Sunday, June 29, 2003

By Christopher Snowbeck, Post-Gazette Staff Writer

A proposal to subsidize malpractice insurance premiums for Pennsylvania doctors could result in an especially good deal for Allegheny County physicians, some of whom might end up paying premiums below the national average.

Steep premium increases in recent years have led Pennsylvania physicians to press the state government for reforms to the legal system. Doctors have argued that without caps on pain and suffering awards in malpractice cases, physicians will flee the state and patients will suffer from access problems.

In response, Gov. Ed Rendell announced this month a reform plan that didn't include caps, but offered $200 million in state money for each of the next three years to help physicians pay their premiums.

The impact of subsidies would be different on the two ends of the state. Doctors in Philadelphia and Scranton are thought to pay some of the highest malpractice insurance premiums in the country, so their premiums might remain relatively high, even with state support.

But Pittsburgh physicians generally pay half as much for their insurance as Philadelphia doctors. In fact, premiums for general surgeons, obstetricians and internal medicine doctors in Pittsburgh are comparable with the national average, according to 2002 figures reported by Medical Liability Monitor, a Chicago-based trade publication.

Obstetricians in Pittsburgh with clean malpractice records were paying between $45,640 and $54,027 for commercial insurance during 2002, according to Medical Liability Monitor. In Philadelphia, obstetricians were paying between $89,703 and $100,045, compared with the national average of $56,546.

The publication reported a similar relationship among Pittsburgh, Philadelphia and the national average for the other two groups of doctors on which it collects data -- general surgeons and internal medicine doctors.

The debate in Harrisburg about how to address rising malpractice premiums has gone on with almost no reference to national averages. Doctors have compared premium costs here with those in California, which passed a law that included caps on pain and suffering during 1975.

Part of the problem is that calculating a national average is difficult.

Carol Golin, the past editor of Medical Liability Monitor, said her publication has conducted an annual study of malpractice insurance rates for 12 years, taking voluntary submissions from carriers in all 50 states who represent approximately 65 percent to 70 percent of the market.

But because not all carriers report numbers and different carriers report numbers from year to year, the resulting national average should not be considered a definitive number, Golin said. Instead, it should be used as a very general benchmark for where premiums fall when measured across a wide-ranging continuum, she said.

Despite those limitations, the publication is a well-respected source, said Randall R. Bobvjerg, a researcher at the Urban Institute and contributor to the ongoing Project on Medical Liability in Pennsylvania of the Pew Charitable Trusts.

"They're as good as you're going to get," Bobvjerg said of the numbers.

Amy Kelchner, spokeswoman for the Governor's Office of Health Care Reform, said Rendell knew about the differences among premiums in Philadelphia, Pittsburgh and the national average when he developed his plan. But Rendell didn't want to "micromanage" premium relief by trying to assess the fiscal need of particular physicians, she said.

"I don't think there's any physician who's going to say the premiums are what they should be," Kelchner said.

Subsidizing higher costs

Western Pennsylvania physicians pay less, but their premiums still subsidize high legal costs in Philadelphia and Scranton, said Steve Foreman, an economist with the Pennsylvania Medical Society.

Doctors in Pennsylvania purchase $500,000 worth of insurance from a primary carrier and then another $500,000 worth of coverage from the MCARE Fund, a state insurance program that provides doctors with catastrophic coverage for medical malpractice. Both sets of premiums take into account a doctor's experience, practice location and specialty, but the MCARE Fund assessment results in some cross-state subsidies, according to an analysis of fund payouts supplied by the medical society.

Allegheny County doctors paid about $36 million in MCARE assessments in 1999 -- then called surcharges for the state's CAT Fund -- but the fund paid out only about $16 million for Allegheny County claims.

The opposite was true in Philadelphia, where doctors paid in about $93 million, but the fund paid out more than $110 million for claims.

The west-to-east subsidy in the MCARE Fund is one reason the medical society believes that all physicians in the state should receive premium relief, despite the geographic variation in premiums, Foreman said.

Rendell's reform plan called for waiving the MCARE assessment for doctors in four high-risk specialties -- obstetricians, surgeons, neurosurgeons and orthopedic surgeons -- and reducing by 50 percent the assessment for all other physicians. But the society believes that all physicians, regardless of specialty, should have their MCARE premiums wiped away, Foreman said.

"Clearly Philadelphia is driving this train," Foreman said. "But maybe even in Pittsburgh -- and at the national average, on the high-risk stuff -- there's an issue there" with premiums being too high.

Another reason Pittsburgh doctors need premium relief is that the rate of premium increases here has matched that in the rest of the state, said Dr. William Crombleholme, an obstetrician who is residency director at Magee-Womens Hospital.

Between 2001 and 2002, physicians across Pennsylvania covered by the state's largest malpractice insurer saw a 40 percent increase in their premiums. That insurer, the Pennsylvania Medical Society Liability Insurance Co., reported an even bigger increase in premiums for physicians across the state between 2002 and 2003. It's unclear how these increases compared with increases in the national average because numbers for 2003 are not available from Medical Liability Monitor.

Crumbleholme said he was not familiar with the publication's numbers. But the Pennsylvania Medical Society and the American College of Obstetrics and Gynecology say Pennsylvania is a bad place to practice, from a malpractice perspective, and he passes that word on to residents graduating from the Magee program.

"I tell them, 'This is, right now, probably an equally important element in your contract as your salary. It doesn't matter what they pay you; if you can't get insured, you can't work," he said.

In the past two years, Crumbleholme said, concerns about premiums have prompted four or five young physicians to leave Pittsburgh for other states. In this year's class, one resident is staying in town while his fiancee completes her residency. Another resident is setting up practice in Pittsburgh, in part for family reasons and in part because a hospital agreed to subsidize the doctor's premiums, Crumbleholme said.

Who to help

In a tight budget year, legislators would be interested in limiting premium relief to only those doctors who demonstrate the most need, said Drew Crompton, an aide to Senate President Pro Tem Robert C. Jubelirer, R-Altoona. The problem is how to do it.

Formulas that assess premiums relative to physician income are difficult to draft in a bill, Crompton said. Tying relief to a percentage increase in premiums might be fair to doctors on both ends of the state, but some premium increases reflect quality problems.

"The last thing you want to do is reward a bad doctor," Crompton said.

The simplicity of Rendell's approach is appealing, but Senate Republicans believe the relief might be better applied to only the high-risk specialties, Crompton said.

He said, however, that the question is not just how to provide relief to doctors, but also how to fund it.

"The underlying problem is [that] we have this plan, but no one has told me to how to pay for it," he said.

Regardless of the geographic variations in premiums, some think the idea of state subsidies for premiums is a bad one.

"I don't know why any government would expect the people of the state to pay for a private group's insurance rates," said Jim Panyard, president of the Pennsylvania Manufacturers Association.

Even Dr. John C. Nelson, president-elect of the American Medical Association, said he wasn't crazy about the notion of premium subsidies.

"What we need to do is stop the fundamental root problem," Nelson said, referring to high legal payouts. Like the Pennsylvania Medical Society, the AMA believes caps on pain and suffering awards are a big part of the solution. "Why would one want to fuel inappropriately high liability premiums with tax dollars?"

Christopher Snowbeck can be reached at csnowbeck@post-gazette.com or 412-263-2625.