RFM: Gov. Rendell gave the mission to the task force to come up with recommendations for short-term financial relief to immediately address the crisis by the 20th of January, and has charged the task force to come up with recommendations by April 1st for long-term solutions that hopefully would aggressively address this problem. The composition of the task force is rather broad-based. We now have seven physicians that are participating, along with myself in task force deliberations. There is an equal number of trial lawyers and defense lawyers, I believe six each, on the task force. There are representatives from various House and Senate legislative staffs. There also is representation from the AFL-CIO, from the state Chamber of Business and Industry, an insurance representative, a representative of Independence Blue Cross, and a representative of the Hospital Association statewide and from the Delaware Valley Hospital Council.

RFM: Judge Abraham Gafni, who chairs the task force, facilitates discussion to gain consensus around the table. We’ve had only five meetings as of mid-January. The first four meetings were concentrated almost solely on a short-term financial relief package, although occasionally the conversation would get into the broader issues and problems. At the fifth meeting we began the process of looking at the more long-term picture. At the conclusion of the fourth meeting the recommendations of the task force were presented to the (then) governor-elect and Rendell apparently considered the recommendations before he made his announcement at the end of the year.

RFM: The trial lawyers have certainly been engaged in the discussion and have asked a lot of questions. But, because the bulk of the meetings thus far have been on a short-term financial relief package, the trial lawyers have not been putting formal proposals forward at this time. I would presume that their involvement will become much more active as we get into the long-term solutions, particularly as we approach various tort reform measures. The trial lawyers in general still make references that they believe that this is more of an insurance crisis brought about by corporate mismanagement and other activities within the liability insurance industry, as well as poor stock market results on their reserves.

RFM: Gov. Rendell did participate in person at the first meeting of the task force. He also participated at task force meetings by telephone shortly after he had met with a group of surgeons at Abington Hospital. Otherwise, the communications primarily back and forth to Gov. Rendell have, I would assume, been through Judge Gafni and through the administrative head of the task force.

RFM: So far the task force has brought a lot of issues forward. The bulk of the first four meetings was spent talking about financial relief to address the huge malpractice insurance premium increases for 2003 that many physicians have indicated they simply cannot sustain. There has been quite a bit of discussion about what might be done at the MCARE Fund level, and there was a sub-committee that was appointed to look at the Joint Underwriting Association. There has also been some discussion about risk retention groups, a number of which have now been approved by the Insurance Department.

RFM: There was an exhaustive look at the JUA by the sub-committee. The report back to the full task force was that there really was not any slack at the JUA level and that the JUA was actually, as are the commercial carriers, paying out more than they are bringing in. Therefore, the task force did not make any recommendations specific to the JUA, but the task force did recommend that the JUA be studied in terms of how they do their underwriting. There was no formal recommendation to the Gov. about funding from the JUA level, and the task force now has another sub-group studying risk retention groups and the JUA level.

RFM: The task force recommendation to the Gov. was that all non-institutional providers be forgiven for the MCARE Fund level for 2003. The total amount of that level of forgiveness was estimated to be approximately $300 million.

RFM: The sub-committee of the task force that was appointed to look at the MCARE Fund level came in with a listing of potential funding sources and estimated amounts of funds that might be available from those sources, such as: possible use of some of the tobacco settlement money; trying to collect the equivalent of a premium tax from the Blues, as other commercial carriers have to pay; selling the state liquor stores; trying to put an assessment of one percent or less on property and casualty insurance companies; the same on health, life and accident insurance. The listing contained 10 or 12 possible funding sources. It was the decision of the task force not to select from that list a particular recommended funding source. There are a lot of financial and political issues involved in obtaining $300 million in a state that’s having budget deficits and other financial challenges. I think the task force felt that it would be best served to give the Gov. the flexibility to pick those sources with which he is most comfortable or those with which he feels that he can politically succeed.

RFM: To include them, according to what the MCARE Fund had indicated it needed for this year, it would take some $402 million dollars and I think the task force was attempting to come up with a relief package where the problem is most acute, and try to minimize the amount of money that would be required to provide forgiveness and the needed relief. The hospitals that are represented on the task force expressed concern about their cost at the MCARE Fund level but they were willing to accept being excluded.

RFM: The total MCARE forgiveness as he has proposed it is not $300 million, but estimated to be $220 million. He is suggesting that those funds be obtained from a one-time assessment on health insurers, specifically the Blues. There would be total forgiveness for four high-risk specialty groups—OB/GYN, neurosurgery, orthopedic surgery and general surgery—and there would be approximately a 50 percent forgiveness for all other physicians.

RFM: I certainly don’t think that it’s going to be easy. The Blues, Highmark and Capitol Blue Cross in particular, have come out strongly objecting to the use of their surplus in this way, so I think we certainly are going to hear considerable opposition coming from at least those two Blues plans. The business community and the AFL-CIO representatives were very concerned about the cost of this forgiveness and whether or not it will ultimately be borne by employers and employees of the state. I haven’t spoken to them about it, but I think that they are probably more comfortable with the $220 million level than the $300 million level, although I think they would probably have felt better about a proposal that required less than the $220 million. And I do know that there are legislators that have spoken out against the Rendell proposal. I would guess that there’s going to be a considerable amount of debate and discussion on this once it is formally introduced.

RFM: Physicians are pretty much at the end of their rope here. They are finding the situation intolerable and unsustainable, and I think at least the Gov. has raised some expectation that they may see some relief. I think the majority of physicians are skeptical about whether this will all come about or not, but they have been willing to take it in good faith that the governor will work hard to shape a financial relief package of some magnitide before all is said and done.

RFM: I don’t know that’s there’s a specific time on it. At the request of former Governor Schweiker, the Insurance Department was asked to suspend CAT Fund payments into the spring of the year. Most insurance companies in the state are complying with that request. I would hope that some action would be taken this winter on a relief package before this suspension runs out. Otherwise, I suppose Rendell could call upon the Insurance Department to extend the suspension time frame.

RFM: It was estimated when the proposal was a total forgiveness for the non-institutional providers that it would encompass somewhere between a 35 and a 40 percent savings on the total amount that physicians would be paying this year. That was a statewide average of savings on the total premium that would have been required, including primary insurance carrier and MCARE.

RFM: We’ve spent some time talking to Representative Ellen Bard about some of her legislative proposals. We have also talked about some financing mechanisms related to the MCARE Fund level. The judge has appointed several sub-committees: one to look at the positives and negatives of risk retention groups, and another that is to develop the agenda and timetable for discussing long-term solutions. Other subgroups include alternative dispute/tort reform, commercial insurance and physician reimbursement issues. At the sixth meeting of the task force, there is going to be a presentation from the Pew Charitable Trust to help give the task force some indication as to which solutions work over a long-term and which ones don’t.

RFM: The Pennsylvania Medical Society looks at long-term solutions basically in three tracks. One track is to fix the tort system. We have a wide list of reforms that are not addressed in Act 13. We also support some reforms that would strengthen some of the provisions that were compromised during the negotiation process that lead to Act 13. Further reforms include a $250,000 cap on non-economic damage awards, which would require a constitutional amendment. The other key element in terms of fixing the system is to put limits on attorney contingency fees by putting in a sliding scale similar to that used in California. The second track is considering an alternative system, either patterned after Workers’ Comp on a no-fault model or going after a broad-based patient compensation fund model. Our third track relates to what can be done to address the issue of low physician reimbursements, both at the legislative level as well as trying to increase the ability of physicians to level the playing field by having added bargaining power in terms of how they’re dealt with in the marketplace.

RFM: I have not seen what provisions might be on the table. I do know that they have stated that any further legislation to deal with the liability crisis needs to include an additional medical accountability piece. It is the Medical Society’s position that a good deal of that was addressed in Act 13, in the very voluminous patient safety section of the bill, and that it is having some unintended consequences. It’s already log-jamming the system with paperwork and reports and it’s keeping the medical community from addressing patient safety measures as quickly as they did prior to Act 13. The Patient Safety Authority hasn’t released a RFP yet in terms of who is going to do the analysis of this data. Therefore, the information is being stockpiled in institutions all over the state. The Board of Medicine has been strengthened and physician licensure fees have increased in order to provide more funding for these patient safety issues. The Medical Society’s position is that, while we’re still trying to adjust to all the changes that Act 13 has brought in the medical accountability area, no further action should be taken at this time. We need time to see if Act 13 will work effectively. The Society does support, however, holding the Board of Medicine more accountable for activities assigned to them.