A consultant has drafted a plan for a medical malpractice liability fund that would attempt to reduce the rising premiums doctors pay for malpractice insurance in Wyoming.
The plan was reviewed Oct. 25 by the Wyoming Healthcare Commission.
It was the second of three studies the actuarial firm Milliman, Inc., has been working on for the commission. The first, released Oct. 15, concluded that capping noneconomic damages in medical malpractice suits would lead to reduced costs for insurance companies.
The third, to be released next month, will be on risk-retention pools.
The proposals come as doctors complain about soaring malpractice premiums, prompting worries that they will curtail their practices or move to states where premiums are lower. Insurance companies, for their part, blame high jury awards and call for caps on noneconomic damages for medical malpractice.
One constitutional amendment headed before voters on Election Day would allow the Legislature to cap noneconomic damages for medical malpractice. Another would allow legislators to establish a panel that would review malpractice cases before they can go to court.
Insurance companies and many doctors support both proposals.
The liability fund is a plan that could be implemented if neither amendment passes. Richard Lord, a consultant who prepared the proposal, said it could significantly decrease malpractice claim payouts, if not what doctors pay for malpractice insurance. It could reduce the rates doctors pay only if it is set up properly, he said.
“The purpose of this task was to review suitable structures for a fund to cover the excess liability … to provide comparisons to comparable funds in other states and to provide analysis as to establishing a fund in Wyoming,” he said.
One state the firm was asked by the Legislature to study was Nebraska, where an excess liability fund protects doctors with up to $1.75 million of coverage. Lord said a similar structure in Wyoming would lead to increased malpractice insurance rates for doctors.
However, he said, the coverage does not need to be that high here. He suggested a fund that would provide coverage for claims between $250,000 and $1 million, saying that would decrease doctors’ rates.
The system would be funded by a surcharge based on a percentage of doctors’ primary coverage rates. The fund would then cover any claim costs after a predetermined amount, which would be set by the Legislature if and when such a fund were established.
For example, a fund could “attach” at an amount, such as $250,000. The insurer would then pay the first $250,000 of a claim. The fund would contribute the rest, up to another amount, likely $1 million.
However, Lord told the commission members, the savings from a fund probably would be negated if noneconomic damage caps were instituted.
That is because a cap on noneconomic damages, which the first Milliman study said account for about 60 percent of all claim expenses, would significantly decrease the excess liability the fund would be set up to cover.
Commission Chairman Chris Muirhead said the excess liability fund will be “the next step” if tort reform isn’t implemented.
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