Pa. Commissioner Notifies Doctors of Their Obligation to Make Mcare Payments by End of Year

November 26, 2003

After months of work to reportedly develop bipartisan support for a malpractice insurance abatement for doctors, Pennsylvania Governor Edward Rendell said Tuesday he has regretfully directed Insurance Commissioner Diane Koken to notify all physicians that, by law, they must pay their assessments to the state’s Mcare insurance fund by Dec. 31 because it is unlikely the Legislature will consider his proposal this year.

“Even before my inauguration, I promised I would try to reduce significantly the cost of medical malpractice insurance premiums for all doctors through an abatement,” the Governor said. “I have also consistently reminded physicians that, despite my personal commitment, I couldn’t give them relief without legislative approval. Unfortunately, this message has not resulted in legislative action. I will, however, continue to work with legislative leaders to craft a solution to the mounting problem of medical malpractice insurance in Pennsylvania.”

Former Governor Mark Schweiker and Governor Rendell have permitted doctors to defer payment of Mcare premiums four times during the past 12 months. In June, legislative leaders asked Governor Rendell to work with them through the budget process to identify a funding source for the abatement.

“I extended the deferral because I had strong indications that a funding source would be identified and subsequently approved by the Legislature,” said Rendell. “Since the law was not amended, legally we cannot order another extension and must collect payments.”

On Sept. 15, Koken advised carriers to bill physicians for their full year 2003 Mcare assessments as required by law. Koken recommended that doctors pay those bills at the abated levels – total forgiveness for obstetricians, neurosurgeons, orthopedic surgeons and general surgeons, and 50 percent for all other physicians. While the possibility of identifying a funding source was outlined in that letter, it reminded doctors that if the Legislature did not provide the funding, they would have to pay the entire assessment.

To reportedly avoid a double payment for physicians, Rendell has already ordered a delay in the payment of 2004 Mcare assessments until April 1, 2004.

“A comprehensive solution involving all branches of government is the only way to offer physicians relief from burdensome insurance payments and maintain access to quality health-care for all Pennsylvanians,” Rendell said. “Even caps on economic damages, which many physicians have sought, will not afford the immediate relief provided by the abatement I have proposed.”

The Governor said that an additional benefit of his abatement plan – which would be funded primarily by an increase in Pennsylvania’s cigarette tax to $1.25 a pack from $1 – would be the creation of a sustainable revenue stream eventually dedicated to paying off the $2.26 billion unfunded liability of the Mcare fund.

Mcare is a state-managed fund that provides $500,000 worth of malpractice insurance to Pennsylvania’s doctors and other health-care professionals. Pennsylvania law requires physicians to carry a minimum of $1 million of malpractice coverage as a condition of licensure.

Current law requires physicians to pay into the Mcare fund in each calendar year so that all liability awards for that year can be paid. Mcare is a “pay as you go” fund with no reserves. All current-year claims must be paid by Dec. 31.

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