Insurance Needs for a Dental Practice – October 2007

Dentists often neglect to consider the range of insurance policies that are available until they are faced with a tragic set of circumstances that they are unable to afford on the regular payments taken by owning a practice. Of course, some insurance policies are mandated, like workers compensation insurance. But there are other insurance policies that practice owners or associates should definitely consider in operating a practice. Here are some of those kinds of insurance:

Workers Compensation Insurance

                  Both Massachusetts and Rhode Island require all employers to carry workers compensation insurance to cover worker injuries occurring on the job. Self insured group coverage is available to make sure legal requirements are met. There are many instances where the law indicating what kinds of mishaps are covered is unclear, including injuries sustained while doing errands for the employer or work for a practice outside of the work site. Try to see if these are covered by the specific policy selected.

Malpractice Insurance

                  Malpractice insurance is a definite must for all dentists to avoid liability and costs of litigation. Two kinds of policies are available: (a) occurrence coverage, which insures against all claims made for an occurrence taking place during the policy period and (b) claims made policies, which covers events reported during the policy period. Extended reporting endorsements for claims made policies or (tail coverage) is available in case of a move, death, disability or retirement. The minimum coverage recommended is $1,000,000 to $3,000,000.

Disability Insurance

                  If you become disabled and unable to practice, then disability insurance will usually cover 60-70% of pre-tax income. The premiums for this insurance vary according to a number of factors, but as an example, a dentist in his thirties can expect to pay about $4,000 a year for a premium. Often a disability preventing work specifically as a dentist will allow for work in teaching or consulting, and in this case disability benefits may not be reduced varying on the policy if the dentist chooses “own occupation” insurance.

Business and Property Insurance

                  Several types of business and property insurance are essential to maintaining coverage against circumstances that may prove costly otherwise. Overhead expense policies pay for employees’ salaries, utilities, rent and other costs of keeping the practice open while a dentist is disabled and cannot work. Office liability policies cover accidents that occur to patients or others unaffiliated with the practice. Business property insurance is essential to protect the practice against disasters like fire, water damage or other property damage. Practice rebuilding coverage is available to assist dentists in building up a practice again should one of these disasters occur.

Health Insurance

                  Now that some states, such as Massachusetts, require all residents to maintain health insurance coverage, it is important to offer employees and partners health insurance coverage through the practice. Three of the most widely available health insurance coverage options are: (a) Health Maintenance Organizations, which have a network of providers with co-payments for visits, other medical procedures and prescriptions, and usually offer plans without deductibles; (b) Point of Service Plans, which allow higher fees for out of network providers, co-payments, and no deductibles and; (c) Preferred Provider Organizations, with deductibles ranging from about $200 to $1,500, allowance for visits to any provider, and payments for a percentage of the medical bill above the deductible amount with a cap of total costs. Since there is a tremendous variety of plans available, research into the details of the coverage is important.

Massachusetts Health Insurance for Dental Practice Owners – June 2008

Like most small business owners, Massachusetts dental practice owners must comply with the new requirements of the Massachusetts Health Reform Act. Depending on how many full-time employees the employer has, the employer must make a contribution to a particular type of health insurance plan designed for small employers or make a contribution towards the health insurance costs of employees.

Dental practice owners with more than 11 employees must make a “fair and reasonable” premium contribution for their employees’ health insurance or pay a Fair Share Contribution. The Fair Share Contribution is normally $295 per employee per year and is pro-rated for part-time employees. The “fair and reasonable” contribution test is that an employer must meet either one of two conditions. Employers with more than 11 employees must either pay at least a 33% contribution to the premium cost of the employer’s health insurance plan offered to full-time employees (working at least 35 hours per week) who worked at least 90 days from October 1, 2006 to September 30, 2007, or have at least 25% of its full-time employees enrolled in the employer’s health insurance plan to which the employer is making a financial contribution.

There is a requirement that employers with more than 11 employees set up a Section 125 health insurance plan that is required to meet particular rules of the Commonwealth Health Insurance Connector Authority. This plan is paid on a pre-tax basis which makes it not subject to payroll taxes. If an employer does not set up a Section 125 health plan and has employees or dependants who receive state funded health services, the employer may be subject to a “fee rider surcharge.”

To report all these changes in health insurance laws for small business owners such as dental practice owners, a Health Insurance Responsibility Disclosure Form (HIRD) is required to be submitted by all employers with more than 10 employees. This form requires employers to fill out information regarding the Section 125 Plan it has set up for its employees. The HIRD form must be maintained for each employee who has refused health insurance through the employer.

While the obligatory features of the Massachusetts Health Reform Act are in place for dentists with more than 11 employees, there are definitely advantages for those practices with less than 11 employees to use the Act to their employees’ advantage when offering health care benefits. These possibilities are excellent for use by solo practitioner dentists who use small numbers of employees or some part-time employees. Many of these options can save part-time and contract employees money on their taxes and otherwise. The employee first needs to set up or revise a Section 125 health plan for the part-time or contract employees. The documents for the plan set up are available on-line and can be used by a dentist with assistance from an attorney. The Commonwealth Health Connector can serve as the carrier for the plan, and employees will see a single bill from the Health Connector. They can use six approved health providers for a Commonwealth Choice health plan: Blue Cross and Blue Shield of Massachusetts, Fallon Community Health Care, Harvard Pilgrim Health Care, Health New England, Neighborhood Health Plan, and Tufts Health Plan. Once the employer account is set up with the Health Connector, the eligible employees can be notified of the pre-tax savings that their plan can result in and start the process of finding the right plan for them. Once the plan has been selected, the employer is notified by the Health Connector of the monthly premiums to withhold.   Premium payments are made directly to the Health Connector. While these plans are not required of the dentist, they can contribute to making the solo practice more attractive to part-time staff when hiring future employees.

What to Look for In Making an Insurance Provider Agreement – July 2010

Insurance provider agreements often are a way to achieve a maximum number of patients with a guaranteed payment system for certain services at fixed rates. It is important, however, to analyze what the insurance company is offering and what obligations the dentist will incur by using the benefits of patient use of dental insurance to pay for services. Sometimes the agreements can be complex, so an initial perusal of several key areas is essential to the decision to narrow down provider agreements to one or a limited number of companies.

What services will be covered is the initial question that the dentist must ask when looking at possible provider arrangements. Will the agreement cover all the types of services the dentist usually offers, or will it require the dentist to provide services which are not normally part of the practice?

The payment for services may only cover what is a necessary dental service. If the service is part of a medical plan of treatment it may more often than not be covered, whereas some restorative services, or particularly cosmetic services will not be covered, or will only have limited coverage. Also, preventive dentistry such as cleanings or regular can be included as part of covered services since it many times can save the insurance company money in the long run. It is important to find out who determines what is a necessary service, the dentist or the company, and what rights the patient has to appeal a particular decision as to coverage.

Of course, the payment system the insurance company provides is an essential part of any analysis of which company is right for the particular practice, its overall financial status, and its cash flow. Usually the payments are for “usual, customary and reasonable” fees or some similar phrasing. The decision as what is usual, customary and reasonable must be clarified, and the standards used, such providing a fee range within a certain geographical area or using both general dentists’ fees and specialists’ fees, must be clarified. Sometimes, through an HMO, the dentist pays a “capitation” fee, which allows for a set monthly payment for each patient, regardless of whether the patient uses services or not. Under some plans the patient bears the ultimate responsibility for reimbursing the dentist once the insurance payments are made to the patient, while in others the dentist is paid directly. When these payments are mad (some states have laws requiring a minimum insurance payment period), when the payment figure is fixed, and what is the action the dentist must take to recoup unpaid fees should be considered.

The requirements of the plan for the office availability to the patient or who the patient must see to be able to get insurance coverage should be noted. Some plans require 24 hour on call services, while others restrict who in the office can treat the patients and may or may not allow other dentists to treat patients either in an emergency or at other times when the dentist is not in the office. Patient referrals are a tricky area which should be analyzed thoroughly, for sometimes out of network referrals are not allowed, or the company makes a decision as to whether the dentist should be reimbursed by particular specialists for particular services.

As in most contracts, a dispute resolution provision is always inserted. At issue is whether the company has internal, fair procedures for dispute resolution, whether the agreement requires nonbinding mediation or binding arbitration methods, who makes the decision resolving the dispute, and what rights the dentist has to appeal the decision. Also, with regards to litigation, this provision may make note of who pays court costs and attorneys’ fees should a dispute or malpractice action take place.

Privacy laws are always a part of any agreements that are signed, for HIPAA sets standards on the flow of medical information electronically to insurers, what kinds of information can be forwarded, and who can forward that information. This area is the subject of changing legislation and case law, and the dentist should consult with an attorney familiar with this area if case of doubt.

Insurance companies often require a process of possible auditing of procedures, or peer review programs to determine whether the dentist is eligible to become a part of the network the company offers. Claims made against the dentist through dental boards, or malpractice suits, complaints or settlements are often necessarily revealed by the dentist to remain a part of the provider network.

Generally, insurance provider agreements can allow for a regular flow of business not otherwise coming into the practice if only private fee for service arrangements are made with patients, but analyzing the agreement, and using an attorney before finalizing the contract is essential to using them effectively.

Finding the Right Dental Malpractice Insurance – October 2010

Dentists are sometimes a little more relaxed than doctors or other medical providers about making certain that they have the exact policy they need to cover any possible liability for medical malpractice. After all, only a very small number of malpractice suits are filed against dentists, and those suits are generally for smaller sums and are almost always settled before expensive trials. But it is important to know exactly what kind of coverage each dentist in the office has, and whether it will provide coverage in specific instances.

One of the most important things to note about obtaining the proper malpractice coverage is that insurance policies for medical providers nearly always have a provision regarding who pays for the fees to defend such actions. For even when the sums of the claims are small, attorneys’ fees can mount up tremendously, especially in cases where plaintiffs insist that they are right and want to take the case forward until they receive the resolution that they were initially looking for, even if it is to simply validate that an injustice was done to them. Oftentimes, the attorneys’ fees involved can be three or four times the amount of any eventual verdict or settlement. When choosing a policy, it is important to examine the “duty to defend” clause in the contract. The clause should be well defined, detailing when the insurance company has a duty to defend the actions, how much they will charge if their claim that there is no coverage is shown to be correct, and at what point they can consider themselves not required to provide coverage or defend. If the policy doesn’t have a clause that you and your attorney agree with then don’t buy it.

Most policies are clear about language regarding a “duty to defend,” even if the claims adjuster or company attorney doesn’t feel the claim would allow for coverage. There is a general legal principle that the “duty to defend” provision always applies when there is any chance that the facts presented somehow could result in coverage, even if specifics are available or some facts show otherwise. The insurance company has the independent duty to investigate unclear claims outside of the lawsuit or facts alleged. If they don’t provide coverage right away, then ask for representation anyway, under this clause, because the costs of the defense will then generally be borne by the insurance company, if that is what the policy provides for. The insurance company will generally defend, subject to a “reservation of rights” clause which will absolve them of the liability to provide coverage if their initial conclusion that coverage wasn’t applicable is correct. But they have to show first, and absorb the attorneys’ fees to do so, that the eventual conclusion of the suit will result in liability that isn’t covered by a malpractice policy. Just remember the case of the “disco dentist” in Long Island, the subject of a previous article in this newsletter and a well publicized case, where the dentist supposedly committed malpractice because he was dancing to disco music while the patient was under anesthesia. The insurance company wouldn’t defend, and he lost the suit and a sizable some of money (over $100,000 in damages). He then sued the insurance company for not defending him, and won over twice that amount back from them

Another provision to examine closely in the policy is whether it is a “claims made” policy or a policy with a “tail” provision. If it is a “claims made policy” then the claim is very often covered only when reported during the coverage period, or a certain period afterwards (usually 90 days). Only by purchasing a “tail” provision covering those claims occurring during the policy period , but not reported until after that 90 day period after the policy elapses, and with a specific retroactive date of coverage, will claims occurring several months or years afterwards be covered. The “tail” provision can be added on to a claims made policy if necessary.   What if a patient has dentistry work done which took place within the policy period but has problems with the work that was performed which surfaced a year after the policy has elapsed? If the dentist only had a “claims made policy” there won’t be any coverage. It’s simply too much of a risk for most practitioners to take. Of course, that “tail” provision costs somewhat more, but it is very often worth it.

The scope of coverage for a professional liability insurance policy should also be examined thoroughly by the dentist and perhaps his or her attorney. It should be determined whether the coverage is provided for actions of other providers or employees in the office such as hygienists or dental assistants. Very often it is not, but the law of agency requires the dentist to be responsible for the acts of his or employees, or any office personnel he or she has control over. Make sure that either the hygienists or dental assistants have their own policies (which are fairly inexpensive), that your malpractice policy covers for their malpractice, or that at least you know when it will not be covered and then can provide enough safety precautions to protect yourself. You may also want to include a provision in your employees’ contract that they are required to be responsible for their own negligence. Plaintiff’s attorneys love the “deep pockets” that dental offices can provide if their clients have damages which have anything to do with the practice, so these instances have to be provided for.

Some states require malpractice insurance as a matter of law, and some states do not. In Massachusetts the statutes don’t always require it, but it generally is supposed to be made public knowledge whether the practitioner has coverage or not for malpractice. In any case, it is important to have some kind of coverage, and to be knowledgeable about when it applies and when it does not, about what legal costs are included within the coverage, and about the expansiveness of the policy protection. It is not wise to skimp on the type of coverage included, or the research done to buy that coverage, for the costs of non-coverage can be enough to be devastating to a practice.