Be Your Own Insurance Spokesperson

The insurance industry is constantly reminding people to review their current insurance premiums and do a comparison to see whether there’s a better deal out there. Many of the national carriers have spokespeople or mascots who poke fun at all that can go wrong if you fail periodically reevaluate your insurance plan for adequate coverage. No such spokespeople or mascots exist to give reminders to hospitals.

The regulations allow hospitals to purchase coverage from a commercial company, be self-insured or a combination of the two. This regulation applies to health insurance coverage for employees, malpractice insurance for physicians, or general liability coverage for the entity. The selection of one kind over another is only required to be “reasonable and prudent” for the organization.

The regulations also recommend the hospital should conduct a comparative analysis which demonstrates that the provider’s choice results in a reasonable cost for the coverage offered and that the extent of coverage is consistent with sound management practices. This analysis should be performed on a periodic basis, usually every three to five years, to assure consistent application of the prudent buyer principle and to properly monitor the cost effectiveness of the insuring method being applied. 

Tip #31:

Periodically conduct a comparative analysis of your health insurance to ensure your facility is meeting the “prudent buyer” principle (CMS Pub 15-1, Section 2162). Further guidance can be found on the Centers for Medicare and Medicaid Services (CMS) website:

Provider Reimbursement Manual 15-1

Questions? Please contact Marie White at 612.253.6546 or