RBG: It was created primarily to ensure that the governor and his administration would have a central point for advancing the health care reform agenda. The governor remains committed to his primary agenda of educational reform, economic stability and development, and health care reform. If he wanted to deal with any issue related to economic development, there is a secretary for that, and there is a single department for education. In health care reform, the governor would need to talk to six or seven, perhaps even more, departmental agencies, secretaries and commissioners. So the Office of Health Care Reform was established to lead and to coordinate the administration’s health care reform agenda among and between each of the departments. Its charge, imbedded in an executive order, is to eliminate redundancies, streamline delivery of products and services by identifying best practices in the commonwealth and in the country, and ensure accessibility and affordability of quality health care for the citizens of the commonwealth, including projects related to medical malpractice insurance, accessibility to emergency room care, the continued operation of trauma centers and long term care.

RBG: The office is a cabinet level position with an advisory role to the governor and also acts as a facilitator of the other cabinet level departments in facilitating the administration’s health care reform agenda. The authority of the Office of Health Care Reform resides in the office of the governor, so that our recommendations are directly to the governor. The director of the Office of Health Care Reform is the chair of the Governor’s Health Care Reform Cabinet and the people who sit on that cabinet are the secretaries of Health, Welfare, Aging, Corrections, the Adjutant General, and the Insurance Commissioner. We meet and discuss the reform agenda and focus and coordinate our efforts. The secretaries and commissioners have been advised by the governor that they may not act on any aspect of their responsibilities that is related to health care reform without going through the Office of Health Care Reform. This office must be made aware of any of their actions and plans, whether it be for using the resources out of their budget, using people out of their budget, having them determine a policy or plan on a regulation or a statute - anything related to health care reform needs to come through the Office of Health Care Reform. We take a position on it and we advise the secretary and the governor as to what our position is. The determination as to whether to pursue that action is made by the governor.

RBG: No, and that was at my request. And we have a very small staff: four professionals and two administrative people. The reason that structure was requested is that we believed from the outset that we have extraordinary expertise within the commonwealth in the people who are attached to the different departments that I just named. They’ve developed expertise over an extended period of time and in many cases they were not included in deliberations or assessment of improvement processes. Further, they did not have any vehicle through which they could communicate across departmental lines. We have projects that are being housed in the Office of Health Care Reform and are led by people within the other agencies, such as the Department of Aging, with people who are assigned to projects from each of the other departments as well as from interest groups outside of government. We did not want to establish any kind of bureaucracy that would be additive to the budget of the state. In essence, we have monies that are imbedded within the budgets of the other departments because what we’re trying to prove here is that we are about efficiency and effectiveness, using the dollars that are already committed in each of the other departments to their highest and best use.

RBG: I don’t have a health care background. What I have is a corporate business background as a Chief Executive Officer of major banks and, prior to that, working through the operational and financial side of the banking business. My 30 years experience in the industry has been around starting up businesses, doing major turnarounds of businesses that were in trouble, acquiring businesses and other banks and merging them into a full banking institution. The last bank that I was CEO of was the 18th largest bank in the country at a time when there were over 2,000. Basically, what we have is redundancies and a fractured health care system. We have a system that is in trouble that requires turnaround methods, strategic planning and implementation, good policy and the ability to have processes to support the policy and changes.

RBG: As an example, let’s talk about community versus demographic ratings. The Insurance Department has the authority to approve community or demographic bases for an insurance company to establish their methodology of determining insurance factors. However, our office from a strategic viewpoint needs to determine what effect community versus demographic methodologies would have on all of the constituencies for whom the state government either is the purchaser of insurance or the provider of insurance and we would weigh in on that from the accessibility and affordability of insurance standpoint.

As another example, the Office of Health Care Reform was charged with reviewing the recommendations of the Medical Malpractice Liability Task Force that the governor-elect had established prior to this office being established. Their recommendations came to the governor and came to me at the same time. The Insurance Department reviewed what the options were for meeting the governor’s commitment of MCARE premium abatement for physicians, and that work was reviewed by the Office of Health Care Reform. The decision of the MCARE abatement being extended beyond the one year was made by the governor, but was recommended to him by the Office of Health Care Reform. In order to do that, we needed to work with the Insurance Department to determine what the subsidies for that abatement would be over the next three years.

RBG: The governor-elect had established a Medical Malpractice Liability Task Force team and asked for recommendations around the critical issue of the cost of medical malpractice insurance for physicians and other reforms that he would need to consider when he was governor. One of the first things that came out of that task force was a recommendation that he do something to control the cost of medical liability insurance. Since the only charge that the government has control over is the MCARE Fund charge, the recommendations that the governor received from the task force were to control the increased cost of MCARE premiums either through eliminating them or giving a significant reduction. So he announced in December his plan to give a 100 percent abatement to the four critical specialties who would pay the most in MCARE premiums and 50 percent to all other physicians. He also had announced in December that he was going to look at determining whether or not the excess reserves from the Blue Cross organizations in the state would be able to be used for funding this abatement.

Our first project was to assess how we were going to be able to keep the governor’s commitment to fund this abatement, and what other reforms would we implement in order to address the issue of medical malpractice liability, the effect on physicians and most critically the effect on access by the citizens in the state. At the same time, both the task force and our office met with William Sage, who is the leader of the Pew Project, to gather from him the Pew Project’s view of what the best practices would be to apply to Pa.’s medical malpractice liability issues. The insurance commissioner and I met with medical liability insurance companies that write in our state, those that did write in our state and those that have never written in our state to ask them questions such as what would enable you to expand your book of business in our state and what would cause you to return to our state. Our office reviewed the options of risk retention groups and captive insurance companies, as well as the proposal of having the state potentially be the insurer from first dollar, covering the primary insurance layer up to $1 million. That’s what we were looking at while the liability task force was looking at other reforms. They submitted their reforms on the 1st of April to the governor and to this office. We reviewed those reforms and we also did some test analysis of them on the basis of how certain reforms were implemented in other states. The outgrowth of it all was that our office recommended to the governor, after having worked with the Office of Budget as well as the Insurance Department, that we could not simply provide an abatement for one year, 2003, but that the abatement would need to continue for at least three years until the patient safety and additional tort reforms that were recommended in the governor’s package could be in place to give physicians relief so that patient access would not be impacted and until the insurance companies would be willing to reenter the state.

RBG: We believe that the improvement in the patient safety, which will be an outgrowth of the patient safety initiatives that are in the plan, the additional tort reforms that the judiciary branch is reviewing, the actions on provider reimbursement such as the trauma center operations and increased Medicaid reimbursement for OBs delivering babies - that all of these factors will come together to create to counteract what people have called the perfect storm as it relates to the medical malpractice liability crisis.

RBG: In essence of what that says is that the insurance commissioner has a responsibility now to review what those increases are. The increases came about as a result of most every aspect of medical liability being out of control. Act 13 was an extraordinarily good first step to begin to control the outcomes of medical malpractice case payments, and with these additional reforms on top of that, we should not be seeing from liability carriers the need for such extraordinary increases as we have seen. So we don’t really view that as a deterrent to medical malpractice carriers coming back into the state.

RBG: It’s extraordinarily expensive. It would be a $400 million cost that would have to be absorbed somehow through a revenue source, which in essence would be a burden on all taxpayers. But most importantly, the rate of increase of medical malpractice premiums most severely impacts the high risk physicians. The claims being made about physicians leaving the state, whether you subscribe to them or not, says that where we are having an impact in terms of accessibility to physicians is in the specialty classes, not in the general practitioners.

RBG: For several reasons, not the least of which is that the abatement now is beyond one year and even if you change the assessment formula, the abatement would not be funded by the reserves of the Blues. Further, there was a whole set of groups, individuals and entities who argued that the reserves, if they are going to be used for anything, should be used to either reduce the premium cost for health care or be returned to the insureds who paid in the reserves. The position the governor took in June of not identifying a source of funding was really at the advice and request of the legislative body to determine the source of funding through the budget process, and because the budget process is in some degree of flux, he agreed with that.

RBG: We have always been in favor of retiring the MCARE Fund. The ability to purchase coverage between $500,000 and $1 million is cheapest through the MCARE premium. The primary carriers basically have said to us they have neither the wherewithal in terms of capital to invest in providing $500,000 and $1 million coverage at the rate that we provide it in the state. So, for the short term, we need to keep it operating in the foreseeable future, at least. Act 13 has addressed the issue in its proposal that in 2006, if in fact the marketplace is robust enough, that coverage can be carried by primary carriers up to $750,000 and then in 2009 up to $1 million, and the insurance commissioner has the right and authority to determine if that coverage could be provided by the primary marketplace. At the same time we need to make sure that we have the wherewithal to retire and cover the tail of the MCARE Fund. Would we like to accelerate the phase-out? Yes. But the marketplace is giving us no indication that we can.

RBG: In the past, the legislature took some actions that dealt with mediation and certain other reforms and the judiciary basically overturned those actions saying it was the purview of the court to determine what actions would be taken in courts. And so the current recommendations were made directly to the judiciary because we did not want to engage once again in either offending them or usurping their powers and authorities. The reforms for the judiciary to consider include changing the standard for remittitur, which is something the legislature would first need to do, and provides a standard for a judge to refer to in order for him or her to determine whether or not a noneconomic jury award is excessive. The standard for remittitur as it currently stands is really something that is quite conservative: it must be so excessive and unconscionable as to shock the conscience of the court. When judges have gone to that language, they have not been very quick to determine that in fact it’s unconscionable or shocks their conscience. Our proposal would allow a judge to grant the motion of remittitur if "the award deviates materially from what would be considered reasonable compensation." What we need for the court to do is to determine guidelines for remittitur for the judges to consider.

RBG: The governor asked the court to consider for cases involving minors or incompetents that the attorney fees cannot exceed 25 percent. For recoveries of $50,000 or less, attorney fees cannot exceed 40 percent. Recoveries between $50,000 and $7.5 million, attorney fees cannot exceed 33 percent. For any recovery above $7.5 million attorney fees can’t exceed 20 percent. And most importantly, a referring attorney cannot receive a higher percentage than the attorney handling the case.

RBG: I think the issue of remittitur first of all is an acknowledgement that the standard for a judge to consider was just extraordinarily conservative. And so the opportunity for a judge to now use the new standard will give the judge a great deal more latitude in determining whether or not he or she should consider that the jury award is excessive. The guidelines that we’re asking the court to consider would also give the judge an opportunity to review guidance from the court in terms of how to apply his or her decision on adjusting the jury awards. But you have to read further in to it, because our recommendation is also that we ask the court to begin to collect data on jury awards and the basis for those awards in terms of what was the injury and what kind of incapacitation did it cause, etc., so that the court system can begin to build a database and a benchmark for them to adjust those remittitur standards on the basis of actual outcomes, throwing out the outlier cases like the bottom 10 percent and the highest 10 percent.

RBG: We added to the PHC4 reauthorization recommendation an appointment of a certified quality systems expert and a patient safety advocate as board members, the use of the data by hospitals’ patient safety committees , and auditing of the use of the data by the Health Department. For the medical board, our proposal is to add a patient safety advocate as well as a quality systems expert. The Office of Health Care Reform has been meeting with the staff of the Pennsylvania Medical Board to determine how to improve the procedures within that staff so that they can get in the most efficient way the information that they need in order to make decisions about either physicians or hospitals or other health care provider entities. The Patient Safety Authority is not yet up and running the way the General Assembly had mandated. We want to institutionalize a patient safety culture across Pa., and in order to do that we have several recommendations. We want an integrated patient safety reporting system, adding six hours per year of continuing medical education requirements in patient safety. Since the Patient Safety Authority record keeping actions are not yet up and running, our recommendation is that we use the PHC4 data in the interim in order to effect the actions of the Patient Safety Authority board. PHC4 is going to generate a report for use by each hospital’s patient safety committee. It also will be giving these reports to the Department of Health, which will conduct audits on that basis. To the Patient Safety Authority board we are also adding a representative from a patient advocacy organization and a person certified in continuous quality improvement.

RBG: We have not taken a position on special malpractice courts at this point in time because we don’t believe that they are efficient or effective and if the judiciary takes actions on mediation and other actions that they are currently considering, we believe that that will be sufficient. We are continuing to study no-fault practices in certain states as it pertains specifically to babies who are delivered and have a neurological impairment of some kind. We continue to look at medical malpractice liability reform methods that are either implemented or being considered in a best practices format and we continue to talk to people like the folks on the Pew Project to see what is happening across the country.

RBG: It’s currently under study. In terms of administrative resolution, we don’t want to usurp the powers of court, so that’s pretty much going to be dependent on them. We have no immediate plans to implement either of those demonstration projects but we are looking very hard at them and we’re looking at some alternatives, which I’ll be happy to talk to you about later in the year.