Ind. Doctors, Hospitals to Get Payment Break for Malpractice Fund

February 20, 2008

Indiana doctors and hospitals will catch a break on the rates they pay to support a malpractice payout fund starting next month. But the deal probably won’t translate into lower patient bills.

Patient’s Compensation Fund surcharge rates will be reduced 19 percent for doctors and 1 percent for hospitals starting March 1, according to the state Department of Insurance.

The fund was established in 1976 to help compensate malpractice victims. Health care providers contribute to it on a voluntary basis, and the vast majority of Indiana’s doctors participate, Insurance Commissioner Jim Atterholt said.

It provides up to $1 million in coverage after malpractice insurance pays the first $250,000 in damages. Indiana caps damages a patient can receive for a malpractice claim at $1.25 million.

State insurance officials say they were able to decrease the surcharge for the first time after making the fund run more efficiently. For instance, the insurance department started using outside lawyers more on complex cases.

“That allowed the staff counsel to address more cases and freed up more time for them to do defense on more routine cases,” said Doug Webber, the department’s chief legal counsel.

The fund currently stands at $150 million. The amount doctors contribute in an annual payment depends on their specialty. Doctors who practice in obstetrics or neurosurgery will see their payments decrease from $33,969 to $27,489 in 2008 thanks to the lower rate.

Patient bills likely will not decrease due to the surcharge reduction, said Dr. Jon Marhenke, an Indianapolis psychiatrist and president of the state medical association. He noted that while the surcharge may sink, many other expenses continue to rise.

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