exchange for this, workers relinquish their right to sue their physician or dental employers for the tort of negligence.

In general, a Workers’ Compensation Policy is a worker’s exclusive remedy for workplace injuries. It pays a portion of lost wages directly related to a work-related accident or illnss, compensation for past and future economic loss to compensate for permanent and partial physical impairments, medical expenses related to the on-the-job injury, and benefits to dependents of workers killed during the course of employment. As you can see, the policy combines disability insurance, health insurance, and life insurance into one plan.

Workers’ Compensation Policies are meant to eliminate the need for expensive and time-consuming litigation. Employees relinquish their right to collect for pain and suffering in exchange for not having to prove fault on the part of their employer in the event of a loss. So, under Workers’ Compensation Insurance, workers receive defined benefits regardless of whether they or their employer are partially or fully at fault in an accident.

What Injuries are Covered by Workers’ Compensation Insurance?
Injuries sustained by a worker “in the course and scope” of employment are covered by Workers’ Compensation Insurance. These include injuries from accidents, workplace violence, terrorist attacks, and natural disasters.

Workers’ Compensation Insurance also covers certain illnesses and occupational diseases contracted in the course of employment. For example, if a healthcare worker contracts AIDS from a needle puncture at work, the medical expenses and lost wages are covered by Workers’ Compensation Insurance.

Who is Required to Purchase Workers’ Compensation Insurance?
A medical and dental practice in the State of Florida is required to purchase Workers’ Compensation Insurance when it employs four or more employees, generally defined as people performing services at the direction of the employer. Florida allows sole proprietors and partners to cover themselves if they choose. Corporate owners are covered unless they exclude themselves.

It is advisable for a practice to purchase Workers’ Compensation Insurance regardless of the number of employees, in order to exempt the employer from becoming legally liable for the injury or illness of their employees. A single illness of an employee could bankrupt a practice which chooses not to purchase Workers’ Compensation Insurance. State inspectors are working hard to administer harsh fines and shut down those practices that are required to carry Workers’ Compensation Insurance but do not carry it.

Is Workers’ Compensation Insurance Part of Any Other Insurance Policy
No, a Workers’ Compensation Insurance Policy must be purchased separately.

How are Workers’ Compensation Premiums Determined?
Premiums for Workers’ Compensation Insurance are determined by the employer’s industry classification code and by annual payroll. The more risk involved in the business, such as roofing, the higher the premium. The rate for physician and dental offices is relatively low, because the risk of injury or sickness is low. The 2015 rate for a healthcare office is $.44 per $100 of payroll.

What can a Doctor or Dentist Do to Reduce His Workers’ Compensation Insurance Premium?
The best way for a physician or dentist to manage premium is to manage risk. A small practice may not be able to retain a Risk Manager on staff. Nevertheless, someone in the office should be responsible for loss control to keep workers safe, manage workers’ compensation insurance claims, and return employees to work quickly. The last thing a practice wants is to be assigned to the Assigned Risk Plan, or insurer of last resort, where the premiums are significantly higher than those of a standard carrier.

Some companies offer dividend programs for practices with a premium above the minimum which do not have workers’ compensation losses. Gracey-Backer, Inc. is privileged to have an excellent program with an “A” (Excellent) rated carrier to return 30% of your premium in the form of a dividend (as set by the Board of Directors) for offices who do not have claims. Even if there is a claim, the insured practice is guaranteed a 10% return premium in the form of a dividend. Please call for more information on the excellent Workers’ Compensation Insurance Program, offered exclusively by Gracey-Backer, Inc.

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1. Fewer physicians in the work force. It is well known that physician practices are consolidating. Physicians and surgeons are gathering into larger groups to reduce costs, increase efficiencies, improve physician lifestyle, and comply with complex healthcare laws and regulations. This consolidation dilutes the physician/patient relationship.
2. The rise of “super losses”: According to industry sources, large claims against physicians and surgeons are on the rise. And, what the company calls “super losses”, or those totaling more than $5 million, are increasing. These mega losses are now accounting for a larger percentage of claims submitted by physicians and surgeons. In the past decade, rates charged by defense counsel have increased significantly. According to one report, this is especially true for large firms where handling “bet the firm” litigation, defense costs can be $600 or more per hour.
3. Hospitalists: In addition, as small, local hospitals and physician groups merge with faceless larger entities, patients have less hesitancy to sue than they had when they felt like they were suing their “friend”. The reduced supply of physicians in the marketplace will also put pressure on medical malpractice insurance rates.
4. More patients: As baby boomers approach retirement, demand for medical care is expected to rise sharply, which will undoubtedly lead to an increase in medical malpractice insurance claims. The increase in the number of physicians in the next decade is likely to be much lower than the anticipated growth in the percentage of people over 65 over the same time frame. As a result, in some parts of the country, the physician population will struggle to meet demand. Patients, already irritated about office wait times, will have to wait even longer to see their physician, thereby potentially delaying diagnoses. Also, primary care physicians will be asked to perform more procedures and make more diagnoses in a day, thereby increasing the likelihood of being sued.
5. Tort Reform: Another issue that could well lead to medical malpractice insurance rate increases for physicians and surgeons is the anticipated wave of legal challenges to established limitations on malpractice litigation, including caps on damages, shortened statutes of limitations for filing lawsuits, and caps on attorney fees—reforms which are largely credited for controlling the cost of medical malpractice insurance by reducing medical malpractice litigation.

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The practicing physician or organization is generally the name insured.

Coverage under the physician and surgeon professional liability policy assumes that a policy is in force and that the claim comes within the scope of the policy. It also assumes that the claim is reported in a timely fashion and that there is no other coverage.

Coverage on the Physician and Surgeon professional liability (medical malpractice insurance) insurance policy is similar to other general liability policies:

• It promises to indemnify the insured physician or surgeon for damages for which he is found legally liable, including the payment of a judgment negotiated by the insurance company, up to the limits of liability stated on the policy.
• It pays legal defense and mediation costs incurred by the insured physician or surgeon. The malpractice insurance company generally has the right to choose the attorney and run the defense. This right includes the decision to settle or litigate the case. Some professional liability (malpractice) policies have a “consent to settle” provision, which allows the insured some say in the decision to settle. In any case, the insured physician has an obligation to cooperate with the insurance company in the conduct of his defense.

Generally, professional liability is not covered by the commercial general liability policy. In rare cases, it is added by endorsement; however, it is better to have a standalone policy.

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According to the Centers for Medicare and Medicaid Services (CMS), an ACO is ”an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.”

The ACO was created with the hope of improving patient care and reducing unnecessary expenses while also allowing patients the freedom to select their own service provider. The ACO aims to incentivize hospitals, physicians, long term care facilities and other providers to coordinate the delivery of care to patients. The Department of Health and Human Services estimates that ACOs could save Medicare up to $906 million in the first three years.

Providers
The ACO network is composed mainly of physicians, hospitals and healthcare professionals. Also included may be home healthcare facilities, health departments, social security departments, and safety net clinics. Any provider or provider organization may assume the leadership role in running the ACO.

Payers
The primary payer of the ACO will be Medicare, as it is a prime target for reducing the national deficit. With baby boomers retiring, healthcare costs for the elderly and disabled are expected to soar. Other payers include private insurance companies.

Patients
Medicare beneficiaries are the primary patients of the ACO. This may be stretched to include the homeless and uninsured.

Challenges
The ACO model will need to prove that the product it is creating can actually run better and reduce costs if patients and payers are going to buy it. As far as insurance goes, the major medical malpractice insurance companies are struggling to determine how to best cover the varied exposures of the ACO. The exposures are many and varied: property, workers’ compensation, directors and officers, managed care liability, professional liability, cyber liability, privacy and social media.

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When smaller practices merge into larger ones, it is not uncommon for doctors to then be insured by different medical malpractice insurance carriers. The group will undoubtedly move to one carrier, usually the one representing the larger entity. It is important for all physicians in a group to be insured by the same carrier, as the group will not want to negotiate among several insurers. This issue should be addressed before the merger takes place, so the new malpractice insurance coverage is active on the first day of operations. If the merging group has its own corporate coverage, it should be sure to maintain that coverage until accounts receivable are zeroed out and the corporations are closed.

In addition to ease of adjusting claims, there are other advantages for the group being insured by one medical malpractice insurance carrier:

• The cost per physician is usually less, as the group is usually able to negotiate credits;
• Physicians with prior medical malpractice claims may now be able to secure coverage from a standard carrier;
• The group can take advantage of free on-site risk management seminars and courses;
• Agents compete for group business, and can offer competitive bids.

It is very important for the group to be insured with a quality medical malpractice insurance company. We have seen too many cases where, in a desire to save premium, the group chooses a non-rated or poorly rated carrier, only to be disappointed with the claims handling later on. We believe that the company should be “A” rated by A.M. Best and Company, and focus solely on writing medical professional liability insurance for physicians and surgeons. Society credits, loss-free credits, risk management credits, and discretionary credits are usually available for quality risks. Some of the best medical malpractice insurance carriers offer dividend and other profit-sharing plans to secure new business and reward loyalty.

If the physician and surgeon group is working with an experienced medical malpractice insurance agent, that agent should be proactive in “shopping” the group’s insurance each year. In some cases, it will be best to stay with the same company—for a number of reasons. However, it has been our experience that everyone benefits with competition. In the end, the physician group receives the best possible price with the best possible company—a win for the doctor for sure.

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What does locum tenens mean?

Locum tenens literally means “place holder”. A locum tenens physician is one who temporarily works in the place of the regular physician while that physician is absent. A locum tenens doctor allows for continuity of patient care when the office has an increased patient load or if a physician is away due to CME, sabbatical, vacation or illness. His patients continue to be cared for and he does not lose his valuable revenue stream.

Why locum tenens?

Choosing to practice as a locum tenens can be attractive to a physician at any stage in his career. A first year physician can try out a variety of practice styles and geographic locations before committing to something permanent. Physicians in the middle of their career can test different areas and bridge the gap in income. Mature physicians can scale back their practices without fully retiring.

Don’t forget about medical malpractice insurance.

A locum tenens physician should carefully consider the medical malpractice insurance implications of accepting a temporary position.

Florida medical malpractice insurance policies can be endorsed to extend coverage to an approved locum tenens physician. By “approved”, we mean that the name insured doctor needs to notify his medical malpractice insurer of the name of the locum tenens doctor and the dates when he or she will be practicing in his place. Some medical malpractice insurance companies require an extensive review of the qualifications of the locum and some do not, as long as the locum is of the same specialty, has a valid Florida license and has an approved claims history.

Do I need to purchase malpractice insurance if I am going through a placement agency?

If you are securing a locum tenens through a placement organization, that company may well provide coverage for the locum tenens. This is one of the main things you should check if using a placement company.

“Tail” issues for locum tenens.

It is important to check the tail requirements if the main physician carries a claims-made medical malpractice insurance policy. There is no problem if the primary physician keeps continuous coverage. If, however, he drops it and fails to purchase a tail policy, there may not be coverage for the locum. And, when the primary physician retires, gets a free tail, and then re-enters practice as a locum tenens, there may be a problem with that free tail. Our office highly recommends that the doctor check with his medical malpractice carrier and secure approval, in writing, if he decides to go back into practice as a locum tenens after retirement.

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A $1,000,000/$3,000,000 limit of medical professional liability insurance means that the most that the medical professional liability insurance company will pay for any one claim against a physician or surgeon in a year is $1,000,000. The most the medical malpractice insurance company will pay for any amount of professional liability claims against the physician or surgeon in one year is $3,000,000.

Many of our physician and surgeon clients ask how much professional liability coverage they need. At the risk of being vague, the answer really depends on a number of factors, including the physician or surgeon’s annual income, his assets, and medical professional liability insurance premium costs. We at Gracey-Backer, Inc. will consult with a physician or surgeon and tailor a policy for his or her particular needs.

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Premium credits are available, and should be mentioned by your agent. These are:

• Five Year Claims-free discounts – These discounts can be significant. Usually a company requires that a physician be claims-free for five years to receive any discount. The longer you remain claims-free, generally the greater the credit. A doctor just getting out of residency may receive a new-to-practice credit, but is usually not eligible for a claims-free discount because he has not had enough experience. Even if you have had a claim, you will probably be eligible for a credit as time goes by and you remain claims-free.
• Board Certification – A board certified physician can often receive discounts. The more board certifications, the greater the discount.
• Society Memberships – Membership in National, Regional, or State Medical Societies can often result in a discount, depending on the insurance company.
• Large Group Discount – A large group is appealing to an insurance company, especially if the group is relatively claims-free. Credits can be negotiated by the agent.
• Shop the Market – A good agent will constantly monitor the very fluid malpractice marketplace for you, getting quotes from various companies well prior to your renewal. He will balance the need to reduce premium with the need to be insured by a quality company with a proven track record of claims defense.

The medical malpractice insurance market is “soft” right now, meaning that credits are available. You should not have to ask for them. They should be offered to you.

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