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PA Bulletin, Doc. No. 04-1408

NOTICES

DEPARTMENT OF
PUBLIC WELFARE

Medical Care Availability and Reduction of Error Fund Abatement

[34 Pa.B. 4080]

   The purpose of this notice is to announce one of the Department of Public Welfare's (Department) proposals to address the Commonwealth's current medical malpractice crisis, which is creating a serious shortage of physicians in this Commonwealth. The high rate of medical malpractice payouts throughout this Commonwealth has led to ever-increasing private malpractice insurance premiums. In addition, since 1975, physicians and other health care professionals have been required to pay premiums to the Medical Care Availability and Reduction of Error Fund (fund), a Commonwealth-managed malpractice insurance fund. The fund currently provides coverage for malpractice awards between $500,000 and $1 million. Current law requires physicians to pay into the fund in each calendar year to cover all liability awards for that year.

   The Commonwealth is committed to addressing and remedying the current medical malpractice crisis. In December 2003, the General Assembly passed legislation to abate the premiums that health care providers in this Commonwealth must pay to the fund. The abatement is 100% for qualified physicians practicing in high-risk specialties with the highest medical malpractice costs (specifically, obstetrics, general surgery, neurosurgery and orthopedic surgery) and 50% for all other qualified physicians.

   It is appropriate that the Medical Assistance (MA) Program play a role in the fund abatement for providers enrolled in the MA Program, as approximately 75% of the providers who applied for the abatement in 2003 are enrolled in the MA Program and serving MA patients. The abatement costs borne by the MA Program for these physicians are necessary to help prevent these physicians from leaving this Commonwealth because of high malpractice costs, thus ensuring that these physicians (particularly high-risk specialists) remain available to serve the MA population.

   Because the Commonwealth's current MA payment methodology does not include a specific element for malpractice costs, the Department proposes to establish a medical malpractice supplemental fee for each physician procedure. The supplemental fee will be established at a level sufficient to cover MA's share of the fund's liabilities. The supplemental fee, in combination with the procedure fee on the MA Program Fee Schedule, will not exceed what Medicare would pay for the particular service. Each year the Department will make an aggregate payment on behalf of the physicians to the fund for the supplemental fees associated with the physicians' MA claims for the most recent calendar year. Supplemental payments will be made to coincide with the duration of the fund abatement.

   Based on a preliminary analysis of MA claims for physicians' services, the Department estimates the supplemental fees to be contributed for calendar years 2003 and 2004 to be $144 million per year.

Fiscal Impact

   The supplemental fees should amount to $144 million in total funds ($65.146 million in State funds and $78.854 million in Federal funds) for calendar year 2003 and $144 million in total funds ($66.47 million in State funds and $77.53 million in Federal funds) for calendar year 2004.

Public Comment

   A copy of this notice is available in each local county assistance office. Interested persons are invited to submit written comments to this notice within 10 days of publication in the Pennsylvania Bulletin to the Department of Public Welfare, Office of Medical Assistance Programs, c/o Deputy Secretary's Office: Regulations Coordinator, Room 515, Health and Welfare Building, Harrisburg, PA 17120. Persons with a disability may use the AT&T Relay Service by calling (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).

ESTELLE B. RICHMAN,   
Secretary

   Fiscal Note:  14-NOT-394. (1) General Fund; (2) Implementing Year 2003-04 is $65.146 million; (3) 1st Succeeding Year 2004-05 is $66.47 million; 2nd Succeeding Year 2005-06 is $66.47 million; 3rd Succeeding Year 2006-07 is $0; 4th Succeeding Year 2007-08 is $0; 5th Succeeding Year 2008-09 is $0; (4) 2002-03 Program--N/A (new program); 2001-02 Program--N/A; 2000-01 Program--N/A;(7) Health Care Provider Retention Account; (8) recommends adoption. Costs are the result of a medical malpractice supplemental fee for each physician procedure. Each year the Department will make an aggregate payment of approximately $144 million, including the State and matching Federal funds, to the Medical Care Availability and Reduction of Error Fund (fund) to cover the Medical Assistance share of the fund's liabilities.

[Pa.B. Doc. No. 04-1408. Filed for public inspection July 30, 2004, 9:00 a.m.]


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