This month's column provides an overview of how members working in a Family Health Network (FHN), Family Health Organization (FHO), or other capitation arrangement are compensated by their insurance provider in the event of a disability.
Sun Life Financial has prepared the following outline that describes how claims are administered for family physicians with OMA Group Disability Income (DI) and/or Professional Overhead Expense (POE) Insurance.
Capitation is a funding arrangement encompassing a group of medical professionals. The FHN/FHO Agreement requires that the Group, not each physician, provide the services to the rostered patients.
Members of a FHN/FHO are fully entitled to receive disability benefits under the OMA plan. The amount of their entitlement depends upon the type of claim (total or partial disability) and the type of contract under which they are insured (DI or POE). Regardless, the overriding principle is to provide income replacement or reimbursement to all eligible members who suffer a financial loss as a consequence of medical incapacity.
For Disability Income, a physician who becomes totally disabled* will receive full benefits, regardless of any other (financial) consideration under the FHN/FHO. This outcome is a result of contract wording, which directs that full benefits be paid when the insured member is a) unable to perform the essential duties of his or her regular occupation, or b) unable to perform the essential duties of his or her regular occupation, and not engaged in any other gainful occupation.
Members may also be entitled to residual (partial) disability benefits when they are not totally disabled but suffer a loss of income of at least 20% as a result of sickness or illness. Revenue normally given to the partially disabled physician under the terms of the capitation agreement would instead reimburse locums and other physicians in the FHN/FHO, as well as meet the disabled physician's ongoing practice expense obligations.
Once all these expenses are accounted for, any remaining revenue would be used to help determine the residually disabled physician's net earnings. It is this bottom-line figure that would be used to determine the physician's loss (when compared against his or her pre-disability net after-tax income). By going through these steps to determine the amount of revenue and expenses incurred, the residually disabled physician participating in a FHN/FHO would be treated in exactly the same manner as his or her colleagues who are not part of a network.
The amount a physician may receive from a POE contract might be reduced based on his or her participation in a FHN/FHO.
Professional Overhead Expense coverage is different from Disability Income in that it is a reimbursement policy; that is, it is designed to provide the disabled physician with reimbursement for ongoing business expenses for which the physician remains responsible, therefore:
* "Total disability" or "totally disabled" shall mean that the insured member is unable to perform the essential duties of his or her regular occupation as a result of sickness or injury, is under the regular care of a physician, and is not engaged in any other gainful occupation.