Kansas Health Care Stabilization Fund Changes
Kansas Health Care Stabilization Fund Changes
On May 19, Kansas governor Laura Kelly signed Senate Bill 78 which increases the base liability insurance that defined health care providers are required to obtain from an insurer. The current base liability of $200,000 per claim changes to $500,000 for all new health care providers and policies that renew on and after January 1, 2022. All defined health care providers will be required to obtain base liability coverage of $500,000 purchased after that date.
For your reference, defined healthcare providers can be found at this link https://hcsf.kansas.gov/providers/defined-health-care-providers/
The new law also changes the current 3 options that are offered by the Stabilization Fund to just 2 options as shown below:
Current Health Care Stabilization Fund options available to health care providers through 12-31-2021
➢ Current Option 1. $100,000 single judgment or settlement, $300,000 aggregate annual limitation, through 12-31-2021
➢ Current Option 2. $300,000 single judgment or settlement, $900,000 aggregate annual limitation, through 12-31-2021
➢ Current Option 3. $800,000 single judgment or settlement, $2,400,000 aggregate annual limitation, through 12-31-2021
Future Health Care Stabilization Fund options available to health care providers effective January 1, 2022
➢ Option 1. $500,000 single judgment or settlement, $1,500,000 aggregate annual limitation, available January 1, 2022
➢ Option 2. $1,500,000 single judgment or settlement, $4,500,000 aggregate annual limitation, available January 1, 2022
The Kansas Health Care Stabilization Fund Board of Governors will be considering surcharge rates that will take effect on and after January 1, 2022. We will be sending a Bulletin with the new surcharge rates as this information becomes available.
What we know/expect
➢ Claim severity across the country and in Kansas has been increasing. We believe this is one of the main factors for this change in fund limits at this time.
➢ We anticipate that most all carriers in the medical professional liability space will be looking at minimal RATE increases. Premium is different than rate of course, and each specialty will be different.
➢ The Health Care Stabilization Fund sets surcharge pricing. They have indicated it could be mid-September before they provide all surcharge details.
➢ As mentioned above, we anticipate minimal rate increases, however, with the increase in underlying limits from $200,000 to $500,000, there will be premium increase due to the primary carrier taking on more limit. What we have learned so far is that the increase may all come at once, or the premiums will step increase over a five-year period. It will be each carrier’s decision how to handle this.
➢ It is our understanding from the Fund that there will be no split retroactive dates. The incident date will drive what limits the fund will provide. This is a notable change, and one that we will explain in further detail as this progresses.
➢ If your professional coverage renews prior to January 1, 2022, you will be under the current limits and rules with the fund. We will be working on specific claim scenarios with various retro dates, incident dates, and policy term dates to try and clarify this situation as we go forward.
We will be communicating with you as often as we receive updated information, and we are staying on top of this on a weekly basis.
Please call us with any questions or concerns and we are always happy to meet at your convenience.
Fee Insurance Group