JENNI DILLON Star-Tribune staff writer | Posted: Tuesday, October 26, 2004 12:00 am
A state-run excess liability fund could help with doctors' malpractice insurance rates and coverage if tort reform efforts fail to win voter approval, according to a draft study presented to the Wyoming Healthcare Commission on Monday in Casper.
The commission spent much of its day-long meeting reviewing a preliminary draft of the study, one of three that actuarial firm Milliman Inc. is working on for the state.
The first study, on noneconomic damage caps in medical malpractice claims, was completed and released Oct. 15. The excess liability fund study is expected to be released Nov. 1, and a third study, on risk retention pools, is slated to be finished Nov. 15.
Richard B. Lord, a consultant who prepared the excess liability fund study, told commission members the second study is based in part on the first, which found that claim caps could significantly decrease malpractice claim payouts, if not rates.
An excess liability fund could decrease actual rates for doctors, but only if set up properly, Lord explained.
"The purpose of this task was to review suitable structures for a fund to cover the excess liability … to provide comparisons to comparable funds in other states and to provide analysis as to establishing a fund in Wyoming," Lord said.
One state the firm was asked by the Wyoming Legislature to study was Nebraska, where an excess liability fund protects doctors with up to $1.75 million of coverage. Lord said a similar structure in Wyoming would actually increase malpractice insurance rates for doctors. However, he said, coverage does not need to go that high.
A fund that provided coverage for claims between $250,000 and $1 million would decrease doctors' rates, he said.
It would work like this: Doctors would pay a surcharge to the fund based on a percentage of their primary coverage rates. The fund then would cover any claim costs after a predetermined amount, which would be set by the Legislature if and when such a fund were established.
For example, with a fund that "attaches" at $250,000, a primary insurance provider would pay the first $250,000 of the claim, while the fund contributed the rest, up to another predetermined amount, likely $1 million.
However, Lord told the commission members, the savings from a fund probably would be negated if noneconomic damages caps were instituted in Wyoming. That's because a cap on noneconomic damages - which the first Milliman study said account for about 60 percent of all claim expenses - would significantly decrease the excess liability the fund would be set up to cover.
Commission Chairman Chris Muirhead said the excess liability fund will be "the next step" if tort reform efforts do not occur.
At present, however, the study still is in the works, he said. Commission members spent Monday posing questions to Lord and suggesting content and language revisions to the study.
All three Milliman studies will be used to provide data for legislators next session as they continue to tackle health care issues for the state, Muirhead said.
"We put the studies out there, but we're not taking a stance," Muirhead said. "This commission with come forth with recommendations for consideration with these studies."
Staff writer Jenni Dillon can be reached at (307) 266-0619 or Jenni.Dillon@casperstartribune.net.