What Is Mcare and Why Should You Care?
The subject of medical liability coverage can be a difficult one to navigate, particularly Pennsylvania’s Mcare Fund. The program has a long and confusing history, which the Pennsylvania Medical Society has boiled down to just the essentials.
What is the Mcare Fund?
The Mcare Fund is a state-run medical liability coverage fund. In Pennsylvania, physicians must carry $1 million in liability coverage. The first $500,000 can be obtained from private insurers or the Joint Underwriting Association (JUA). The JUA is the liability insurer of last resort for physicians who can’t obtain coverage elsewhere. Physicians must pay an assessment for the second $500,000 of coverage from the Mcare Fund.
Will these levels ever change?
Every two years, the state Insurance Commissioner decides if the private medical liability insurance market can support increasing the amount of coverage that must be purchased from private insurers or the JUA to $750,000. That would decrease Mcare coverage to $250,000.
Those levels would then stay the same for three years, when the commissioner would decide if physicians should purchase all coverage from private insurers or the JUA.
In 2005 and 2007, the commissioner decided not to change the levels. He will re-examine the market in 2009.
How does the Mcare Fund work?
Unlike a traditional insurer, the Mcare Fund is a pay-as-you-go operation, setting aside no reserves to pay future claims. It simply charges physicians, hospitals, nurse midwives, podiatrists, and nursing homes an annual assessment to pay current claims and operating expenses. In 2005, the fund paid out claims totaling $230 million on claims that exceeded the $500,000 primary level of coverage.
What is Mcare abatement?
Physicians can receive Mcare assessment discounts through Mcare abatement if they agree to remain in active practice in Pennsylvania during the year after receiving the discount.
It offers high-risk physicians (such as neurosurgeons, orthopedic surgeons, general surgeons, emergency physicians, and OB-GYNs) a full 100 percent abatement of their Mcare assessment for those two years. All other physicians receive 50 percent abatement.
Why was Mcare abatement created?
Mcare abatement was initiated in 2003 in response to Pennsylvania’s deepening medical liability insurance crisis. The program initially was established for 2003-04 but was extended for 2005-07. It hasn’t yet been extended for 2008.
What is the unfunded liability?
Eventually, physicians will purchase all of their medical liability coverage privately.
This is where the unfunded liability comes in. Even after physicians no longer obtain coverage from the Mcare Fund, there will still be claims to pay because some suits filed before then won’t have been settled and others won’t have been filed yet. Since Mcare only collects enough to pay for a single year’s claims and expenses, there won’t be funds to pay those claims.
The current unfunded liability is estimated to be $1.7 billion.
Who will pay off the unfunded liability?
Currently, there is no plan in place to pay off the unfunded liability. It could fall to physicians to pay it off—even those who weren’t practicing in the state when the Mcare Fund was in place. It would be like asking those physicians to pay a mortgage on a house that they never owned. A plan must be enacted through legislation.
The Pennsylvania Medical Society’s plan would use tobacco taxes and surcharges on moving violations that been put into the Health Care Provider Retention Account (HCPRA) to pay off the unfunded liability. This would be much fairer and would not put the burden of the unfunded liability on the backs of young physicians.
Last Updated: 10/8/2008