Malpractice rates in state heading lower

By Daniel Lee

Indiana physicians and hospitals are going to get a break next year on how much they pay into the state-run fund that makes payments to victims of medical malpractice.

Rates will be reduced by 19.1 percent for physicians and by 1.3 percent for hospitals starting in March, according to the Indiana Department of Insurance.
The cuts are the first since the state-run Patient’s Compensation Fund, or PCF, was created in 1976 to provide compensation for people severely injured by health-care providers. The fund also helps reduce the financial liability faced by doctors and hospitals.
Insurance Commissioner Jim Atterholt said the rate reduction is potentially good news for consumers because the cost of malpractice coverage is a factor in the rising cost of health care.

Physicians and hospitals can voluntarily participate in the PCF. Fund members then receive coverage of $1 million above the $250,000 in coverage they must have from private malpractice insurance.
Those two forms of coverage cap at $1.25 million the amount a patient can receive for a malpractice claim.
“It makes Indiana again an appealing place to bring your health-care practice,” said Doug Webber of the Department of Insurance.
Webber and Atterholt emphasized that the cuts will not impact the fund’s ability to make payments to victims of malpractice. It pays about $100 million a year in malpractice claims, according to the Department of Insurance.
The majority of doctors and hospitals participate in the PCF, the department said.
Malpractice coverage costs thousands of dollars a year. Under the old rate system, physicians paid from $2,997 a year, for a lower-risk doctor such as a pediatrician handling only office visits, to $33,969 a year, for a doctor in a specialty such as obstetrics/gynecology. Under the new rate structure, those payments will range from $2,426 to $27,489.
In addition to those expenses, doctors and hospitals also buy private malpractice coverage.
Rates for hospitals are determined by factors including bed count.
Daniel Evans, chief executive of Clarian Health, called the rate reduction huge news for his Indianapolis hospital system, which operates Methodist Hospital, Indiana University Hospital and Riley Hospital for Children.
“We have the largest medical staff in the state, plus medical students, and we own a risk retention insurance group,” Evans wrote in an e-mail. “We are grateful to the governor and commissioner for their leadership, which has led us to this development.”
The Department of Insurance said the reduction in rates — which had risen sharply in recent years — was possible because the PCF is well-funded and because a recent court ruling limits how much can be paid for one act of malpractice.
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