A state fund to freeze malpractice premiums could disrupt the malpractice insurance market in Maryland, a representative of a large national insurer said yesterday.
Along with other malpractice reforms, the state is considering creating the fund to help doctors insured by the Medical Mutual Liability Insurance Society of Maryland. The doctor-owned insurer covers about 6,400 doctors, or about three-quarters of the physicians in private practice in the state.
A 33 percent increase in Med Mutual premiums is scheduled to take effect Jan. 1. After a 28 percent increase this year, that would push rates above $150,000 a year for obstetricians, the highest-risk group.
Doctors have argued that many physicians won't be able to stay in practice unless the state agrees to a rate freeze and a "stop-loss" fund to pay any claims that exceed the premiums Med Mutual collects.
"The stop-loss fund would create a lot of problems for us," said Phillip J. Troyer, associate general counsel for the Medical Protective Co., which covers about 700 doctors in the state.
A fund that required his company, known as MedPro, to pay out all its premiums before the state contributed could eliminate its profit and prompt it to leave the state, he said.
On the other hand, a fund that only applies to Med Mutual would give it a significant competitive advantage, driving MedPro and other insurers out of the state, Troyer continued.
Funds set up in some states are designed not to disrupt the competitive market, Troyer noted. For example, he said, some states subsidize premiums directly, while others have funds that pay large single claims, reducing expenses for all insurers. MedPro, which is owned by General Electric Co., operates in 49 states.
Donald J. Hogan Jr., an aide to Gov. Robert L. Ehrlich Jr., who has been pressing for malpractice reforms, said the administration was planning to work closely with state insurance regulators to devise a fund that didn't disrupt the competitive insurance market.
"Other states have done this," Hogan said. "It will probably take a fair amount of work, but I think it's doable."
Hogan said the governor hopes to meet with legislative leaders next week in an attempt to reach consensus on a package of reforms.
Ehrlich, Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch have all said they hope to reach agreement in time to convene a special session of the legislature this month or early next month to enact reforms that will forestall the Med Mutual rate increase.
Busch, an Anne Arundel County Democrat, said he met with Miller yesterday and will meet with delegates Tuesday to discuss the malpractice insurance problem. He said a special legislative session would have to take place by the end of the month. The speaker hopes to determine by the end of next week whether an agreement can be reached.
"If it's not addressed," the speaker said yesterday, "you're going to lose physicians now." He said he remains hopeful that a compromise can be reached to prevent increases in premiums this year and in the future.
Any solution would have to include both a stop-loss fund and long-term reforms, he said. Without funds to eliminate this year's rate increase, he said, there's no reason not to wait until the regular January start of the legislative session to grapple with the problem.
Miller, a Prince George's County Democrat, has strongly supported a stop-loss fund. Ehrlich has agreed to the concept, but he and the lawmakers have yet to agree on how to finance the fund.
T. Michael Preston, executive director of MedChi, the state medical society, which supports a fund, said yesterday that the stop-loss program would have to be crafted carefully to avoid hurting any company. "Everything depends on the details of the way the program is written," he said.
Troyer's comments on the potential problems with a stop-loss fund came after a rate hearing conducted by the Maryland Insurance Administration, reviewing a 59.6 percent MedPro premium increase that kicked in, with state approval, in August.
Although the rates are already in effect, Dr. Scott E. Maizel, president of the Maryland Chapter American College of Surgeons, said he had requested the hearing to highlight the problems doctors have with escalating malpractice premiums. If surgeons leave practice, he testified at the hearing, malpractice costs will have an impact on "anyone who drives a car, or perhaps has a tumor."
MedPro originally sought a 67.9 percent increase. An independent actuary hired by the insurance administration recommended the lower figure, based on projections of future claims, and MedPro agreed.
Sun staff writer Andrew A. Green contributed to this article.
