E and O Insurance

What is E&O Insurance and why would you need it for your Medical Billing Service? Very good question! E&O Insurance, or errors and omissions insurance would cover your business for any claims made against you that arise as a question of your performance as a billing service. So, if you have a provider that decides to sue you for money that they feel that they lost as a direct result of you either doing something wrong, or not doing something that you were supposed to do, the E&O Insurance would cover you.

You may be thinking, as we did in the beginning, "Oh, I'm just getting started. I don't even have any clients yet. I'm going to do a good job, this won't even ever apply to me." Well, people don't ever plan on getting in an auto accident either but they sure are happy they had collision insurance when they did. People never plan on anything happening on their property, but when their tree falls on someone else's house, they are pretty happy to know they have homeowner's insurance. Just like all of the other insurances we have, E&O, or property liability insurance is only used when something bad happens. That's why we decided to add this section to the contract book!

You can never foresee all the things that can go wrong, and hopefully they never will go wrong. We can honestly say that we hope that you never need the E&O insurance and wonder if you really did need it in the first place. However, for those occasions that do arise where the E&O insurance comes in to save your business, we will be happy that we encouraged you to get it.

The costs and regulations vary from state to state. Some states require extra coverage. You should shop around to find what is right for you in the state that you are located. You do not want to go strictly on price, you need to compare the details of the policy as well. See what coverage you will need for your business. You may need to modify the policy as your business grows. Since I'm still not sure that we've convinced you of the need for O&E insurance, here is a real situation that happened where the O&E insurance saved the owner of the Medical Billing Service:

The names have been changed to protect the innocent!

I have a friend (really I do) with a Billing Service in Florida. One of her first accounts was an outpatient addiction facility that was just starting up. He signed a contract with her for the billing and she outsourced the credentialing to us. The provider, an MD with a colorful past, was a little uhhh, unstable. He was difficult for her to work with and didn't listen to her advice. After several months of frustration, she gave him notice that she was terminating the contract and would no longer bill for him. She did everything according to the rules of the termination and ended the contract.

The practice management system she used was a web based system that charged a monthly fee for each provider. That was part of her contract, the provider covered that fee. She had notified the provider in writing that he would no longer have access to the system as of November 1st if he didn't pay the fee. Several notifications were sent. I'm sure you've guessed that the provider did not pay the fee, or respond to any of the notifications.

A month after the termination, she was served with papers. He was suing her stating she caused him to lose $600,000.00 in patient balances because she denied him access to his account information. The ironic thing was that one of the main reasons she terminated her services was because he refused to charge the patients for their portion.

Well, you may be thinking "that's crazy, she notified him". I'm sure you're thinking other things as well. But bottom line, she had to defend herself and her actions. Without E&O insurance, her business could have been lost because let's face it, our judicial system is not always perfect.

Anyway, if you ever do find yourself in court and at the mercy of a jury, you have to remember, those jurors are not medical billers. They may not understand what your business is, and what the job of medical billing entails. So you are at the mercy of your lawyer's (who also doesn't understand medical billing) ability to explain to them what happened and why you are not to blame. E&O insurance protects you from losing everything if you ever find yourself in a situation where your business may be on the line.

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