MSL Claims: Top 5 Risks and How We Manage Them

by | Jun 16, 2024

It’s crucial to understand potential risks when dealing with Medical Stop Loss (MSL) claims administration. Your claims department or administrator needs to have mechanisms in place to manage these risks effectively:

Reputational Risk

Mishandling claims can lead to professional liability claims filed against the insurance company and/or MGU as well as the claims administration. Long before it reaches the stage of an E&O claim, your claims department can do significant damage to your reputation as an insurance company or MGU in mishandling claims or simply taking too long to process claims. Do you really to worry about this or would you rather hire a specialist firm to manage your claims allowing you to focus on underwriting? AIS can provide that service to you with a 10-day turnaround guarantee mitigating the potential for reputational damage from poor claims services.

Regulatory Compliance Risk

The MSL claims landscape is regulated by numerous laws and regulations, which can vary by location and change over time. Non-compliance could result in fines, penalties, or reputational damage. AIS navigates this risk by keeping up-to-date with all relevant regulations. Regular internal audits are conducted to ensure all procedures align with these laws, minimizing the risk of non-compliance.

Operational Risk

This pertains to risks arising from operational failures such as process inefficiencies, system failures, or human errors. Operational failures could lead to delays or errors in claim processing, which could cost clients significantly. AIS mitigates this risk by using advanced technologies and best-practice processes to ensure efficient and error-free claim administration. Regular staff training is also conducted to ensure everyone is familiar with correct procedures and protocols.

Financial Risk

The financial outcome of a claim depends on accurate assessment, calculation of payments, and negotiation with healthcare providers. AIS mitigates this risk by employing experienced claims analysts who verify that claims were paid correctly according to the stop loss policy that was underwritten and the approved Plan Document. AIS also leverages advanced data analytics to inform financial decisions and achieve the best possible outcome for our clients.

Fraud Risk

MSL claims administration is not immune to fraud, which could include false or inflated claims. Fraudulent claims can lead to financial losses and reputational damage. AIS uses state-of-the-art fraud detection tools that analyze patterns and discrepancies in claims data to identify potential fraud. All suspicious claims are rigorously investigated by our team, and robust preventative measures are in place to deter potential fraudsters.

Cybersecurity Risk

Medical stop loss claims contain protected health information, which is protected under HIPAA. Data breaches and other cybersecurity incidents are a significant risk. Such incidents could compromise sensitive claimant data, leading to fines, financial liability and significant notification and remediation compensation paid to affected parties. Reputational damage to carriers, but particularly MGUs, who often specialize in this line of coverage and do not have the breadth of operations to recover from this type of incident. AIS takes cybersecurity seriously and employs advanced security measures to protect client data, including encryption, secure data storage, regular system audits, and cybersecurity training for staff.

By recognizing and actively managing these risks, AIS is well-positioned to provide secure, compliant, and efficient MSL claims administration services for our clients. We believe that prevention is key, but we are also fully prepared to handle any issues that arise, ensuring the best possible outcome for every claim.