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The legal landscape for healthcare is changing in the United States and the risk for advanced practitioners is increasing more and more. And as the scope of practice for Nurse Practitioners, Physician Assistants, CRNAs, and other providers continues to expand, the liability grows, as well.

So, if you’re an NP, PA, CRNA, RN, Aesthetician, or any other type of ancillary provider, what’s the best way to be covered for malpractice insurance? Should you carry your own policy or accept the insurance being provided by your employer? And what if you’re self-employed doing 1099 or locums work?

In this blog, we’ll address these questions and more to help you understand malpractice insurance for advanced practitioners.

When it comes to malpractice insurance for advanced practitioners and ancillary healthcare providers, there are 3 ways they can be covered… And each of these options have varying costs, and levels of protection. Let’s look at each option along with the pros and cons.

1. Coverage under the Supervising Physician

Most malpractice insurance carriers will allow Registered Nurses, Medical Assistants, Aestheticians, Therapists, X-Ray/Ultrasound/Surgical Techs, and other medical staff to be covered under their supervising physician at no cost; however, Nurse Practitioners, Physician Assistants, CRNAs, Midwives and other providers with a larger scope of practice are often excluded.

While it’s beneficial to have this shared limit option available, keep in mind that shared limits means just that – the policy limits are shared among everyone under the policy. So, if a physician has a $1M policy limit and a claim names him/her, their RN, the medical assistant, and their receptionist, everyone shares the $1M in coverage.

This shared limit option also generally limits the coverage to work done on behalf of the employer; so a RN would not be covered for any moonlighting or outside work – only that work done within the scope of their duties for the supervising physician or employer.

When an allied provider leaves a practice, they do not need to purchase tail insurance, since they were sharing the policy with their supervising physician; however, it is the supervising physician’s duty to maintain continuous coverage and take care of the tail insurance at some point in the future (unless it’s an Occurrence policy).

Pro’s:

  • No cost
  • It’s an easy way to cover most of your staff

Con’s:

  • Only certain types of allied providers can be covered (it usually won’t include advanced practitioner such as NPs, PAs, etc.)
  • It only allows for shared limits

2. Coverage under the Employer or Corporation

Corporate malpractice insurance coverage provides a wider range of protection for allied providers in a group. Most malpractice insurance carriers allow all classes of allied professionals to be insured under the corporate policy. This is beneficial to the doctors, because they are no longer sharing their individual policy limits with their staff; but rather, it provides a separate set of limits to cover the entity and all non-physician staff working under it.

Corporate malpractice insurance costs are minimal. For a single physician practice, the corporate malpractice insurance is generally 10% of their individual premium. So, if you’re a doctor who pays $15,000 / year then the cost for a corporate malpractice insurance policy for you will be around $1,500.

For groups, the corporate cost is around 10% of the top 5 physicians’ premiums combined. So, in this example, let’s say we have a group of 10 doctors and they each pay $10,000 / year for their malpractice insurance. The corporate malpractice insurance cost would be $5,000 ($10,000 x 5 = $50,000 x 10%).

The corporate malpractice insurance policy extends coverage on a shared limits basis and coverage is generally limited to the acts done within the scope of employment. When an allied provider leaves a practice, they typically do not need to purchase tail insurance, since they were sharing the policy with their employer; however, it is the employer’s duty to maintain continuous coverage and take care of the tail insurance at some point in the future (again, unless it’s an Occurrence policy).

Pro’s:

  • It carves out the allied providers so there is no eroding of the physician’s policy limits

Con’s:

  • It has a cost (although minimal)
  • It only allows for shared limits

3. Individual Coverage

    Allied providers can secure their own individual malpractice insurance, which gives them their own policy and unique set of limits – not sharing with anyone else. This option provides more coverage than a shared limit option, since the individual provider has a policy all to themselves. The group may control the policy or the individual provider may choose to pay for it on their own.

    An employer-controlled policy often means that the coverage will be limited to only the work done for that employer. Midlevel providers that work as independent contractors, 1099s, or locums may want to carry their own policy to have the flexibility of managing their own coverage.

    If you are a self-employed Nurse Practitioner, Physician Assistant, or CRNA, you’ll likely want to carry your own individual insurance policy so that you can practice when and where you want – with no limitations.

    Individual policies will have a premium cost, although there are often discounts available for those working part-time.

    Pro’s:

    • There is separate coverage for the advanced practitioner
    • There is no eroding limits for physician, corporation or other providers in the group
    • It allows the provider to go anywhere and work where they want
    • Usually one policy can cover all of your activities

    Con’s:

    • There is a cost, either paid by the employer or paid by the practitioner themselves

    So, how do you decide which coverage option is right for you? It depends on several factors including the state you’re practicing in, your budget, and your risk tolerance.

    For small, start-up practices, shared limits coverage is common. It’s an economical way to extend coverage to the midlevel providers in the group, while the number of exposures is relatively low. As the practice grows and expands, however, it is wise to consider separate coverage options to spread out the risk so not to exhaust limits.

    It’s also important to be cognizant of the policy limits, particularly for shared limits policies. A corporate malpractice insurance policy sharing $1M in limits is very different than a corporate malpractice insurance policy sharing $200,000 in limits.

    State nuances, hospital requirements, and other factors may also affect the type of coverage option that you’ll select. In Indiana, for example, the Patient’s Compensation Fund requires that all Independent Ancillary Providers (IAPs) carry their own individual malpractice insurance, unless they are employed by a hospital or nursing home. This includes Dentists, Psychologists, Podiatrists, Optometrists, Nurse Practitioners, Nurse Midwives, Certified Registered Nurse Anesthetists, Physician’s Assistants, and Clinical Nurse Specialists. In Indiana, these providers cannot share limits with a physician or a corporation. They must be separately insured.

    Deciding on the right form of malpractice coverage for allied healthcare providers can be tricky, but there are experts available to help you talk through options. A knowledgeable malpractice insurance agent can simplify the process for you and explain all available coverage option so that you can find the malpractice solution that’s right for you.

    Published On: March 28, 2024
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