Dr. Thomas Lansen, a 60-year-old neurosurgeon, had planned to continue practicing for a few more years, but if a $50,000 insurance surcharge the state superintendent of insurance is proposing to levy on physicians is implemented, he”™s decided instead he”™ll retire at the end of the year.
Lansen, who already pays approximately $230,000 annually in medical malpractice insurance premiums, said the cost of the insurance “has gone up insidiously and progressively.” Five years ago, he paid $150,000. But it isn”™t just the high costs that get to him; it”™s also the anxiety that comes from looking each new potential patient in the eye and trying to gauge whether the person might be capable of suing him for millions.
Lansen said the main reason for his higher premiums is a dramatic increase in the amount of individual awards for medical malpractice liability cases. With his insurance covering him for a total liability of $2.5 million, including an extra layer for hospital coverage, he could potentially loose his house and other assets in the event of a multimillion settlement against him. The state doesn”™t cap awards for liability, which mean doctors have been sued successfully for as much as $38 million or more.Â
Lansen said that risk is the reason his daughter, who is graduating from medical school this spring, has decided not to practice obstetrics, even though it”™s a specialty she loves and has excelled at.
Lansen”™s concerns encapsulate the reason more than 1,000 physicians descended on the State Capitol March 4 to protest the proposed $50,000 fee. The demonstration, which entailed meeting with Gov. Eliot Spitzer and other elected officials, was an ominous sign that the state”™s shortage of physicians could become much worse if the fee goes into effect. Soaring medical malpractice premiums and reimbursements by the health insurance companies that have remained flat are also inciting physicians to leave the state or to retire before they”™d planned.
“Our members cannot bear this cost,” said Gerard Conway, senior vice president of governmental affairs at the Medical Society of the State of New York State (MSSNY), which represents 30,000 doctors, medical residents and medical students. “They”™re already paying (medical malpractice) premiums at the very highest levels in the United States.”
The problem stems not just from what the MSSNY claims are out-of-control medical liability related costs, but also lack of fiscal responsibility on the part of the state. By statute, medical malpractice insurers are required to pay into a reserve fund covering uninsured doctors and other high-risk physicians. The state has appropriated money from this fund to help close the gaps in its operating budget.
The state superintendent of insurance is required by state law to levy a surcharge on physicians to make up the shortfall. Only a move by state legislators to change the terms of the law has precluded him from doing this.
The situation is putting the medical malpractice insurance companies on the brink of default ”“ a crisis that hasn”™t been seen since 1976, when every medical malpractice insurance company left the state because they deemed the risks too great to insure, according to Conway.
Another contributor to the problem has been the failure of premium rates to keep pace with rising liability costs. “As a result of artificially low rates, combined with the failure to effectuate needed reforms to address the root causes of high medical liability costs, insurance companies now face the real prospect of insolvency,” said the state department of insurance in a statement. Under orders from Spitzer, the superintendent of insurance has put together a task force to examine the issue, with a report expected shortly.
Meanwhile, to make up for the lagging premium rates of the past, physicians are getting hit with double-digit increases. The rates, which are set by the state superintendent of insurance on an annual basis, went up 14 percent last year, and another 15 percent increase is expected this year.
The result is that higher-risk specialists, such as neurosurgeons and obstetricians, are paying in excess of $300,000 a year in premiums in certain parts the state, said Conway. He said more and more specialists, such as anesthesiologists and emergency room physicians, are falling into the high-risk category. According to Dr. Michael Rosenberg, president-elect of the MSSNY, these premium increases, combined with the proposed $50,000 surcharge, could put from 10 percent to 15 percent of physician practices in the state out of business.
As it is, “we are losing obstetricians in this state,” Rosenberg said, citing a shortage at the Mount Vernon Hospital as one example. “It”™s difficult to find neurosurgeons upstate. They”™re leaving.” He said that if the state superintendent of insurance approves the 15 percent premium increase on June 30, which is the date upon which the annual rates are set, “we”™re going to have a crisis of access to care.”
What”™s needed, according to the MSSNY, is reform of the civil justice system, which not only results in liability settlements in the millions of dollars, but also entails a lot of waste. For example, Rosenberg said while 70 percent of medical malpractice claims “never lead to any settlement of the client, it costs $70,000 to defend a frivolous case. The system is serving trial attorneys very well, but I”™m not sure it”™s serving patients or physicians very well.”
Rosenberg noted that other states cap the amount of a liability settlement. In the case of Texas, that resulted in an 18 percent decrease in medical malpractice premiums, he said. Another problem in New York is that it is the only state “that doesn”™t allow a defense attorney to depose the expert witnesses prior to the trial. It”™s a surprise witness and (the attorney) can”™t get records of the person”™s other testimony,” which results in more generous settlements.
Conway said that juries also “don”™t look at the failure to exercise care,” which involves complex issues. The tendency to make decisions based on emotions in reaction to a “terrible tragedy” such as a baby born with complications resulting from a difficult birth results in physicians unfairly being blamed, he said.
Conway said the number of physicians getting sued is off the charts. According to the MSSNY, every five years 60 percent of neurosurgeons insured by the largest medical malpractice insurer in the state, Medical Liability Mutual Insurance Company (MLMIC), are sued, along with 55 percent of the obstetrician-gynecologists and almost 50 percent of surgeons in other specialties. The average MLMIC payout went up from $394,000 in 2002 to almost $500,000 in 2007, an almost 27 percent increase.
The MSSNY is supporting reforms of the civil justice system proposed in a number of bills. For example, the Medical Liability Reform Act (A.3139) would cap damages and require that an attorney submit a signed affidavit from a physician prior to the filing of a medical liability action. Another bill, A.8066-A/S.4149-A, would require the pre-trial identification of expert witnesses as well as require them to be practicing in the same specialty as the defendant physician. It would also pilot the use of medical courts in five counties. Other bills provide for a state-funded subsidy and/or tax credit to defray the cost of medical liability insurance.
Conway said the reimbursement system for Medicare and Medicaid, which he characterized as “woefully inadequate,” also needs to be reformed. The Medicaid reimbursement levels in New York are “the lowest of any in the U.S.,” Conway said. The proposed increases by the governor would be “significant,” but until his budget is passed, just theoretical.
Conway said the conversion of many health insurers from nonprofit to for-profit entities and the resulting consolidation of the companies had resulted in too great an emphasis on profits and not enough on delivery of patient care. With most physicians in the state maintaining small practices, doctors “have no leverage” to negotiate with the companies, resulting in inadequate reimbursement rates.
