Frequently Asked Questions
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Frequently Asked Question Pages
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General Information About The Fund

The Board of Governors of the Health Care Stabilization Fund welcomes you to the Kansas health care delivery system. Information presented in this web site will help you understand:

• the Health Care Stabilization Fund;

• which health care providers participate in the Health Care Stabilization Fund;

• how health care providers participate in the Health Care Stabilization Fund;

• what coverage is provided by the Health Care Stabilization Fund; and,

• where you can get additional assistance with any matter related to the basic professional liability insurance or the Health Care Stabilization Fund.

Administration of the Health Care Stabilization Fund is the responsibility of the Fund Board of Governors. This board is comprised of ten members who are representatives of the health care providers who participate in the Health Care Stabilization Fund. In their administration of the Fund, every attempt is made to maximize its efficiency, effectiveness and service to its participating health care providers.

Any health care provider who needs additional assistance in understanding or meeting the requirements of this Kansas law is encouraged to contact the Topeka office of the Fund.

Brief History Of The Fund

Kansas health care providers were confronted with medical professional liability problems in the mid 1970’s that resulted from changes in the legal, medical, social and economic environments. The impact of changes adversely affected the availability or cost of medical professional liability coverage for certain classes of health care providers. In 1975 and 1976, representatives of the Kansas health care provider groups, the Insurance Department and the legislature worked together to resolve these problems by creating the Health Care Provider Insurance Availability Act. This 1976 law included the following major provisions:

• created the Health Care Stabilization Fund to provide excess professional liability coverage for defined health care providers;

• mandated a basic professional liability insurance requirement for defined health care providers;

• established an availability plan to provide the required basic professional liability insurance coverage for those health care providers who could not obtain such coverage from one of the commercial insurers.

Although the availability problems do not exist today, the unpredictable nature of medical professional liability coverage availability, the unique beneficial coverage provisions of the Fund, and the actuarial soundness have warranted the continuation of the Kansas Health Care Stabilization Fund.

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Definition of Health Care Providers

The Fund law includes the following categories of health care providers in its definition of health care provider:

• Medical Doctors and Doctors of Osteopathy who are licensed or hold a temporary permit issued by the Kansas Board of Healing Arts

• Persons engaged in a postgraduate training program which is approved by the Kansas Board of Healing Arts

• Chiropractors

• Podiatrists

• Registered Nurse Anesthetists, including temporary authorizations

• Medical Care Facilities (special hospitals, general hospitals, surgical centers or recuperation centers)

• Mental Health Clinics or Centers

• Psychiatric Hospitals (selected facilities only)

• Dentists who have been certified by the Kansas Board of Healing Arts to administer anesthetics

• Kansas Professional Corporations or Partnerships of defined health care providers

• Kansas Limited Liability Companies organized for the purpose of rendering professional services by its health care provider members

• Kansas not-for-profit corporations organized for the purpose of rendering professional services by persons who are health care providers

• A nonprofit corporation organized to administer the graduate medical education programs of community hospitals or medical care facilities affiliated with the university of Kansas school of medicine

Health care providers, in accordance with the provisions of the Fund law, are required to maintain basic professional liability insurance coverage, pay the Fund surcharge and are eligible for professional liability coverage from the Fund. Please refer to subsection (f) of K.S.A. 2001 Supp. 40-3401 for the full definition of the term "health care provider".

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Fund Compliance Guidelines For Health Care Providers

Health care providers who engage in rendering professional services in Kansas are subject to the basic professional liability coverage and Fund surcharge requirements. This applies to health care providers who are Kansas residents and to non-resident health care providers who are rendering professional services in Kansas.

• Resident health care providers obtain the basic professional liability insurance coverage from an insurer that is authorized to write business in Kansas or the Health Care Provider Insurance Availability Plan. The insurer is responsible for calculating the amount of surcharge based on the Fund coverage limit selected by the provider, the rating classification code of the provider and the number of years the provider has been in compliance with the Fund. The insurer collects the Fund surcharge payment along with the premium for the basic professional liability insurance coverage and remits the surcharge to the Fund without any reductions for commissions, collection or processing expenses.

• Non-resident health care providers who render professional services in Kansas comply with the Fund directly by completing the Fund non-resident compliance form. The surcharge payment is submitted to the Fund with the completed non-resident compliance form. Individual non-residents, or their representatives may contact the Health Care Stabilization Fund to obtain the necessary compliance form and related instructions.

• Health care providers who live in Kansas and hold an active Kansas license or registration, but practice solely in another state may also be required to comply with the Fund. Providers are afforded Fund coverage for their out-of-state practice even though they do not render services in Kansas. If, however, you do not wish to maintain Fund compliance or pay the surcharge, you may discontinue your Kansas professional license or registration, or change your Kansas licensing status in a manner that is acceptable to your licensing agency.

• Health care providers that are denied basic coverage from the voluntary insurance market may obtain basic coverage from the Kansas Health Care Provider Insurance Availability Plan.

These general guidelines should be helpful to most health care providers; however, health care providers may call or write to the Fund for additional assistance. Our telephone number and address are on the home page of this web site. Click here for a listing of state professional associations and Kansas licensing agencies you may find helpful in resolving your individual situation.

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What Coverage Is Provided By The Fund?

Excess professional liability coverage is the primary function of the Fund. Three different Fund excess coverage levels are available to health care providers and discussed in detail in other sections of the FAQs.

Typically, the Fund’s excess professional liability coverage is “triggered” when the basic professional liability insurer’s projected loss exposure exceeds $200,000; however, the Fund’s legal staff monitors all claims and suits filed against Kansas health care providers and attends claim settlement conferences even though the Fund’s coverage has not yet been triggered. Because the Fund monitors all professional liability claims brought against health care providers, our legal staff can often assist providers who become involved in a professional liability claim.

Each of the available Fund coverage limits are comprised of two dollar amounts. The Fund coverage limits are $100,000/$300,000; $300,000/ $900,000 or $800,000/$2,400,000. Using the highest Fund coverage as an example, the first dollar amount (e.g., $800,000) is the amount of loss payment available for each claim. The second dollar amount (e.g., $2,400,000) is the total annual amount of loss payments for all claims made during a Fund coverage year. Fund coverage limits are always excess over any other available professional liability coverage. Claim expenses and defense costs are covered by the Fund without any limitation.

In addition to this primary purpose, the Fund law also provides for the following health care provider professional liability coverage features:

• Requires all basic professional liability insurers to include prior acts coverage in their basic professional liability insurance coverage. This provision of the law eliminates the need for Kansas health care providers to purchase reporting endorsement coverage (also known as “tail” coverage) when changing basic professional liability insurers.

• Requires that all basic professional liability insurers provide professional liability insurance for the overall or total professional services rendered by a Kansas health care provider. (In most other states, insurers are allowed to sell professional liability policies which may restrict the professional liability coverage to a specific location or the professional services rendered for a specific employer. In other states, and prior to the existence of the Kansas Fund law, many health care providers were required to maintain two or more professional liability insurance policies in order to cover their total professional liability exposures.)  Note:  Kansas resident health care providers rendering professional services outside of Kansas or in another country should check with their basic coverage insurance company.  Some insurance companies have included a "coverage territorial limitation" in their policy form.  Please refer to the following newsletter article for more information:  September 2003.  As pointed out in the newsletter article, for an active health care provider, the Fund must have basic coverage in effect before the Fund becomes available to the health care provider.

• Fund “tail” coverage for qualified inactive health care providers is an important feature of the Fund. This coverage feature eliminates the need for most health care providers to purchase “tail” coverage for their discontinued basic professional liability insurance when they become inactive health care providers in Kansas.

• The Fund law also provides special self-insurance coverage provisions for the full-time faculty members, foundations and individuals engaged in the residency training programs of the University of Kansas Medical Center and certain affiliated programs.

• The Fund provides the “financial back-up” for the Health Care Provider Insurance Availability Plan. This availability plan provides the required basic coverage for those health care providers who can not locate the required basic professional liability insurance from commercial insurers.

The above coverage features of the Fund are often overlooked by health care providers. The benefits of these coverage features and other provisions are key reasons why the Fund continues to exist. Without the presence of the Fund, health care providers would be confronted with basic professional liability coverage issues, including claims made tail coverage problems.

As of December 2003:  Our professional liability insurance market is measurably reduced from 2001 and earlier.  Five insurance companies are now providing the required basic professional liability insurance for approximately 80% of our health care providers.  Some health care providers are confronted with only one or two insurance companies that are willing to review applications for coverage.  This has resulted in more than 600 health care providers finding it necessary to obtain their basic coverage from the Health Care Provider Insurance Availability Plan.  Two years ago the Availability Plan was providing coverage to about 225 providers.  There is a listing of basic coverage insurance companies, with contact information, on the Insurance Companies page of this site.

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The Missouri Surcharge Rate Modification Factor

The FY2008 Missouri surcharge rating factor has been changed from 20% to 25% (effective for new and renewal Fund coverage records starting on and after July 1, 2007).  This change was adopted by the Fund Board of Governors based on the evaluation and recommendation of the Towers-Perin Tillinghast (St. Louis, Mo. actuarial firm).  The following comments are from the April , 2007 actuarial review:

• "The data suggests that the 20% surcharge should actually be higher (approximately 30%).", Finding, Missouri Surcharge, March 1, 2007 presentation to the Board of Governors.
• "The Board has also elected to increase the additional surcharge applicable to Kansas residents who are licensed and render professional services in Missouri.  The additional surcharge is increasing from 20% to 25%.  The decision was based on actual Fund data which shows that the providers who receive the Missouri surcharge account for approximately 20.2% of Fund revenue in fiscal years 2004-2006.  However, these providers have accounted for 22.4% of paid losses and expenses, and 21.8% of current loss reserves, from policies issued in fiscal year 2001 through fiscal year 2007.", actuarial review dated March 20, 2007.

Click here for the examples of the change in Fund surcharge for resident health care providers who are licensed and render professional services in Missouri.

The following information is being continued from previous postings on the web page:

This update message was posted to this site on July 25, 2000: The July 1, 2000 effective date for the Missouri surcharge rating factor has been implemented. Since the first announcement of this surcharge rating factor in April of 1999, the Fund provided information to health care providers via newsletters, presentations to the Kansas City area medical societies, this Internet site and responded to approximately fifteen written letters or e-mail inquiries.
The Fund Board of Governors and staff member of the Fund realize that no health care provider wishes to accept surcharge cost increases or finds it easy to absorb increases in surcharge costs. It is the hope of the Board of Governors and Fund staff members that those Kansas resident health care providers who are continuing to practice in Missouri understand the reasons for the additional surcharge cost. If not, those providers may wish to review the following information.

FAQs About The Additional 20% Missouri Surcharge Rate Modification Factor
The following are questions that have been asked regarding this surcharge rating modification factor, followed by the answer that was furnished by the Fund.

Why is the Fund charging an additional surcharge amount for those Kansas resident health care providers who are licensed and rendering professional services in Missouri?
ANSWER: Both the April 1999 and the October 1999 newsletters included articles regarding this change which becomes effective July 1, 2000. The following is a summary of other supporting considerations:

• Independent actuarial recommendation

• Equity of surcharge payments for health care providers who do not practice outside of Kansas

• Legal climate differences in Missouri

• Average loss payments in Missouri greater than Kansas

• Number of Missouri cases increasing

What health care providers will be required to pay the additional Missouri surcharge rate modification amount?
ANSWER: Kansas resident health care providers who are licensed and rendering professional services in Missouri. 

Would it not be more reasonable to apply the 20% additional Fund surcharge modification factor only when the Kansas resident health care provider rendered more than a specified percentage of their total professional services in Missouri?
ANSWER: First, there is no standard percent of practice rule being used uniformly by all insurance companies. It is probable that some insurance companies apply the highest premium rate applicable whenever the insured is practicing in more than one rating territory or state.
Furthermore, there is no written uniform rule or procedure to follow for determining how to calculate the percent of practice between rating territories. Would it be based on time spent in each state? Number of patients seen in each state? Percent of income derived from each state? Should there be different percentages based on the type or kind of services (e.g., surgical v. non-surgical) being rendered in Missouri? Or some other method?
Second, if an acceptable percentage threshold could be adopted, a modification factor larger than 20% may be needed to pay for the increased losses stemming from those providers who were below the threshold percentage.
Third, health care providers who practice less than the specified percentage threshold in Missouri are not immune from being named in a claim or suit in Missouri. Also, they are not removed from the higher Missouri loss potentials should they be named in such a claim or suit arising from an alleged injury occurring in Missouri.
Fourth, any professional service rendered in Missouri by a Kansas resident health care provider exposes the Fund to the higher Missouri loss costs should an alleged injury occur from that professional service.

What is the additional Missouri surcharge rate modification factor?
ANSWER: 20% for Kansas resident health care providers who are licensed and rendering professional services in Missouri. The additional 20% would be added to the amount shown in the surcharge rates published by the Fund.
For example, if the published Fund rate for the individual is $500, then add $100 (20% of the $500) for being licensed and rendering professional services in Missouri for a total of $600. The following table has some addition examples.

When does the additional 20% Missouri surcharge rating factor become effective?
ANSWER: The added Missouri surcharge rate modification factor will be effective for basic professional liability insurance policies which have effective or renewal dates on or after July 1, 2000. If the provider's annual renewal date is September 1st of each year, the additional surcharge amount would be added to that provider's September 1, 2000 to September 1, 2001 Fund compliance period.

Why are physicians who are practicing in other border states not being subjected to this rate hike.
ANSWER: The reason that Kansas residents who are practicing in Nebraska, Colorado or Oklahoma are not being required to pay an additional surcharge amount is due to the fact that there has been only one case filed against a Kansas resident who practiced in one of these states since 1994. That one case was filed in Oklahoma and did not require any loss payment from the Fund. During the period of Fiscal Year 1994 to Fiscal Year 1999 there were 207 cases filed in Missouri in which one or more Kansas resident health care providers were named.

What paperwork will I, or my office, receive from the Fund?
ANSWER: It is likely that you will receive a questionnaire (or a supplemental statement to complete with your normal insurance application or renewal application) from your basic professional liability insurer or insurance agent. The Fund will not be sending individual statements or certifications. The Fund will rely on the basic professional liability insurer to collect the information, assign the proper surcharge, collect that amount from the provider and remit the surcharge to the Fund.
Additional information regarding the Missouri surcharge rate modification factor will likely be included in the January 2000 and April 2000 Fund newsletters.

Following added November 10, 2004:  The additional 20% Missouri surcharge rating factor will not be prorated for a portion of the otherwise applicable basic coverage policy period.  This means, for example,  that if a Kansas doctor who did not pay the additional 20% Missouri surcharge rate when their basic coverage policy was renewed and subsequently decides to practice in Missouri, the additional 20% Missouri surcharge factor would be applied to their entire basic coverage policy surcharge for that policy period.  (This is not a change in the related procedures.  It is added for clarification and continuity with the information published in our April 2000 Newsletter and other implementation instructions regarding the additional 20% Missouri surcharge rating factor.)

When might I receive a statement that reflects the increase?
ANSWER: It should be included in the insurance statement or billing that you receive for your basic professional liability coverage which has an effective or renewal date on or after July 1, 2000.

Will the actuarial justification be made available? How?
ANSWER: Yes. Copies of the actuarial report are available. The "actuarial justification" is reflected in the premium rate differentials in existence for the major medical professional liability insurers which utilize reasonably similar policy provisions and write professional liability coverage in both states. There was not a need to supplement this existing premium rate relationship; therefore, statistical loss evaluations were not included in the actuarial report.* Any person may contact our office in writing and request a copy of the latest actuarial report.

*The 1999 actuarial report states, "Internal Tillinghast studies show that Missouri medical malpractice costs are approximately 20% higher than Kansas medical malpractice costs. Based on this data, it would seem reasonable to apply a higher level of surcharges to Kansas residents who practice in Missouri." This notation was added April 10, 2000.

Since there are so many unknowns, will there be a review at some point that might show that the plan is "overstabilized" and money might be returned or surcharge adjusted?
ANSWER: The only significant "unknown" is the actual number of Kansas resident health care providers who are licensed and rendering professional services in Missouri.
The compelling "known" in this situation is that Missouri does not have the same tort reform measures as does Kansas. Medical professional liability loss costs are greater in Missouri than in Kansas as reflected in the premium rate differentials of St. Paul Fire and Marine Insurance Company, The Medical Protective Company and other insurers utilizing reasonably similar policy provisions and writing professional liability coverage in both states.
If future annual reviews of this area of Fund surcharge administration should indicate that professional liability insurance premium rates and other loss cost factors have "leveled" between the two states, then the 20% Missouri Fund surcharge rate modification factor may be lowered to give recognition to those factors.

Is the 20% additional Missouri surcharge modification factor applicable to Kansas professional corporations and other Kansas health care provider entities that render professional services in Missouri?  Please read all of the following, including the most recent change adopted by the Fund Board of Governors on April 7, 2005.
Notice:  Note the change made to be effective on 7-1-03.  This change was first posted to this page on 4-10-03 and announced in our annual surcharge bulletin dated April 16, 2003. This change is based on basic coverage insurers apparently not adjusting their premium cost for professional corporations (and other Fund Class Group 16 Kansas health care provider entities) that are licensed (registered, etc.) and practicing in Missouri. 
ANSWER: UNTIL JUNE 30, 2003 -- No. Health care provider entities continue to pay a percentage surcharge based on the premium cost of their basic coverage. Insurers routinely adjust the premium cost for those Kansas professional associations or other Kansas health care provider entities that are also licensed or registered in Missouri and rendering professional services in Missouri. 
ANSWER:  ON JULY 1, 2003 -- Yes. These Kansas health care provider entities that are licensed (registered, etc.) and practicing in Missouri will also be subject to the 20% additional Fund surcharge payment.

ANSWER:  AS Of April 7, 2005 -- Yes. All  Kansas resident health care providers (individuals, health care provider corporate entities, hospitals, etc.) that are licensed (registered, otherwise authorized,  etc.) and rendering professional services  in Missouri will be subject to the 20% additional Fund surcharge payment.

 Other Supporting Information For Additional Missouri Surcharge Modification Factor

Health Care Stabilization Fund Kansas & Missouri Loss Payments

As of September 1999	JO & WY Counties Kansas	Missouri	% Greater Than Kansas
Average Fund Loss Payment	$218,170	$296,366	+36%

Some Basic Legal Differences Between Kansas & Missouri Cases

• Venue - Social-economic demographics of Jackson County, Missouri

• Cap on Non-Economic Damages - Kansas is $250,000; Missouri is approximately $515,000 per defendant (As of September 1999)

• Joint and Several Liability - Vicarious liability abrogated in Kansas

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