AAOS Now

Published 2/1/2008
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Beth Weachter

Mcare debate keeps physicians in limbo

Uncertainty over program could threaten patient access to care

More than 900 orthopaedic surgeons in Pennsylvania may have to wait until spring to learn what their total medical liability insurance bill will be for 2008. Gov. Edward G. Rendell and the Pennsylvania General Assembly are trying to work out differences on whether or not the state Mcare Fund, which assists doctors with medical liability insurance bills, should also help patients without healthcare insurance.

The Medical Care Availability and Reduction of Error (Mcare) program pays for half of a physician’s medical liability insurance coverage with the proceeds of a 25-cent-per-pack cigarette tax. But a disagreement between Gov. Rendell and legislators over how much of the program’s surplus should go to funding healthcare insurance for uninsured residents has placed the program in limbo.

Addressing the medical liability crisis
The Mcare Abatement Program, as it is called, has been credited with stabilizing Pennsylvania’s physician exodus at the height of the state’s medical liability crisis in 2001–2003. Pennsylvania, like many other states, requires physicians to carry $1 million in medical liability insurance coverage, but the Mcare program splits the coverage into two layers.

Physicians must obtain their primary $500,000 coverage layer through private commercial insurance carriers; they are assessed a surcharge for the remaining $500,000 second layer of coverage through the Mcare Fund, a state-run, state-mandated excess medical liability insurance provider. The Mcare surcharge is based on previous years’ claims payouts. Unlike a traditional insurer, the Mcare Fund is a pay-as-you-go operation that assesses physicians, hospitals, and many other healthcare providers an annual surcharge equal to the amount needed to pay current claims and operating expenses.

Preserving patient access to specialty medicine
The Mcare Abatement Program subsidizes 100 percent of the Mcare surcharge for high-risk specialty surgeons, and 50 percent of the Mcare surcharge for other healthcare providers. The program is the keystone of the medical liability reforms enacted during 2002 and 2003. At that time, lawmakers laid the foundation for meaningful tort reforms but stopped short on a few key elements such as caps on noneconomic damages. The reforms were aimed at lowering the staggering financial costs and emotional burden placed on physicians as a result of frivolous lawsuits.

Despite these reforms, medical liability insurance premiums for orthopaedic surgeons and other specialists in Pennsylvania remained among the highest in the nation. A bipartisan group of legislators and Gov. Rendell recognized that surgeons needed immediate relief from the skyrocketing cost of insurance to preserve patient access to quality medical care.

Working with the Pennsylvania Orthopaedic Society (POS), Gov. Rendell and legislative leaders developed the Mcare Abatement Program in 2003. The program was renewed annually three times. In late December 2007, however, it became evident that the General Assembly could not agree on how to allocate the Mcare Fund’s surplus, and the Mcare Abatement Program was not renewed by the year-end deadline.

Without the abatement for the second layer of coverage, many specialty surgeons would not be able to afford the coverage and would be prohibited from practicing medicine as of Jan. 1, 2008. To avoid a New Year’s Eve crisis of trauma center and emergency department closures, the governor issued a letter to all healthcare providers, deferring collection of the Mcare surcharge until March 31, but keeping payment due dates for the primary portion of insurance premiums on schedule.

Spreading tort reform benefits to patients
The 3-month delay is an effort to allow the governor and legislative leaders to come to an agreement on renewing the Mcare Abatement Program’s renewal and on using the fund’s growing surplus, the result of a decline in the Mcare Fund claims payouts over the past several years.

Gov. Rendell and Democrats in the Pennsylvania House have proposed dedicating the surplus to provide a 10-year extension of the Mcare Abatement Program. Any remaining portion of the surplus would help finance the governor’s Cover All Pennsylvanians health insurance program for the state’s uninsured adults. Senate Republicans have proposed using the surplus funds for hospital-based programs.

The Mcare Abatement Program has provided immediate relief to POS members and created a more stable medical liability environment for physicians in Pennsylvania. Continued stalemate and gridlock on these important matters does not serve the interests of anyone, particularly patients. POS has expressed support of Gov. Rendell’s efforts to balance healthcare coverage for Pennsylvania’s uninsured residents with the need to maintain access to specialty care through extension of the Mcare Abatement Program. POS continues to work closely with the administration and the General Assembly to seek solutions in this latest dispute concerning health care in Pennsylvania.

Lawmakers returned from the holiday break in mid-January. They face lots of work if all four legislative caucuses are to resolve their differences and renew the Mcare Abatement Program for physicians before the daffodils bloom.

Beth Weachter is executive director of the Pennsylvania Orthopaedic Society. She can be reached at beth@paorthosociety.org