America's physicians have struggled in recent years with a grim financial reality: Reimbursements from third-party payers have remained static at the same time the cost of malpractice insurance has hit the roof.
Now doctors are looking to their patients to share the pain as they consider instituting "liability surcharges" to help offset insurance costs. In most cases, the additional fees are similar to typical copayments of $10 or $15 per visit. In one case, however, Physicians for Women's Health, a 150-member OB/GYN group practice in Avon, Conn., has announced it will charge an extra $500 per pregnancy starting Sept. 1-a hefty add-on that triggered immediate criticism from government officials.
The American Medical Association voted earlier this month to launch a detailed study of these surcharges to determine whether they can withstand legal and regulatory challenges. A lengthy debate aroused strong emotions on both sides of the issue.
Peter Lavine, an orthopedic surgeon in Washington and the author of the resolution that called for the study, said liability surcharges are the only way to address the immediate impact of ballooning malpractice insurance rates that have forced many physicians to relocate or restrict some high-risk services, like the delivery of babies. He said the AMA's effort to enact a $250,000 cap on noneconomic damages is unlikely to have much impetus unless patients get personally involved in the issue.
"This whole idea of tort reform sounds great," Lavine said during a public debate at the AMA's meeting in Chicago. "But it's not going anywhere. As passionate as we feel about tort reform, nobody except doctors feels that it's a problem. When patients see that they have to pay a little more for liability, they get interested."
William Huffaker, a plastic surgeon from St. Louis, said the public perceives tort reform to be a physicians' problem.
"I see (surcharges) as a way to make this a patients' problem," he said.
Lavine, who said he thinks a modest fee of $10 or $15 would be tolerated by patients, called on the AMA to help determine whether these fees will be accepted by third-party payers. AMA officials said they would be ready to release the report at the organization's Atlanta meeting in early December.
Medicare does not allow physicians to charge extra for services already covered by the federal insurance program. And most physician contracts with insurance companies also forbid any additional fees for covered services. However, some insurance companies consider these fees permissible, especially when a patient signs a waiver, Lavine said. In addition to the liability surcharge, some doctors are now assessing fees for "administrative" duties, tacking on charges for everything from telephone calls to help with insurance billing matters.
"There are a lot of gray areas that need to be investigated-that's what the resolution asks the AMA to do," Lavine, president of the Medical Society of the District of Columbia, said in an interview last week. "We should come out with some kind of a policy, but you don't want that policy to be contradictory (to the law)."
In a recent advisory to its members, the Ohio State Medical Association said "There is no inherent ethical or legal barrier to charging administrative fees," as long as proper notice is provided and the charge is reasonable. It added that physicians should not charge these fees to patients covered by Medicare or Medicaid.
The notion of liability surcharges did not win unanimous support among AMA members. Sheldon Gross, a neurologist from San Antonio, warned that adding these surcharges "would make people think we were using the malpractice crisis as another way to increase fees. I'm concerned this would backfire."
In Connecticut, Physicians for Women's Health, which employs almost one-third of the OB/GYNs in the state, gained considerable attention in May when officials announced their hefty surcharge of $500 per delivery. Attorney General Richard Blumenthal immediately questioned the charge, issuing a "consumer warning" urging any pregnant woman assessed the fee to contact his office because "It is mostly likely illegal."
"I sympathize with physicians who face increasing medical malpractice costs-particularly obstetricians and gynecologists," Blumenthal said in a news release. "But imposing a surcharge is unreasonable and unauthorized, unless the doctors are able to negotiate it with the healthcare coverage providers."
In an interview last week, Blumenthal, who expects to wrap up his investigation of the surcharge in the next week or so, said, "Our view is that they are almost certainly illegal."
While Physicians for Women's Health has not yet levied the surcharge, Blumenthal indicated that his mid-May consumer warning triggered complaints from a number of state residents who say they have been charged extra for services that once were provided at no cost.
Federal insurance programs, Blumenthal said, require a participating provider to accept only what Medicare and Medicaid pay for these services. In the case of HMOs and other insurance plan subscribers, Blumenthal said, state statutes say enrollees cannot be billed for any sums owed beyond what the insurance company would cover, with the exception of standard copayments and deductibles.
Mark DeFrancesco, medical director of Physicians for Women's Health, said the announcement of the surcharge was a "warning" to lawmakers that insurance costs have spiraled out of control and can only be corrected if the state Legislature enacts a cap on noneconomic damages in malpractice lawsuits. He said the group's doctors, who absorbed a nearly 100% hike in malpractice premiums over the last year, will wait until the attorney general's ruling before instituting the surcharge in the fall.
"We will not break the law," he said. "If it turns out that the attorney general rules that a specific surcharge is illegal, then we would not be doing it."