Opportunities & Impacts of HB 2516

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1 Opportunities & Impacts of HB 2516

2 Kansas Professional Liability Health Care Provider Insurance Availability Act of 1976 Three Principal Features 1. A requirement that all defined health care professionals purchase professional liability insurance. 2. Creation of the Kansas Health Care Provider Insurance Availability Plan - assigned risk plan 3. Creation of the Health Care Stabilization Fund Reinsurer of the Availability Plan (Assigned Risk) Provides excess coverage (Fund Limits) above the required primary limits ($200k/$600k) HCSF Surcharge Provides "Tail Coverage" for providers who have met the eligibility requirements for this coverage

3 Kansas Professional Liability The Health Care Stabilization Fund is overseen by a Board of Governors who are health care industry representatives. Members of the Board of Governors John R. Eplee, M.D., Chairman Wayne T. Stratton, J.D., Vice-Chairman Scott D. Booker, D.O. Chris L. Burke, C.R.N.A. Harold M. Chalker, D.C. J. Michael Frost Jimmie A. Gleason, M.D. John W. Mize, J.D. Steven R. Short, D.O. Travis W. Stembridge, M.D.

4 Kansas Professional Liability There are sixteen categories of health care providers required by law to participate in the HCSF: Three types of medical care facilities; hospitals, ambulatory surgery centers, and recuperation centers, The three licensees under the Healing Arts Act; D.C.s, D.O.s, and M.D.s, Podiatrists, Nurse anesthetists, Entities established under the definition of Health Care Provider Professional corporations, Limited liability companies, Partnerships, Not-for-profit corporations, Graduate medical education programs affiliated with the University of Kansas, Dentists certified by the Board of Healing Arts to administer anesthesia, Psychiatric hospitals, and Community mental health centers.

5 What does HB 2516 do? Until this point, Nursing and Assisted Living Facilities, have not been defined as health care providers under the Health Care Provider Insurance Availability Act. HB 2516 amends the Act to: Include, as of January 1, 2015, physician assistants, nursing facilities, assisted living facilities, residential health care facilities, and certain advance practice registered nurses (certified in the role of nurse midwife);

6 What does HB 2516 do? HB 2516 also: amends provisions relating to the operation of mutual insurance companies organized to provide health care provider liability insurance Specifically: Expands the types of insurance products that can be sold to include all insurance policies statutorily authorized for sale by mutual insurance companies other than life insurance.

7 What does HB 2516 do? Finally, HB 2516: clarifies that professional liability insurance and HCSF coverage are a condition of licensure to practice in the state for health care providers & beginning July 1, 2014, the five-year compliance period requirement prior to being eligible for tail coverage is removed and any health care provider has tail coverage immediately upon canceling or inactivating a Kansas license and the provider s professional liability insurance policy. Five year HCSF compliance is no longer necessary for (free) tail coverage.

8 Why does this matter? Miller v. Johnson case 5-2 KS supreme court decision upheld the $250,000 cap* on noneconomic damages The decision specifically referenced providers required to buy professional liability insurance under the Health Care Provider Liability Insurance Act. It became immediately unclear whether providers not participating in the HCSF were included in the Miller v. Johnson decision. *SB 311 amends this cap to $350,000 over a 10 year period beginning July 1, 2014.

9 Why does this matter? In addition to clarified protection afforded under the noneconomic damages cap, HB 2516 also expands the types of insurance certain mutual insurance companies are able to sell. What does this mean? Kansas Medical Mutual Insurance Company (KaMMCO) was originally authorized as a mutual professional liability insurance company for Kansas physicians. Today, KaMMCO provides insurance, risk management and advocacy for the majority of Kansas physicians & hospitals.

10 Why does this matter? HB 2516 provides clarity regarding KaMMCO s ability to expand the types of insurance products that can be sold to include all insurance policies statutorily authorized for sale by mutual insurance companies. Classes of business identified as growth areas: Nursing/Assisted Living Facilities Home Health Hospice Community Mental Health Centers

11 Important Steps In anticipation of the January 1, 2015 implementation date there are few steps Nursing Home and Assisted Living License holders will need to take: Determination of Health Care Stabilization Fund coverage limits. Basic Limits HCSF Option 1 Total Limit Structure Per Claim $200,000 $100,000 $300,000 Aggregate $600,000 $300,000 $900,000 Basic Limits HCSF Option 2 Total Limit Structure Per Claim $200,000 $300,000 $500,000 Aggregate $600,000 $900,000 $1,500,000 Basic Limits are purchased from the private marketplace or the KS Availability Plan. HCSF limits have an accompanying surcharge. Some facilities afforded protection under the KS Tort Claims Act (gov t owned) will choose HCSF Option 2. Basic Limits HCSF Option 3 Total Limit Structure Per Claim $200,000 $800,000 $1,000,000 Aggregate $600,000 $2,400,000 $3,000,000 Option 3 is the most popular. Excess or Umbrella limits can be purchased above these limits.

12 Important Steps Appropriate tail coverage or extended reporting period (ERP) accommodations must be made if coverage is currently claims-made. The HCSF can provide prior acts coverage honoring an existing retrodate of coverage. Unless otherwise requested, HCSF compliance will create a new retro-date of coverage (fund entry date). Facilities using occurrence coverage will not have this need. Selection of an Insurance Carrier capable of bringing you into compliance with the Health Care Stabilization Fund. Many carriers currently writing Nursing/Assisted Living do not yet have the ability comply with the HCSF. For some carriers, there may be initial reluctance to coordinate with the HCSF. Why would this be? Some carriers may have questions about controlling claim outcomes. Other carriers may simply not understand the new law.

13 KaMMCO for your LTC facility. Since 1989, KaMMCO has coordinated with the Health Care Stabilization Fund. KaMMCO insured facilities will experience seamless HCSF compliance. KaMMCO is owned by their policy holders and exists only for the benefit and protection of their policy holders. Purchasing Professional Liability insurance from KaMMCO gives your facility ownership in the company. KaMMCO has defended more medical malpractice cases in Kansas than any other carrier. Specific jurisdictional knowledge of the state gives KaMMCO a distinct advantage when defending claims. KaMMCO has been at the forefront of leadership in terms of provider advocacy and development of provider friendly legislation. KaMMCO is the administrator of the Kansas Availability Plan.

14 KaMMCO Premium Examples Example #1 Certified Nursing Beds 295 KaMMCO $1m/$3m Prof Liab Prem $30,641 Example #2 Certified Nursing Beds 99 KaMMCO $1m/$3m Prof Liab Prem $11,456 Example #3 Certified Nursing Beds 45 KaMMCO $1m/$3m Prof Liab Prem $6,516 Note: These premiums are Annual Premiums and are Professional Liability only.

15 Conrade Insurance Contact Info Please contact us if you are anyone else at your facility has questions about: Changes in legislation HB 2516 & SB 311 The Health Care Stabilization Fund KaMMCO Chris Conrade, (mobile) Darrell Conrade, (mobile) 129 E Broadway, Newton, KS