$2M Professional Liability (E&O) Insurance for Credentialing Services

If a hospital or health plan asks your credentialing service for $2M, the clause usually means $2M per claim and $2M per policy year, which a $1M/$2M policy does not meet.

What does a $2M requirement mean for credentialing services?

Professional Liability (E&O, short for Errors and Omissions) covers claims that your work caused a client a financial loss, such as mistakes in checking, filing or tracking provider records. A typical clause looks like this:

• Per claim: the most the policy pays for any one claim. Here, $2M.
• Aggregate: the most it pays for all claims in one policy year. Here, also $2M.
• The common mix-up: $2M/$2M and $1M/$2M look alike. The first number is per claim. A $2M/$2M policy meets the sample clause above. A $1M/$2M policy does not.
• Claims-made: the policy covers claims made and reported while it is active, for work on or after the retroactive date (the earliest work date the policy covers).

Who asks credentialing services for $2M?

Credentialing means checking that a clinician is licensed, trained and approved to work with a hospital or health plan. You are a non-clinical vendor. Licensed clinicians need medical malpractice, a different policy. Requests for $2M may come from:

• Hospital systems that send out privileging (approval to treat patients) work.
• Health plans that hire you to check provider files. This is called delegated credentialing.
• Larger vendors (prime contractors) that pass work to smaller firms.

Some smaller practices may accept $1M (see $1M Professional Liability for credentialing services). Some large plans may ask for $3M (see $3M Professional Liability for credentialing services). A limit of $3M or more is rarely found online. Morrow can help you find it. Here is a hypothetical example of why buyers want more:

• A firm misses an expired license. A health plan says it paid claims for a provider who should not have been approved, and asks for repayment (called recoupment). Whether a policy covers a repayment demand depends on its wording.

How is $2M built?

At $2M, the limit is usually one primary policy, which pays first. Excess layers (extra policies stacked above to raise the limit) are usually not needed. Credentialing firms are often written on a Miscellaneous Professional Liability (Miscellaneous E&O, a general form for service businesses) form. If you sell credentialing software, you may need Technology E&O instead (see Technology E&O vs Miscellaneous E&O). See also Professional Liability for healthcare vendors.

A commercial umbrella (extra liability cover that sits above your general liability policy) almost never covers Professional Liability, so it usually cannot get you to $2M. Clients usually cannot be added as an additional insured (a person or company given direct rights under your policy) on Professional Liability. A policy may allow it in some cases, but only if its wording says so. If your contract requires it, tell Morrow before you buy. A certificate of insurance, a one-page summary of your coverage, gives the client no rights under the policy.

What will underwriters ask for?

An underwriter is the person at the insurer who decides whether to offer coverage. Expect questions like these:

• Your services: payer enrollment, privileging, revalidation or full verification.
• Your revenue, your yearly volume of providers and applications, and whether your clients are practices, hospitals or health plans.
• How you verify records. Primary source verification means checking a license or certification directly with the body that issued it.
• How you track deadlines and federal exclusion lists (lists of providers barred from government programs).
• Prior claims and your retroactive date.

What affects the cost?

• Services offered. Delegated credentialing for a health plan may carry more risk than basic enrollment help.
• Volume and client type. More providers and larger clients may mean larger losses.
• Claims history and controls. Past claims and checks such as second reviews may affect how an underwriter views your firm.
• Retention and defense terms. A higher retention (what you pay on each claim before the policy pays, like a deductible) may lower the premium (the price of the policy).

Frequently asked questions

I have $1M Professional Liability and my contract asks for $2M. What should I do?

Request new $2M quotes through Morrow, and ask for quotes that keep your retroactive date and prior acts coverage (cover for work done before the new policy started) where the market allows. Keep your current policy until the new one starts. Report known incidents to your current carrier before that policy ends.

Is $1M/$2M enough if my contract says $2M per claim?

Usually not. A $1M/$2M policy pays at most $1M for any one claim, so it may not meet a clause that asks for $2M per claim. Send Morrow the clause and your declarations page so the requirement can be checked.

Will a hospital or health plan also ask credentialing services for Cyber coverage?

Some do, so check your contract. You hold provider data such as Social Security numbers. Cyber usually covers data breaches and is a separate policy.

What if a claim is made after my contract ends?

The policy must be active when the claim is made, because Professional Liability is almost always claims-made. Many clauses ask you to keep coverage for a set time after the contract ends.

This article is general information, not legal advice or a coverage determination. Coverage depends on the actual policy wording, carrier underwriting and your contract terms.