Obtaining Cost Effective Provider Stop Loss Insurance

Provider stop loss insurance is an absolute necessity for all medical groups and facilities, in addition to medical professional liability insurance. Neglecting provider stop loss insurance can result in a group losing profits because of having more catastrophic claims than its policy can adequately cover. Essentially, the purpose of provider stop loss insurance is to help cover the cost of losses that cannot be absorbed through operational capital received from capitation on the parts it serves.

What Are Catastrophic Cases, And Why Can't They Be Predicted?

Most groups and facilities are paid a set amount per participant, regardless of what or how many services are provided. A catastrophic case is one in which the claim costs more than the premiums collected and, therefore, risks the financial stability of the medical group. These types of claims are very hard to predict, especially when the number of participants is low. Outliers are much easier to average when participant numbers are higher.

How Does Provider Stop Loss Insurance Help?

Choosing provider stop loss insurance means that your claims will be paid you once you've reached a predetermined deductible limit. This means that during some years, you won't reach your deductible and will not have to cover claims from the existing policy. But during years where one or several catastrophic cases occur, provider stop loss insurance could be the financial savior of your medical group

There are numerous coverage options available, which a quality brokerage should go through with you to determine the best policy for your practice. Because provider stop loss insurance can cover financial losses, it's extremely important to get all of the details. Choosing coverage types (specific or aggregate), coverage maximums, deductibles, and renewal options will all factor into obtaining cost-effective coverage.

Keeping Costs Low

In order to avoid losing money through premiums, there are a few tips to keep costs down. First, do not purchase more provider stop loss insurance coverage than is realistically necessary. Over-insuring will result in never recouping the value that the insurance potentially provides. Secondly, obtain as much health and claims information from your data department before deciding on your terms of coverage. Knowing that you have an older, more illness-prone participant base will give a better indication of how much coverage you may want. Thirdly, work with a brokerage that has provider stop loss insurance experience with a successful track record.