Physicians in Pennsylvania are cheering a rare victory in the private sector and hoping for another in the public sector in their fight against soaring medical liability insurance costs.
One of the state's Blues plans has promised to increase its reimbursement rates to healthcare providers because of the high cost of malpractice insurance. At least two other insurers are weighing similar moves.
Pennsylvania physicians also could get a break on malpractice insurance costs if lawmakers succeed in privatizing the state's much-maligned medical liability insurance system this year.
In late May, more than 12,000 Philadelphia-area physicians got a letter from J. Steven Udvarhelyi, M.D., CMO of Philadelphia-based Independence Blue Cross, informing them that the insurer would make "significant increases in fee schedules and major revisions in certain reimbursement systems" because of rising malpractice insurance premiums and high utilization.
The fee hikes, which will apply to HMO and PPO services, will take effect in August.
Udvarhelyi says Independence will raise its payments by 10% for fees currently below the Medicare resource-based relative value scale (RBRVS) and 4% for charges that are now above the Medicare RBRVS threshold. According to the letter, there will be "significant additional increases for certain fees with RBRVS changes."
Some physicians in the state, particularly those in the Philadelphia area, have been hit with liability insurance cost increases of 40% or higher this year as a result of skyrocketing damage awards in malpractice suits. Philadelphia juries returned three verdicts of $49 million or more last year, and statewide tort reform attempts have stalled.
Independence Blues formally notified the Pennsylvania Medical Society of its increased payments last month, prompting the physician group to broach the subject with other healthcare payers. According to spokesperson Chuck Moran, the society has held meetings with Highmark Blue Cross Blue Shield, which serves the Pittsburgh area, and with Aetna.
"We're evaluating our fee schedules," Highmark spokesperson Michael Weinstein says. He adds the Blues licensee already has boosted its payments an average of 5% to 10% this year for certain specialties and procedures, including anesthesia and neurosurgery, and soon may do the same for OB/GYN because of liability insurance costs.
A written statement from Hartford, Conn.- based Aetna says, "We appreciate the plight of physicians due to the rising cost of medical liability insurance" and acknowledges the discussions with Pennsylvania doctors. But it does not explicitly commit to a reimbursement hike.
Regardless of payers' decisions, Pennsylvania legislators are moving ahead with plans to privatize the state's Medical Professional Liability Catastrophe Loss Fund-known as the CAT Fund-and replace it with a privately managed system by 2007.
The proposal, which passed the state Senate on June 19, calls for the elimination of the CAT Fund on Jan. 1, 2002, and creation of an independent authority charged with phasing out the public medical liability insurance mechanism over six years.
It would gradually raise each physician's malpractice insurance coverage requirements from $500,000 today to $1.2 million in 2007. Currently, the fund picks up $700,000 of the $1.2 million ceiling on liability exposure for practitioners who qualify for the state program.
On the federal level, Rep. James Greenwood (R-Pa.) has proposed a cap on noneconomic damage awards in malpractice cases, but that legislation is not high on the agenda of House leadership.