Provider Excess insurance is an important part of any organization’s overall risk management strategy. While Reinsurance provides a wide umbrella to handle a variety of catastrophic claims, Provider Excess can help smooth over financial losses related to specific medical costs for which they are most at risk. This is especially the case as the healthcare industry sees escalating equipment costs along with new costs associated with managing and maintaining data and patient secrecy. Most providers decide to cover all services and supplies for which the Division of Financial Responsibility (DOFR) declares them responsible. Financial arrangements such as capitation add to the overall risk landscape of managed care and other medical providers. When choosing a benefit level for provider excess coverage, consider the following:
Guidelines for Selecting Coverage
- Historically, what is the frequency/severity of claims at various deductible levels?
- What is the risk profile of the provider membership in terms of size and type?
- Does the provider have any risk mitigation mechanisms (such as provider contract structures or claim and medical management programs)?
- What is the provider’s risk tolerance? What are the budget considerations?
- What is the underwriting margin and expected results?