How to Bear Going Bare - a step-by-step guide June 2003 By: Scott Wells, CFP and       Marc Singer, CFP Many physicians are now receiving their July 1st renewal notices with shock and trepidation.  If you have decided that your new rate for malpractice insurance is not feasible, then you need to ask, "How do I self-insure?" We have often stated that $40,000 for $250,000 of coverage is the breakeven threshold for when you should consider going bare. In a prior issue of this newsletter, we discussed the concept that going bare makes you a significantly less attractive target in a lawsuit. Here are some practical, important steps to consider once you self-insure: 1.  Notify the Florida Department of Health, Board of Medicine with "Change of Status Form" DH-MQA 1014. Check box 5, which states that you do not carry malpractice insurance and agree to be financially responsible. This form is available on our website.    2.  Post a sign in your lobby notifying patients before they are seen that you are self-insured. We have seen this critical step be a key issue in several court cases, where the patient claimed the doctor committed financial fraud by not having a sign. From a practice management standpoint, we would recommend that the patient sign a consent form reiterating the notificaútion. The exact language for the sign is also on our website.  3.  Review your patient charts and report even remote potential claims to your current insurer prior to the expiration of the policy. With a claims-made policy, the insurance company is required to cover these events should they turn into actual lawsuits. We recommend reporting not more than  5 - 10 cases. Reporting hundreds of potential patient claims ("claims dumping") is not appropriate and may be rejected immediately. "Going bare without proper asset protection is like having surgery without anesthesia" 4.  Managed care plans: Consider if you should notify the insurance companies of your change in status. This is a gray area since many contracts require notification, but may terminate you when you act. We have found that the majority of companies are responding favorably, albeit slowly, to the new reality that most high-risk specialists are going bare. Some doctors have taken a "don't ask, don’t tell" approach with managed care plans until their policies are clarified. In some cases, we have used a customized letter of credit to satisfy their concerns. You should consult with your healthcare attorney if you are unsure. 5.  We are adamant in the belief that any physician who undertakes the responsibility of self-insuring must combine good fundamental financial planning with a solid asset protection framework. This can be accomplished with little cost in very little time but does require you take action. Going bare without proper asset protection is like having surgery without anesthesia. We have seen many doctors procrastinate on this step, with negative consequences.     Other methods of self-insuring: We do not recommend the method of self-insuring that requires posting a bond or setting up an escrow account. State law requires a $250,000 / $750,000 amount be set aside. However, to be compliant with the statute, one would need to put the maximum ($750,000) into these vehicles.  Having these funds available for a plaintiff attorney may increase your probability of being sued. Going bare is easy; bearing sleepless nights is the difficult part. Making the transition to self-insurance can be eased through thoughtful planning and preparation.  Singer Xenos does not provide legal advice. Please consult with your own legal counsel.