Insurance Agency Helps Nonprofits Move to Medicaid Fee-for-Service Model with Less Risk

Nonprofits must start thinking more like businesses to protect themselves in ways they did not have to before, says Richard Skorupksi of MS&H.

Meeker Sharkey & Hurley announced a free program to help nonprofit and healthcare agencies transition to the fee-for-service model recently implemented by New Jersey’s Medicaid program as well as programs throughout the country.

The program includes a webinar, “Medicaid and the Risk to Providers,” featuring Medicaid expert Ivan Punchatz of Ingersoll & Rooney. In addition, MS&H published two special reports: “Insurance Questions for Non-Profits Transitioning to Fee-For-Service” and the “Cyber Liability Risk Reduction Checklist.” MS&H is also offering providers a free review of their cyber insurance coverage. The webinar, reports and cyber analysis are available at

“Nonprofits must start thinking more like businesses to protect themselves in ways they did not have to before,” said Richard Skorupksi, senior vice president, MS&H. “MS&H is helping nonprofits understand how the transition to the fee-for-service model can impact their liability and devastate their finances without the right insurance coverage.”

In the fee-for-service model, income is derived from actual services provided. Previously, nonprofit agencies relied on state and federal contracts that guaranteed an income stream. Now in the fee-for-service model, it will be critically important to have proper business interruption coverage for the potential loss of income arising from a fire or similar loss to a program.

“I tell clients to think of this as ‘disability insurance’ for the agency, so they can generate revenue even if an adverse event prevents them from providing services,” said Skorupski.

Insurance to Protect Nonprofits

Skorupski outlined three areas where nonprofits are vulnerable: protecting their income stream, preparing for an increased focus on Medicaid audits, and determining if the agency has adequate cyber insurance coverage in the event of a breach.

As nonprofit agencies shift to fee-for-service, there will be increased billing to Medicare or Medicaid for services. To help enforce strict regulations from the federal government, private, commission-based audit companies are authorized to pursue potential overpayments and fraud. They often target smaller providers that don’t have the administrative resources of larger providers such as hospitals.

If a nonprofit agency is audited, it can face costly legal fees. Staff time is lost recovering records, answering audit questions, and preparing a defense. If the agency is at fault, it faces substantial fines and penalties. Most professional liability insurance policies do not cover audits and don’t provide coverage…

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