Health Maintenance Organization Insurance Policy Information
Health Maintenance Organization Insurance. Health Maintenance Organizations - shortened to HMOs - are a type of health insurance provider using a unique business model. These health insurers partner with a network of physicians.
Subsequently, clients who opt to insure themselves through the Health Maintenance Organization may access covered medical care through this network. This model benefits physicians, as the HMO ensures an influx of patients. It also has marked advantages for patients, who obtain less costly health insurance.
Health maintenance organizations (HMOs) act as both a medical insurance carrier and as the coordinator of health services for its members, who pay a monthly fee to receive all the medical services needed at a reduced cost or co-payment to them.
The HMO contracts with doctors, hospitals, and other health care professionals to serve members 24 hours a day, seven days per week. Members may be required to select a primary care physician (PCP). Except for medical emergencies, this PCP determines the member's need for hospitalization or referrals for specialized services such as diagnostic tests or physical therapy.
Preventive care services are often offered free or at a reduced charge. The HMO is generally limited to a particular geographical area but may have reciprocal agreements with HMOs in different areas to provide service to customers outside their primary service location.
HMOs are regulated at both state and federal levels.
HMOs unquestionably provide an important service. While these insurance providers will do everything they can to run a smooth operation, however, they are subject to a range of risks, just like any other business.
Therefore, HMOs require excellent insurance coverage as well. What types of health maintenance organization insurance coverage are crucial? Discover more in this brief guide.
Health maintenance organization insurance protects your HMO insurance and health services business from lawsuits with rates as low as $77/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked HMO insurance questions:
- How Much Does Health Maintenance Organization Insurance Cost?
- Why Do Health Maintenance Organizations Need Insurance?
- What Type Of Insurance Do Health Maintenance Organizations Need?
- What Does Health Maintenance Organization Insurance Cover & Pay For?
How Much Does Health Maintenance Organization Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small health maintenance organizations ranges from $77 to $99 per month based on location, size, revenue, claims history and more.
Why Do Health Maintenance Organizations Need Insurance?
As health insurance providers, HMOs will understand the fact that disaster can strike unexpectedly better than most businesses. Health Maintenance Organizations are vulnerable to some of the same risks as any other commercial venture, as well as facing hazards unique to this particular industry.
The office space of a Health Maintenance Organization may be impacted by large-scale acts of nature, such as earthquakes, hurricanes, or wildfires - leading to severe damage to the building, as well as the loss of important smaller assets.
Theft, cyber theft, vandalism, and accidents represent other important threats, along with the sudden breakdown of essential equipment.
Employees, or third parties present on the premises, may be injured for accidental reasons or those related to negligence. HMOs will, likewise, have to consider the costs associated with claims of professional misconduct, which can be astronomical even if the lawsuit is ultimately dismissed.
Any of these perils, alongside numerous others, can lead to such devastating financial consequences that the HMO may not be able to recover - however, protected by excellent insurance coverage, you no longer have to worry about this.
In addition to the fact that you will legally be required to carry certain types of health maintenance organization insurance, this explains, in short, why the right commercial insurance is important.
Some of the largest HMOs in the US include; Aetna, Anthem, Blue Cross Blue Shield, Cigna, Humana, Kaiser Foundation and UnitedHealthcare.
What Type Of Insurance Do Health Maintenance Organizations Need?
Each Health Maintenance Organization will have unique insurance needs. The types of coverage that will best protect your business depend, after all, on factors such as the size of your company, the jurisdiction in which your business is based, your number of employees, and the value of your assets.
Because of this, it is crucial to discuss your individual risk profile with a skilled commercial insurance broker who understands your industry. However, among the key types of health maintenance organization insurance are:
- Commercial Property - Should your commercial premises be impacted by unforeseen circumstances that include vandalism, theft, and acts of nature, this form of coverage serves the purpose of protecting your HMO from the financial consequences. Your building and its contents are both covered, up to a predefined limit. Flood insurance should be purchased additionally, as that does not fall under most commercial property policies.
- Commercial General Liability - In the event that your business faces a third party personal injury or property damage claim, this kind of health maintenance organization insurance covers many of the legal costs that arise. Attorney fees, medical bills, repair expenses, and settlement payments are examples of the types of expenses covered.
- Errors and omissions - Also called E&O insurance, this type of professional liability coverage protects a HMO in the event that a client or a clinic within their network files a lawsuit alleging professional negligence or misconduct. This form of coverage is essential to any insurance provider or company within the financial sector.
- Workers Compensation - Assuming that you have employees, your business will also need to carry workers' comp insurance in most states. This important form of coverage takes care of the medical expenses of employees who have been injured in the workplace under circumstances for which the company could be held responsible. In addition, it covers any wages the injured employee loses to related work absences.
While HMOs are likely to have further insurance needs - in the forms of commercial auto and cyber security insurance, for instance - these types of coverage will offer a large degree of protection.
To find out what other health maintenance organization insurance policies you may benefit from, direct your questions to a commercial insurance broker.
Health Maintenance Organization's Risks & Exposures
Premises liability exposure is very limited because most member and insurer contact is done over the phone, electronically or by mail. If clients visit the premises, they must be confined to designated areas to prevent them from observing other clients' confidential information or overhearing private conversations.
To prevent slips, trips, or falls, all areas accessible to customers should be well lighted with floor coverings in good condition. The number of exits must be sufficient and well marked, with backup lighting in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.
Personal injury liability exposures include allegations of assault, breach of confidentiality, discrimination, and invasion of privacy.
Professional liability exposures are increasing in some states. The HMO does not technically diagnose illnesses or prescribe treatment but relies on the judgment of participating doctors and other health care service providers.
However, an HMO can deny certain types of services based on cost, the likelihood of a successful outcome, or status of the treatment as experimental or in a clinical testing environment. An HMO may also restrict the amount of time a recuperating patient may spend in a hospital, resulting in allegations of forced early discharge and subsequent worsening of a health condition.
As a result, some states now permit members to sue HMOs directly for medical malpractice. The exposure increases if the HMO fails to conduct thorough background checks to verify employees' credentials and education, if non-professional workers are allowed to make decisions that only professionals should make, or if error checking procedures are ignored or are inadequate.
Workers compensation exposures are primarily those of an office. Since office work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations.
There may also be off-premises travel, which can result in injuries from slips and falls, assaults, or vehicular or aviation accidents.
Property exposure is limited to an office. Extensive phone and computer networks are in place for the handling of claims. Ignition sources include adequacy of electric wiring, heating and air conditioning systems, wear and overheating of equipment. Smoking must be prohibited.
There may be storage of client or medical staff information in paper form, although these are now often digital instead of paper format. Paper should be stored in fireproof cabinets.
Fire suppression systems can result in damage to computers and electronic systems. Computers and other electronic equipment may be targets for theft.
Inland marine exposures are from accounts receivable for credit payments, computers, and valuable papers and records for members' and carriers' information. Power failure and power surges are potentially severe hazards.
Backups of all records must be made regularly and stored off-site. Due to the confidentiality of medical records, adequate security features should be taken to prevent unauthorized access to paper or computerized information.
Crime exposure is from employee dishonesty, computer fraud, and forgery. Employees have access to members' personal medical information. Potential for theft, directly or through identity theft, is great. Background checks should be conducted on all employees.
Hazards increase without monitoring procedures and securing all records to prevent unauthorized access. There must be a separation of duties between persons handling deposits and disbursements and reconciling bank statements.
All activities must be carefully monitored with internal audit systems and checks and balances in place.
Business auto exposure is generally limited to hired and non-owned. If the company supplies vehicles to employees for sales or other types of calls, there should be written procedures in place regarding personal use by employees and their family members.
All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location.
What Does Health Maintenance Organization Insurance Cover & Pay For?
Health Maintenance Organizations (HMOs) can be sued for a variety of reasons, including:
- Denial of Coverage: HMOs may be sued if they deny coverage for a necessary medical treatment or procedure, resulting in harm or injury to the patient.
- Medical Malpractice: HMOs may be sued for medical malpractice if a physician or other healthcare provider employed by the HMO provides substandard or negligent medical care, resulting in harm or injury to the patient.
- Breach of Contract: HMOs may be sued for breach of contract if they fail to fulfill their obligations under a contract with a patient, such as failing to provide promised medical services.
- Negligent Hiring or Supervision: HMOs may be sued if they negligently hire or supervise healthcare providers who then provide substandard medical care.
- Misrepresentation: HMOs may be sued for misrepresentation if they make false or misleading statements about the medical services they provide.
Insurance can protect HMOs from these lawsuits in several ways. For example:
Professional Liability Insurance: This type of insurance, also known as malpractice insurance, provides coverage for claims related to medical malpractice. If an HMO is sued for medical malpractice, their professional liability insurance can help cover the costs of legal defense and any damages awarded to the plaintiff.
General Liability Insurance: This type of insurance provides coverage for a variety of claims, including those related to bodily injury, property damage, and personal injury. If an HMO is sued for any of the reasons listed above, their general liability insurance can help cover the costs of legal defense and any damages awarded to the plaintiff.
Directors and Officers Insurance: This type of insurance provides coverage for claims against the directors and officers of an organization. If an HMO is sued for breach of contract or misrepresentation, their directors and officers insurance can help cover the costs of legal defense and any damages awarded to the plaintiff.
Overall, insurance can help protect HMOs from the financial consequences of lawsuits by covering the costs of legal defense and any damages awarded to the plaintiff.
Commercial Insurance And Business Industry Classification
- SIC CODE: 6324 Hospital And Medical Service Plans
- NAICS CODE: 622210 Psychiatric and Substance Abuse Hospitals
- Suggested Workers Compensation Code(s): 8829 Nursing or Convalescent Home - All Employees
Description for 6324: Hospital And Medical Service Plans
Division H: Finance, Insurance, And Real Estate | Major Group 63: Insurance Carriers | Industry Group 632: Accident And Health Insurance And Medical
6324 Hospital And Medical Service Plans: Establishments primarily engaged in providing hospital, medical, and other health services to subscribers or members in accordance with prearranged agreements or service plans. Generally, these service plans provide benefits to subscribers or members in return for specified subscription charges. The plans may be through a contract under which a participating hospital or physician agrees to render the covered services without charging any additional fees. Other plans provide for partial indemnity and service benefits. Also included in this industry are separate establishments of health maintenance organizations which provide medical insurance. Establishments providing these services through their own facilities or employed physicians are classified in Major Group 80.
- Dental insurance (providing services by contracts with health
- Group hospitalization plans
- Hospital and medical service plans
- Medical service plans
Health Maintenance Organization Insurance - The Bottom Line
To learn more about the exact types of health maintenance organization insurance policies needed, what coverage limits you should carry and the associated premiums - consult with a reputable broker that is experienced in commercial insurance.
Additional Resources For Medical Insurance
Discover small business insurance for medical and dental professionals. Medical malpractice insurance is a type of professional liability that protects health care professionals from liability causing in bodily injury, medical expenses and property damage.
- Ambulatory Surgical Center
- Art Therapy
- Assisted Living Facilities
- Blood Banks
- Dental Lab
- Dental Office
- Diagnostic Imaging Centers
- Health Maintenance Organizations
- Healthcare Facilities
- Home Medical Equipment Dealers
- Marriage & Family Therapy
- Medical Clinics
- Medical Laboratories
- Medical Marijuana Dispensary
- Medical Practice
- Medical, Surgical & Hospital Supply Store
- Mental Health Counseling
- Nurse Registry
- Occupational Therapy
- Osteopathic Physicians
- Physicians Office
- Plastic Surgeons
- Skilled Nursing Facilities
- Speech Therapy
- Substance Abuse Counseling
- Telemedicine Business Insurance
- Specialty Medical Centers And Clinics
- Specialty Medical Malpractice
The medical industry is a crucial sector that plays a vital role in ensuring the health and well-being of individuals. It is a complex and highly regulated industry that requires specialized knowledge and expertise. As a result, the medical industry is exposed to a variety of risks, including legal and financial liabilities.
One of the main reasons why the medical industry needs commercial insurance is to protect against medical malpractice. Medical malpractice occurs when a healthcare provider deviates from the standard of care and causes harm to a patient. It can lead to costly lawsuits and significant financial losses for the healthcare provider. Business insurance helps to cover these costs and protect the financial stability of the medical facility.
Another reason the medical industry needs business insurance is to cover the cost of regulatory fines and penalties. The medical industry is subject to strict regulations and any violations can result in significant fines and penalties. Business insurance helps to cover these costs and protect the financial stability of the medical practice or facility.
In addition, the medical industry is vulnerable to data breaches and cyber attacks. These incidents can result in significant financial losses and reputational damage for the medical facility. Business insurance helps to cover the cost of recovering from a data breach or cyber attack and helps to protect the reputation of the medical facility or practice.
Overall, business malpractice insurance is an essential component of the medical industry. It helps to protect against the financial and reputational risks associated with the medical industry and helps to ensure the financial stability and success of medical practices and facilities.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Physicians and Surgeons Floater, Valuable Papers and Records, General Liability, Employee Benefits, Professional, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Equipment Breakdown, Flood, Leasehold Interest, Real Property Legal Liability, Computer Fraud, Forgery, Cyber Liability, Employment-related Practices, Business Automobile Liability and Physical Damage and Stop Gap Liability.