Title: Pennsylvania Insurance Department
1Pennsylvania Insurance Department
- Overview of the
- Medical Care Availability and Reduction of Error
Fund
2What is Mcare?
- The Medical Care Availability and Reduction of
Error Fund (Mcare) was created by Act 13 of
2002 and is a deputate of the Pennsylvania
Insurance Department - Mcare is the successor to the Medical
Professional Liability Catastrophe Loss Fund,
better known as the CAT Fund
3What is Mcares Mission?
- Mcare main purpose is to ensure reasonable
compensation for persons injured due to medical
negligence
4How does Mcare Implement its Mission?
- By administering various sources of funds to pay
for judgments, awards or settlements in medical
malpractice claims against participating health
care providers and eligible entities, which
exceed the primary limits of coverage
5Who is required to participate in Mcare?
- Participation is mandatory for
- physicians
- osteopathic physicians
- podiatrists
- nurse midwives
- hospitals
- nursing homes
- birth centers
- primary health centers
- Professional corporations
- Most professional corporations, associations or
partnerships owned entirely by health care
providers may choose to insure their basic
(primary) layer of liability - If they so choose, then their participation in
Mcare is mandatory
6Who is NOT Subject to Mandatory Mcare Coverage
Participation?
- providers who practice less than 50 in PA
- providers who practice exclusively as federal
government employees - providers who practice exclusively as
Commonwealth or City of Philadelphia employees - providers who are exclusively forensic
pathologists - providers who are retired, but who provide care
for his or herself and immediate family members - providers who practice exclusively as members of
the PA or U.S. military forces - providers who practice exclusively under a
volunteer license - providers who practice exclusively with coverage
under the Federal Tort Claims Act
7National Coverage Limits
- 8 states require some level of mandatory coverage
- Only New Jersey and Wisconsin require the same
level of mandatory coverage as Pennsylvania
8PAs Mandatory Coverage Limits
- Since the Funds creation in 1976, the required
coverage limits for health care providers has
varied to meet changes in the law - The primary rates increase or decrease in part to
reflect the risk associated with the changes to
the primary layer
9What are the Coverage Requirements?
- Providers must insurer their professional medical
services within the Commonwealth by purchasing
medical professional liability insurance as
follows - Primary Layer from an insurance carrier licensed
or approved by the PA Insurance Department or
with an approved self-insurance plan and an - Excess Layer from Mcare
10Market Rates
- Premium rates for primary malpractice insurance
are increasing annually at lower percentages - Since 2003, the Pennsylvania Insurance Department
has licensed or approved 4 new insurance
companies and 29 risk retention groups
11What is the history of coverage limits?
- From 1976 to 1982 coverage remained consistent
12Coverage in 1983
- Increase in primary layer
13Coverage from 1984 to 1996
- Increase in primary layer
14Coverage from 1997 to present
- Fund layer decreases
- Primary layer increases
15Primary Market Rates
- The following slide illustrates recent rates for
a select group of carriers
16Annual Percentage Changes in Select Medical
Malpractice Carriers Base Premium Rates
(Year Increases Are Effective)
17Mcare Layer Rates
- The Mcare rates increase or decrease to reflect
the changes in coverage, claims payout and
operational expenses - Mcare rates were simply a percentage of
providers primary premiums until 1996 - Since 1997, Mcare rates were a percentage of the
JUA base rates
18What is the History of Mcare rates?
- The following slide illustrates assessment rates
from 2000 to 2007 - The rate went from 61 in 2000
- to 23 in 2007
19Assessment Rate History
20Medical Malpractice Crises
- Periodic medical malpractice crises date back to
the mid-1970s - In 2000, several national medical malpractice
insurers withdrew from the market and thereby
reduced the total medical malpractice insurance
capacity in PA and the nation - The 9/11 attack exacerbated the malpractice
insurance crisis by increasing reinsurance costs - Increased malpractice expenses created financial
stress on providers
21How did the Administration and the Legislature
React?
- Act 13 of 2002 was enacted in order to address
the concerns of the health care provider
community and private marketplace
22Legislative Reforms and Rule Changes by the PA
Supreme Court
- Prohibited venue shopping
- Curtailed the number of cases filed in
Philadelphia - Established guidelines for Motion of Remittitur
- Gives judges more power to limit runaway jury
awards for non-economic damages
- Certificate of Merit
- Certified medical expert must confirm that
malpractice has occurred - Encourage the use of Alternative Dispute
Resolution Methods
23Some Other Key Provisions of Act 13 of 2003
- Reduced mandatory malpractice coverage limits
from 1.2 million in 2002 to 1 million in 2006 - Reduced Mcares coverage layer from 1,200,000 by
200,000 in 2002 to 500,000 to 1,000,000 in
2003 - Continue to provide fair and reasonable
compensation to injured claimants - Provided for a gradual phase-out of Mcare
24Access to quality health care was an immediate
concern
- Something was needed that would allow time for
the Act 13 reforms to take effect
25An interim measure was needed
- The General Assembly passed Act 44 of 2003 and
Governor Rendell signed it into law thus
establishing the Health Care Provider Retention
Program - Commonly referred to as the Mcare Abatement
Program
26How is the Abatement Program Funded?
- Act 44 provides funding for the Abatement Program
from a 25 cents per pack tax on cigarettes,
providing 180 million annually - 42 million annually has been dedicated from the
Auto CAT Fund - Funding for Mcare from the Auto CAT Fund is
scheduled to sunset in 2013
27What are the Goals of the Abatement Program?
- Mcares Abatement Program is
- designed so Pennsylvanians will
- have continued availability of and
- access to quality health care
28How is this goal achieved?
- Pennsylvanias innovative Abatement Program
defrays providers malpractice insurance expenses
until legislative and judicial reforms have time
to take effect - Through 2006, more than 830 million of public
funds have been committed to help defray
providers malpractice insurance expenses - Encourages physicians to continue practicing in
Pennsylvania - The number of physicians paying Mcare assessments
remained fairly constant over the past few years
at more than 35,000
29Abatement ProgramNote Through October 25,
2006, 33,660 unique providers submitted 2006
abatement applications, which is many thousands
more than the number of abatement applications in
October in prior years. More than 36,500 unique
providers are expected to apply for 2006
abatements because nursing homes became eligible
for 2006 abatements, and it appears that more
than 700 nursing homes will apply for abatements.
Likewise, Podiatrists became eligible for
abatements in 2005, which accounts for most of
the 2005 increase.
Provider is defined as either a physician
(MD/DO), podiatrist, certified nurse midwife,
nursing home, birth center, medical corporation
or hospital
30Providers Eligible for Abatement of their Mcare
Assessments
- Approximately 14 of all physicians participating
in the Mcare program are eligible for 100
abatements of their Mcare assessments, as are
midwives - Physicians who are not eligible for 100
abatements are eligible for 50 abatements, as
are Podiatrists (as of 2005) and Nursing Homes
(as of 2006)
31100 Abated Providers
- The following slide illustrates
- The total amount of Mcare savings realized to
date (2003 2006) for those providers abated at
100 - The top line demonstrates the value to those
providers in the JUAs highest rated territory
(Philadelphia) - The bottom line demonstrates those providers in
the JUAs lowest rate territory (Dauphin)
32100 Abated Providers
3350 Abated Providers
- Program began for 2003 and included only MDs and
DOs not abated at 100 - Podiatrists added effective 2005
- Nursing Homes added effective 2006
3450 Abated
35Abatement Program Improvements
- e-Signature implemented mid-06
- Relieves providers of requirement to print, sign
and return abatement applications - Increases efficiency of the eligibility process
- Allows providers to confirm their eligibility
status within 24 hours
36What is occurring in the Mcare Claims environment?
- Mcares claim expenses decreased each
- year since 2003, and Mcares assessment
- rates decreased each year since 2001
37Claims Assessments
- Mcares claim payments have declined each year
since 2003 - Mcares assessment rate has declined each year
since 2001 - Total Mcare assessments paid by providers (net of
abatements) have declined each year since 2001
38History of Mcare Claim Payments
39Count of Paid Cases and Claims
40Alternative Dispute Resolution Procedures
- Mediation was used in 114 cases between September
1, 2005, and August 31, 2006, a 46 increase when
compared to 78 for the previous year - Arbitration used in an additional 21 cases in
2006 - Trials with pre-determined award ranges
(high/low) were used in 4 cases - ADR techniques were used in a total of 139 cases
in the 2006 Mcare claim year
41Mcare claims appear to be in line with the recent
Supreme Court study
42Trends in Case Filings for All Pennsylvania
Medical Malpractice
Note Act 13, The Mcare Act, and Act 127 (Venue
Reform) became effective in mid-2002.
41.5 decline in case filings since 2002
Source Administrative Office of PA Courts,
Medical Malpractice Statistics http//www.courts.s
tate.pa.us/Index/MedicalMalpractice/2005StatewideF
ilings.pdf
43Communication Efforts
- Governor Rendells desire for more communication
between Mcare and the malpractice insurance
community has resulted in more than 10 carriers
meetings since 2002 - On average,125 insurance industry representatives
were present at each meeting - More than 30 individualized carrier
meetings/educational seminars since 2002
44So where are we today?
- Since April 2006, the Mcare Commission has met 6
times to study the future scope and obligations
of the Fund as mandated by Act 88 of 2005 - PricewaterhouseCoopers has made several in-depth
presentations in an effort to educate the
Commission and the public - Various proposals have been presented to the
Commission for consideration
45Where are we today? contd
- To consider.
- Whether or not or when to phase-out Mcare
- Whether or not or when to change the total
mandatory coverage limits - Whether or not taxpayer monies should continue to
be used to fund assessment abatements - How best to deal with the unfunded liability
46Unfunded Liability
- Mcares unfunded liability is the amount of money
Mcare is projected to pay for claims reported to
date as well as claims that occurred but are
unreported - PricewaterhouseCoopers calculates the unfunded
liability to be 2.33 billion as of December 31,
2005 -
47Abatement Program Continues
- Governor Ed Rendell signed Senate Bill 972 (Act
128 of 2006) on October 27, 2006 that extends the
Abatement Program for 2007
48Commission Report
- The Commission is required to submit a report to
the Governor and General Assembly by November 15,
2006
49Thank you for attending the Commissions Public
Hearing today.