Report Recommends Phase-Out of Pa. Med Mal Abatement Program

December 8, 2006

Pennsylvania should get out of the medical malpractice insurance business and return the medical malpractice market to the private sector as soon as possible, according to a report.

Insurance Commissioner Diane Koken unveiled the Medical Care Availability and Reduction of Error (Mcare) Commission final report, which offers recommendations on the future of the state’s program the helps pay certain catastrophic medical malpractice claims for doctors and other healthcare providers.

“The commission’s recommendations center on two initiatives,” said Koken. “The first is implementation of a realistic plan to phase out the Commonwealth’s Mcare Fund program and return all medical malpractice insurance coverage to the private market as soon as possible. This is a move that is strongly supported by physicians and hospitals.

“The commission also supports continued use of the public funds that are currently dedicated to the Mcare abatement to keep costs manageable until the Mcare Fund is phased out and then ease the transition and impact on health-care providers as the Mcare Fund is replaced by the private market,” she added.

The commission’s membership included eight private citizen appointees selected by the leaders of the General Assembly as well as the Koken and the state’s budget and revenue secretaries.

Highlights of the commission’s recommendations include:

• To continue the state’s Mcare abatement program which subsidizes health care providers’ catastrophic malpractice claims payments until Mcare coverage has been phased out. The Mcare abatement program was initially proposed by Governor Edward G. Rendell in 2003 to encourage health care providers to continue practicing in the Commonwealth and has defrayed nearly $1 billion of malpractice expenses for Pennsylvania health care providers;

• To privatize Mcare malpractice coverage as directed under the Act 13 of 2002 as soon as is feasible, ideally in the period between 2008 and 2011. Currently, most health care providers are required to buy $1 million in malpractice coverage – the first $500,000 from the private market and the remaining $500,000 from the government-run Mcare Fund;

• To eliminate the Mcare assessments paid by health-care providers to support the Mcare Fund once private insurers begin covering the entire amount of required malpractice insurance, thereby reducing health-care providers’ medical malpractice costs;

• To use the public funds currently committed to the Mcare abatement program to retire the unfunded liabilities of the Mcare Fund, once the Mcare program ends;

• To use any remaining currently committed public funds to mitigate increases in health care provider malpractice insurance costs, with a target of limiting the maximum increase in aggregate medical malpractice liability insurance costs in Pennsylvania to 10 percent annually; and

• To aggressively promote health-care quality initiatives, which will, among other things, reduce future malpractice expenses and maximize public funds that can be dedicated to health care services.

Koken said the report contains “practical and achievable ideas for consideration by the legislature and the Governor.”

Mcare pay-outs have declined for the third consecutive year. The two largest private medical malpractice carriers have not increased their base rates in two years and over the past four years, four new insurance companies and 29 risk retention groups have started writing med mal insurance in Pennsylvania. The number of physicians practicing in Pennsylvania has remained constant at about 35,000, and the number of medical malpractice cases filed has dropped nearly 38 percent since 2003.

In 2006, the Mcare Commission held six meetings and hosted a public hearing. Commission members included: Commissioner Koken; Budget Secretary Michael J. Masch; Revenue Secretary Gregory C. Fajt; Sen. Gibson E. Armstrong; Rep. Steven R. Nickol; Joseph G. Cesare, MD; Steven A. Shapiro, MD; Joshua Port, MD; Don Matusow, Esq.; and David F. Simon, Esq.

The Mcare Program is operated under the provisions of Act 13 of 2002 and is administered by the Pennsylvania Insurance Department. Its purpose is to ensure reasonable compensation for persons injured due to medical negligence in cases where claims fall in the range from $500,000 to $1 million per claim.

Source: Pennsylvania Insurance Department

Topics Pennsylvania Medical Professional Liability

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