Pennsylvania liability fund may be used to cover uninsured

Doctors support increasing access to health insurance but don’t want it funded from a state medical liability pool.

By Amy Lynn Sorrel, AMNews staff

Pennsylvania physicians are fighting to stave off Gov. Edward G. Rendell’s plan to divert funds from the state’s medical liability assistance program to cover the uninsured.

Doctors and other health care professionals contribute annually into the Medical Care Availability and Reduction of Error Fund — known as Mcare — set up under a 2002 tort reform package. Physicians are required to have $1 million in liability insurance, but the fund subsidizes half of their premiums and pays claims exceeding $500,000.

In 2003, the governor also established a separate funding pool, financed by cigarette taxes. It helps doctors pay their Mcare assessments and covers the fund’s claims payouts. The Legislature has continued this abatement program with the governor’s support. The abatement covers 50% to 100% of Mcare fees for doctors, depending on their specialties.

Now, with a downturn in medical liability claims, Rendell says there is a $400 million surplus in the abatement pool. He says the pool’s reserves are more than enough to ease doctors’ Mcare fees and cover the state’s share of claims for at least another year, and — combined with other tax proposals and Medicaid money — finance a plan to offer health insurance to nearly 800,000 low-income adults.

The governor has threatened to stop Mcare assistance payments from the pool if legislators don’t transfer some of the surplus to his Cover All Pennsylvanians program.

The move mirrors a similar effort by Wisconsin Gov. Jim Doyle. He approved a law that withdraws $200 million from the state patient compensation fund to pay for Medicaid programs. The Wisconsin Medical Society is suing the state to block what it says constitutes an illegal tax on doctors paying into the pool.

Pennsylvania physicians share those concerns and worry that dipping into the Mcare cookie jar could destabilize the medical liability climate and access to care.

The Pennsylvania Medical Society supports health coverage for the uninsured, said President Peter S. Lund, MD. But tying that to medical liability aid is unfair and dangerous, he said.

“Doctors and patients are being put in the middle of this political process, and we are almost being held hostage,” Dr. Lund said.

He said the so-called “surplus” was designated to cover Mcare’s outstanding liability claims still percolating through the legal system, which are now an estimated $2 billion. Rerouting the pool’s funds away from Mcare would hurt its ability to pay claims. This could drive up doctors’ fees to cover any potential deficit, he said. Also, cutting off relief from physicians’ assessments could drive some specialists out of practice altogether.

“What will happen when the surpluses go away?” Dr Lund asked. “And the question is whether [doctors] can continue to practice without that abatement.”

But Rendell says the medical liability climate is looking up.

He announced in October that Mcare claims filings and payouts decreased by 50% from 2003 to 2007. Mcare’s payouts in 2007 were $191 million. The insurance department also approved rate decreases by two of the state’s largest liability carriers.

Given those improvements, “it seems reasonable that we should use unspent funds … to confront Pennsylvania’s most pressing current health care crisis — the crisis of the uninsured,” Rendell said in a statement.

The governor argues that state law gives the Legislature authority to use leftover reserves in the pool not needed for Mcare claims or physicians’ fee abatement “for any purpose consistent with the general health and welfare of the people of Pennsylvania.”

At press time in late December 2007, the debate remained unresolved.

The 2007 abatement was set to expire Jan. 1, and the Legislature recessed without renewing it for 2008. Doctors are asking Rendell to stop collecting Mcare assessments until lawmakers reach an agreement.

The Senate has passed two conflicting measures. The most recent bill, passed Dec. 11, 2007, would extend state assistance with Mcare fees through 2008 without diverting any money to cover the uninsured. The measure also would allocate $25 million to e-prescribing programs and $25 million for hospital infection reporting. The remaining funds would go toward paying down Mcare’s debts.

That move came just one month after the Senate approved a separate bill that would give half of the abatement pool’s surplus to Cover All Pennsylvanians. It would not renew the abatement for 2008. The proposal would suspend collection of doctors’ Mcare fees until the program for the uninsured was enacted and funds were transferred.

State Sen. Vincent J. Hughes, who tried but failed to attach similar language to the latest bill, still plans to push for a measure that would cover funding for the uninsured program and Mcare assistance, said his spokesman, J.P. Kurish. “We want to give the problem of uninsured patients the same priority we are giving to retaining doctors.”

Other lawmakers have vowed to fight plans to link insurance access and Mcare assistance. The state medical society has urged lawmakers to address the issues separately.

Sen. Gibson E. Armstrong said “disrupting a program designed to retain and attract doctors is a poor policy choice when we are deeply concerned about health care access and quality.”

The House is expected to take up the issue when it reconvenes Jan. 14.
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