Rx for PA

1. What is Prescription for Pennsylvania?
2. If the health care system is so broken, why does the governor think the government can solve the problem?
3. Why isn’t Governor Rendell proposing a single-payer program?
   
   Controlling Cost
    
4. How will prescription for Pennsylvania reduce the cost of health care?
5. What will Prescription for Pennsylvania do to lower the cost of prescription drugs?
6. How will Prescription for Pennsylvania control expenditures by hospitals for facilities and equipment?
   
   Improving Quality
    
7. How will Prescription for Pennsylvania improve the quality of health care?
8. What are health associated infections (HAI’s) and how does Prescription for Pennsylvania address them?
9. Prescription for Pennsylvania refers to MRSA infections. What are they?
10. What does Prescription for Pennsylvania do to promote wellness?
    
    Increasing Access
     
11. If nurse practitioners are going to be providing more care under Prescription for Pennsylvania, shouldn’t they be covered under medical malpractice policies?
12. How many people are uninsured in PA?
13. Who are the Uninsured?
    
    PA ABC
     
14. What is Pennsylvania Access to Basic Care (PA ABC)?
15. How will PA ABC work and who is eligible?
16. How many people will be eligible for PA ABC?
17. How many people are expected to actually sign up for PA ABC?
18. Will employers cease offering health care coverage if they think their employees can get it from a government program?
19. Is ABC and entitlement program?
20. How does ABC help small businesses that already offer coverage?
21. What are CARE Grants?
22. How do HSA’s figure into ABC?
23. What if an employer offers health insurance, but the employee can’t afford the employee premiums?  Can employees get help paying so that they can get their employer-provided health care coverage?
24. What are the health benefits under the ABC program?
25. Why does ABC offer a richer benefit package than adultBasic but costs less?
26. How will ABC be funded?
27. How can the state pay for ABC with declining tobacco revenue, which will be further affected by SMOKEFREE Legislation?
28. Will offering PA ABC have an impact on other health care insurance?
29. Will Pennsylvania be mandating that everyone have health insurance?
30. Who will be in charge of PA ABC?
31. How will you be getting word out about this new plan and what will be the process to apply?
    
    MCARE and the Health Care Provider Retention Account
     
32. What is Mcare?
33. How does Mcare work?
34. What is the HCPRA?
35. Why is there an Mcare surplus?
36. What does ABC do about Mcare?
37. How does ABC propose to pay off the unfunded liability?
38. What has happened to Mcare and medical malpractice insurance since legislative med mal reforms?
    
    ABC and Physicians
     
39. How does ABC help physicians?
40. What conditions must doctors meet to receive the abatement under ABC?

1. What is Prescription for Pennsylvania?

Prescription for Pennsylvania is Governor Rendell’s comprehensive health care reform initiative to address the access, affordability and quality of health care in the commonwealth.  Rx for PA is a set of integrated strategies to eliminate Inefficiencies in the health care system, better manage chronic conditions, eliminates health facility acquired infections, common sense insurance reforms and offering access to affordable health care insurance to the uninsured.  Prescription for Pennsylvania ensures that every Pennsylvanian has access to quality health care.

return to menu

2. If the health care system is so broken, why does the Governor think the government can solve the problem?

Over the last three years, while the cost of health care has greatly increased, the Commonwealth has experienced no increase in the health care costs provided for its 55,000 state employees. In addition, while other states have had to cut hundreds of thousands of their residents from state-supported health care programs, Pennsylvania has expanded enrollment by 370,000 and kept costs down through tough management and strong wellness programs.

As a result of the Commonwealth’s track record, businesses, unions, voters and others have all been asking the Governor to take the lead to institute statutory reforms and pay-for-performance purchasing to reduce the cost of health insurance, improve patient safety and cover the uninsured. Prescription for Pennsylvania is the response.

return to menu

3. Why isn’t Governor Rendell proposing a single-payer program?

Since, 88% of the Commonwealth’s population already has health insurance – 17% are covered by Medicare, 2% through military benefits, and most of the rest through employers - this plan builds on the model that is currently in place.

38% of the working uninsured are offered employer-based health insurance but can’t afford the required premiums. This plan will help those employees by allowing them to purchase CAP at an affordable rate. The plan will also offer affordable health insurance through CAP for those who do not have an employer-based option.

While there are significant merits to a single-payer model, it is a system that cannot be implemented on a state-by-state basis. It would be too costly. In order to be viable, single-payer needs to be implemented nationwide and that is unlikely to happen in the near future. In the meantime, CAP will help thousands of people who are without insurance while helping to lower the cost of coverage for all Pennsylvanians.

return to menu

4. How will Prescription for Pennsylvania reduce the cost of health care?

Prescription for Pennsylvania will reduce the cost of health care by:

• Working with health care facilities to prevent health care facility acquired infections (HAIs) and focusing on patient safety to reduce medical errors, both of which cost billions of dollars in avoidable hospital charges.
• Expanding access to qualified health care providers, especially those providers who are not physicians; and providing incentives for health care providers who offer evening and weekend hours to reduce unnecessary use of expensive hospital emergency rooms.
• Providing the uninsured the opportunity to buy into CAP at a subsidized rate for those with incomes under 300% of the Federal Poverty Level and allowing others to buy it at cost. This will help reduce the cost of uncompensated care for the uninsured.
• Changing how chronic disease care is delivered in Pennsylvania by providing incentives for the use of nationally recognized Chronic Care Models, which have been shown to significantly reduce the number of avoidable hospitalizations for those with chronic diseases.
• Increasing competition among insurance providers through the requirement of standard benefit packages for small group and individual policies.
• Providing consumers and health care payers more information on cost and quality of health care so they can make informed choices.
• Giving the Pennsylvania Insurance Department the power to better control how rates for insurance products are set and, when rates are filed, scrutinizing them to ensure that savings from cost containment measures are reflected in lower premiums.
• Establishing a commission that will recommend how to ensure that expensive new health care capital expenditures increase quality and access, reduce cost, improve safety and are not an economic burden to health care purchasers.

return to menu

5. What will Prescription for Pennsylvania do to lower the cost of prescription drugs?

The Administration is working on a public database expected to be released in the spring of 2008 which will allow individuals to use a website to search the pharmacies in their area to find the best price on the prescriptions they need. This will help to provide transparency of the variance in pricing to allow consumers to make a more informed decision about how they purchase their prescriptions. Educating consumers and providing transparency in the retail price of prescription drugs is the first step toward making long-term change in relieving the burden of sky-rocketing drug costs.

return to menu

6. How will Prescription for Pennsylvania control expenditures by hospitals for facilities and equipment?

To ensure rational investments, Prescription for Pennsylvania requires that data be collected to determine real regional needs for present and future health care capital investment. A commission will recommend how this information will be gathered into a regional plan that will guide any and all investments in new capital or equipment requests by health care systems.

return to menu

7. How will Prescription for Pennsylvania improve the quality of health care?

Prescription for Pennsylvania will improve the quality of health care in our Commonwealth by:

• Requiring specific system changes by hospitals to prevent avoidable HAIs and medical errors and ensuring public reporting by hospitals on their progress.
• Requiring greater investment in health information technology to reduce patient harm and provide cost savings by enabling more efficient communication among all providers involved in a patient’s care. These required technologies include use of electronic medical records, quality management systems and computerized prescribing in Pennsylvania hospitals by a specific date.
• Establishing payment systems that encourage the effective prevention and treatment of chronic diseases using nationally recognized chronic care models.
• Promoting a payment system that rewards wellness and efficient quality care and does not pay for unnecessary, ineffective or harmful care.
• Promoting wellness in our schools and businesses and making all Pennsylvania workplaces, restaurants and bars smoke free.
• Embedding palliative care and pain management specialists throughout the health care system and expanding the use of hospice services for those in the end stage of life.

return to menu

8. What are health care facility acquired infections (HAI’s) and how does Prescription for Pennsylvania address them?

Health care facility acquired infections, also known as hospital acquired infections or HAI’s, are diseases or infections that a person receives while in a health care facility that they did not have before they were admitted and that usually have no relation to why they were initially admitted. These infections not only endanger people’s lives, they also drive up the cost of our health care system. The charges for the average hospital stay in 2006 totaled about $35,000 while the average charges for a patient with an HAI were around $150,000. However, most of these infections are avoidable with proper hygienic and sanitary conditions; the cost of the gowns, masks, and disinfectant necessary to prevent most infections is between $50 and $150. Infection control models adopted in other countries and in select facilities in the United States, such as a number of VA health centers in Pennsylvania, have shown that these types of infections can be virtually eliminated by implementing a set of best practice standards for infection control and prevention.

In July, Governor Rendell signed legislation which is being implemented by a joint committee including the Department of Health, the Patient Safety Authority, and The Pennsylvania Health Care Cost Containment Council with a goal of eliminating health-facility acquired infections.  Working in tandem with the Hospital and Healthsystems Association of Pennsylvania, the committee is providing guidelines for health care facilities to use in long-term infection control planning as well as in surveillance activities to allow for better implementation of infection control protocols. The health care facilities are expected to begin the expanded reporting early in the spring of 2008.  Again, this effort will help Pennsylvania to save hundreds of millions of dollars in health care costs; and, more importantly, it will help to save thousands of lives every year.

return to menu

9. Prescription for Pennsylvania refers to MRSA infections. What are they?

Methicillin-resistant Staphylococcus aureus (MRSA) is a type of hospital-acquired infection (an infection contracted in the hospital, known as an HAI) which is resistant to commonly used antibiotics. Most often this type of infection is spread from one patient to another via the hands or clothing of health care workers and/or equipment shared among patients such as stethoscopes and blood pressure cuffs.

MRSA lives on the skin and in the nose of healthy people, who have no symptoms from the bacteria. Some patients can become extremely ill from the infection if it gets into the blood stream and can die from it. A number of countries have virtually eliminated MRSA in hospitals – proving that it is possible for Pennsylvania to do the same through simple hygienic measures such as using caps and gowns, hand-washing and using alcohol based sanitizers.

There has been heightened awareness of MRSA recently as there have been a number of high-profile cases of community based MRSA. Community based MRSA is similar to the hospital form but it is contracted from an individual in the community not in a health care facility. Community based MRSA is usually passed through communal use of facilities or close human contact, and it can likewise be avoided through proper hygiene. Student, athletes, and others who use communal facilities should be aware that proper hygiene including hand washing and alcohol-based sanitizers should be used when one is in a communal environment, especially for items that come into contact with the skin.

return to menu

10. What does Prescription for Pennsylvania do to promote wellness?

All Pennsylvanians need to take responsibility for lifestyle issues that impact their health, quality of life and cost of health care. Certain health-damaging behaviors, such as smoking, cause health consequences and the need for treatment that can drive up the cost of health care for everyone. Tobacco causes heart disease, stroke, cancer, chronic lung disease, contributes to death from pneumonia and influenza and increases risks associated with diabetes.

In order to address these types of concerns, the Pennsylvania Employee Benefit Trust Fund already has implemented a program called “Get Healthy” wherein participants can lower their insurance contribution rate by participating in wellness activities on a regular basis. The Administration's proposal is to offer similar assistance to overcome those behaviors while at the same time encouraging businesses and insurers to provide incentives for healthy behaviors and active remediation of unhealthy behaviors.

Furthermore, Prescription for Pennsylvania calls for smoke free workplaces for all Pennsylvanians. This proposal would includes restaurants and bars. Efforts like this in other states have helped to reduce the risk of exposure to second hand smoke, reduce smoking overall, and have even been shown to be good for the businesses involved in terms of increased sales.

return to menu

11. If nurse practitioners are going to be providing more care under Prescription for Pennsylvania, shouldn’t they be covered under medical malpractice policies?

In most cases, nurse practitioners already carry medical malpractice insurance for the services they provide.  The legislation proposed by the Administration requires nurse practitioners to carry adequate professional liability insurance against medical malpractice claims; however, the cost of this insurance is not prohibitive as the level of risk for the care provided by non-physician health care practitioners is relatively low.

return to menu

12. How many people are uninsured in PA?

An extensive survey conducted in 2004 by the Pennsylvania Insurance Department determined that Pennsylvania had 900,000 uninsured – 767,000 adults and 133,000 children. That survey is currently being updated. The Current Population Survey conducted by the U.S. Census Bureau estimates that Pennsylvania has 1,358,330 uninsured, including 281,080 children. The Census Survey contacted far fewer Pennsylvania households than the Pennsylvania Insurance Department’s survey; therefore it may be less accurate. Other states that have done more in-depth surveys have consistently found their uninsured numbers to be lower than the data provided by the U.S. Census. We anticipate that updated figures for Pennsylvania from our survey will be available in March.

return to menu

13. Who are the uninsured in Pennsylvania?

Three out of four uninsured Pennsylvanians are employed, many of them by small businesses. Of those who are employed, three out of four have family incomes below 300% of the Federal Poverty Level. In addition, the uninsured are not just confined to the most urban areas; eight of the top 10 counties in Pennsylvania with the highest per capita uninsured population are in rural areas with Allegheny and Philadelphia counties ranking 10th and 5th respectively.

return to menu

14. What is Pennsylvania Access to Basic Care (PA ABC)?

Pennsylvania Access to Basic Care (PA ABC) is an innovative package of health care reforms that improves the economic conditions of health care providers, rewards small employers who offer health care to their employees and offers a private sector approach to providing an affordable health care product to uninsured Pennsylvanians.

return to menu

15. How will Pennsylvania Access to Basic Care (PA ABC) work and who is eligible?

• Moves those enrolled in adultBasic as of June 20, 2008 (approx. 55,000) into PA Access to Basic Care (PA ABC)
• Immediately notify those on the adultBasic waiting list to enroll in PA ABC as soon as this legislation is enacted and implemented
• PA ABC will provide coverage to approx. 273,000 people by year five of the new program.
• Enrollment will not be prohibited based on pre-existing conditions
• Qualifications for eligible adults:
  • Ages 19-64
  • At a minimum the product will be available to individuals with a household income of 200% of the Federal Poverty Level (FPL) /$20,800; if the federal government permits the income level may be as high as 300%.
  • Legally resides in the United States
  • Live in PA for 90 days prior to application
  • Is ineligible for Medicaid or Medicare
  • Has not been covered by any health insurance plan for at least 180 days preceding the date of application.
• Premiums for eligible adults
  • 100%-150% FPL $0
  • 151%175% FPL $40
  • 176%-200% $50
• Premiums for eligible small businesses
  • Employer Premium is at least 50% of the total monthly cost for each employee not less than $150
• Coverage is available at cost for eligible adults and eligible employees 201%-300% of FPL
• Coverage is available to individuals above 300% of FPL as the insurer of last resort (i.e they cannot buy affordable care on their own due to a pre-existing condition)

return to menu

16. How many people will be eligible for ABC?

Of the 900,000 uninsured Pennsylvanians, approximately 500,000 adults are eligible for ABC. However, actuarial trends indicate that some people won’t enroll in any health care plan absent a mandate requiring individuals to purchase insurance.
 

return to menu

17. How many people are expected to actually sign up for ABC?

Actuarial trends indicate that if an affordable product is available to the approximately 500,000 potentially eligible ABC enrollees, within the next five years as many as 273,000 Pennsylvanians would receive coverage through ABC or Medicaid. Funds provided for in ABC will make it possible for 270,000 of these individuals to enroll. In spite of the fact that funds are limited, this plan will make it possible for more than half of those who would enroll in ABC to do so.

return to menu

18. Will employers cease offering health care coverage if they think their employees can get it from a government program?

“Crowd out” is widely misunderstood and measuring it is extremely difficult. With ABC we will have to take into account changes in the economy that may be driving employer behavior. Across the country and especially in Pennsylvania, the number of people being offered employer- sponsored coverage has been declining regardless of expansions of public programs.   

Pennsylvania has a good record on crowd-out in the CHIP program – in fact, CMS points other states to Pennsylvania for help on how to effectively manage. From October 2006 through September 2007, only 6% of applicants were denied coverage for having either private or employer-based coverage (all applicants).

ABC uses several of the crowd-out tools that CMS says are most effective in preventing crowd out including: 

• Imposing a go bare or waiting period – people must be without insurance for 6 months
• Imposing cost sharing – premiums begin above 150% with point of service co-pays

return to menu

19. Is ABC an entitlement program?

PA ABC is not an entitlement – yearly enrollment is based on available funding.

return to menu

20. How does ABC help small businesses that already offer coverage?

ABC offers small employers grants to ensure they maintain their commitment to providing health care coverage.

• This plan provides $42 million for CARE (Continuing Access with Relief for Employers) Grants for small employers that already provide health insurance to employees.
• CARE will provide up to 25% of the cost of each employee covered by a health insurance plan up to the amount of the employer’s tax liability. Small employers who offer health insurance are eligible for a grant from the state to help defray up to 25% the cost of providing health care for those employees who are covered as individuals and 50 % of the cost of providing health care to the employee if coverage extends to his/her family. In order to receive the CARE grant as an eligible employer must have between and two and 50 employees and pay for health care insurance approved by the Insurance Department. The employer’s package can be a traditional insurance package or some sort of H.S.A.
• Pennsylvania will be one of the first states in the nation to provide financial assistance to our small employers who are doing the “right thing” by providing insurance to their employees.

21. What are Care Grants?

Continuing Access with Relief for Employer (CARE) credits are available to small low-wage employers (2-50 full time equivalent employees) who meet the following requirements:

• Has maintained coverage for at least 12 month prior to the effective date of the ABC legislation.
• Has incurred a health care expense in PA
• Has a tax liability for the year in which the application for the CARE grant is made.
• Applies for a grant providing all needed information

return to menu

22. How do Health Savings Accounts, or HSAs, figure into the ABC program?

• ABC is one of the first state health care plans that will offer HSAs to employers as an alternative for employees with earnings above 200% of the Poverty Level.
  Because HSAs may have a high deductible – meaning that if the person gets sick they must first pay out of pocket for their care –only individuals earning more than $20,800 a year can choose an HSA rather than the full coverage ABC package.
• The HSAs must offer health care coverage that is actuarially equivalent to the benefits offered under ABC.
• The Department of Insurance shall permit the establishment of health savings accounts for those who enroll in the program.

23. What if an employer offers health insurance, but the employee can’t afford the employee premiums? Can employees get help paying so that they can get their employer-provided health care coverage?

If an ABC eligible employee works for an employer that already offers a health insurance and if the cost to help them pay the monthly premium is less than what it would cost the Commonwealth to subsidize the enrollee in ABC, then the Commonwealth will do the common sense thing and help the employee pay toward their employers plan.

return to menu

24. What are the health benefits under the ABC program?

• Preventive and Wellness care
• Emergency care
• Inpatient and outpatient care
• Prescription drugs, medical supplies and equipment
• Emergency dental care
• Maternity care
• 30 days Skilled nursing
• Home health and hospice care
• Chronic disease management
• Inpatient and outpatient behavioral health services

return to menu

25. Why does ABC offer a richer benefit package than adultBasic but costs less?

There are several reasons:

• adultBasic covers about 55,000, whereas ABC will cover far more people, thereby lowering the average cost as adverse selection is spread over a larger pool.
• Persons on the adultBasic waiting list are permitted to buy coverage at cost. Those who do often need an operation, get the coverage, have the operation and then drop coverage. ABC will have penalties to discourage its use for this purpose.
• ABC will stress wellness, preventative care and will use the Chronic Care Model to ensure that individuals with chronic illness get the ongoing care they need, which will help eliminate avoidable hospitalizations and emergency room use.
• adultBasic pays a commercial rate to providers. ABC will pay an actuarial sound rate that in some cases will be below the commercial rate paid by adultBasic.
• The prescription benefits being offered under ABC will be primarily generic, will use a preferred drug list and will be administered by the Commonwealth, which will receive substantial rebates from drug companies. The behavioral health benefit is modest.

return to menu

26. How will ABC be funded?

• Tobacco Settlement money for current adultBasic Program.
• Community Health Reinvestment Fund money for current adultBasic Program.
• The Department of Public Welfare will apply for a waiver for federal matching funds (federal government currently approves waivers in other states for adults with an annual household income of up to 200% FPL, but may permit as high as 250%).
• Health Care Provider Retention Account
• Any money derived from other sources and designated specifically to fund the PA ABC program.
• Premiums paid by subscribers – employers, employees and individuals.

return to menu

27. How can the state for ABC with declining tobacco revenue, which will be further affected by SMOKEFREE Legislation?

The model uses the assumption that the supplemental revenue will include an increase in the Pennsylvania cigarette tax. The model assumes that these revenues will decline by 2 % per year. But cigarette tax revenues constitute only a small fraction of total funding for the program. In addition, the funding model compensates for this declining source by substituting cigarette taxes for other, increasing revenue sources in the out years.

28. Will offering PA ABC have an impact on other health care insurance?

New York State offers a similar product to PA ABC through private sector insurance, and many see this plan as having enhanced competition and strengthened the insurance industry in the Empire State. In addition, increasing the pool of individuals who have insurance will help to lower the cost of uncompensated care thereby relieving the burden on consumers to make up the difference. At present, on average 6.5% of every health care premium goes towards paying for care for the uninsured.

return to menu

29. Will Pennsylvania be mandating that everyone have health insurance?

The intention is to implement Cover All Pennsylvanians and the other health care reform initiatives and gauge their effectiveness in reducing the number of uninsured. At that point, a decision will be made about the individual mandate.

return to menu

30. Who will be in charge of PA ABC?

The Pennsylvania Insurance Department will be in charge of enrollment and outreach. The Department of Public Welfare will assist the Insurance Department with some administrative functions.

return to menu

31. How will you be getting the word out about this new plan and what will be the process to apply?

The state will use efforts similar to those for CHIP/Cover All Kids – including TV, radio and newspaper announcements; asking hospitals, social service agencies, business organizations and others to help sign people up.

return to menu

32. What is Mcare?

“Mcare” stands for the Medical Care Availability and Reduction of Error Fund. It was created under Act 13 of 2002 and is the successor to the Medical Professional Liability Catastrophe Loss Fund, better known as the “CAT Fund.”

return to menu

33. How does Mcare work?

Currently, Pennsylvania law requires physicians to carry a minimum of $1 million of medical malpractice coverage per incident, and physicians must have this coverage in order to be licensed. The first $500,000 of medical professional liability coverage per incident, which is called the basic or primary insurance layer, is obtained through the private insurance market. The second $500,000 of coverage per incident is provided by the state-administered Mcare Fund. Hospitals must also maintain medical malpractice coverage and their required amounts are higher -- $1 million worth of coverage for each incident and $4 million total coverage per year.

return to menu

34.  What is the Health Care Providers Retention Account?

The Health Care Provider Retention Account – which is often called HCPRA – was created as part of the Governor’s medical malpractice reforms in 2003. HCPRA is the fund into which the cigarette tax revenues are deposited to help pay for the Mcare abatement. Because of the improvement in the medical malpractice climate in Pennsylvania, filings and annual payouts have decreased dramatically, thereby creating reserves in HCPRA which have not been needed to pay for the abatement in the last two years. Currently, there is approximately $414 million in that account.

return to menu

35.  Why is there a Mcare surplus?

Because of the improvement in the medical malpractice climate in Pennsylvania, filings and annual payouts have decreased dramatically, and that is the primary reason there are reserves in HCPRA which have not been needed to pay for the abatement in the last two years.

return to menu

36.  What does ABC do about Mcare?

Medical malpractice coverage provided under Mcare will be phased out over the next 10 years. Coverage in the private market will increase in $50,000 increments each year until 2017. Beginning in 2018, all medical malpractice insurance will be purchased in the private market. The hospital and physician organizations have long pushed to get the government out of the medical malpractice insurance business so their members could buy medical liability coverage through the private market. Phasing out Mcare meets this goal.

Physicians will continue to have their MCARE abated. High risk specialists will continue to receive the 100% abatement throughout the 10 years.  This package also begins increasing the abatement of every physician in increments up to the 100% abatement level starting in year six.  The increasing level of abatement will help offset average increases in out of pocket costs as doctors begin buying a greater share of their med mal coverage from the private market.

The incremental increases in non-high risk physician abatements are structured are scheduled so that health care providers will not pay more for the combination of primary and Mcare coverage than they would have paid if they were to purchase 100% of their coverage from the private market.

Each year for the next 10 years doctors will purchase incrementally more of their med mal insurance in the private market.  The bill establishes that each year an additional $50,000 in private coverage will be purchased privately rather than purchased from the government run Mcare program.  Over the 10-year period, the private purchase will increase from the current level of $500,000 to $1 million per physician in the private market.

The result is that this bill phases out payments to the Mcare Fund for all health care providers.

Third, this bill establishes a lock box which annually grows and assures sufficient funds to pay off the currently unfunded liability – or the tail of the Mcare fund.

return to menu

37. How does ABC propose paying off the unfunded liability – or tail – of the Mcare Fund?

This package requires that half of the surplus in the Health Care Provider Retention Account (which is funded by the cigarette tax and helps doctors pay their malpractice insurance) is directed to a special account and locks it away with its interest earnings until Mcare coverage ends on January 1, 2018. As of January 2018 these funds will be used to pay off the MCARE tail. 

When Mcare coverage ends, the two sources which currently fund Mcare -- the $42 million a year from the AutoCAT fund and the 25¢ cigarette tax monies – will fund the ABC program.  Any surplus not needed for the ABC program can be used for the ongoing Mcare claims and operating expenses.  If there is not enough surplus to pay for Mcare claims in a given year, withdrawals are permitted from the lockbox account to make up the difference.

Mcare’s annual claim payments in recent years

return to menu

38. What has happened to Mcare and medical malpractice insurance since legislative med mal reforms?

For 2008, the two largest private medical malpractice carriers, PMSLIC and MedPro, decreased rates an average of 11 percent and an average of 6 percent, respectively. From 2006 to 2008 health care providers saw essentially no increase in their medical malpractice insurance costs because the reforms enacted caused the insurance rates to be flat for those two years. 

This provides a sharp contrast to 2002, when PMSLIC increased its rates an average of 40 percent and Med Pro 45 percent. In 2003, PMSLIC increased rates another 54 percent and Med Pro an additional 16 percent.

Additionally, there is renewed interest by companies that want to sell medical malpractice insurance in Pennsylvania, with 57 newly licensed entities writing medical malpractice coverage since April of 2002, giving doctors greater choice of insurer.

Another indicator of physicians being able to buy coverage in the private market is by looking at the number of doctors obtaining coverage from the Joint Underwriting Association (JUA), the malpractice insurer of last resort in Pennsylvania. Enrollment in the JUA has dropped to its lowest level since 2001 and is projected to continue to decrease.

According to statistics from the Pennsylvania Supreme Court, the number of med mal cases filed in 2003-2006 dropped 37 percent statewide as compared to 2000-2002. In addition, the venue law has had a tremendous effect of moving more than half the cases out of Philadelphia and into their proper counties.

Finally, claims payouts from Mcare have decreased for four consecutive years specifically they were 38 percent lower in 2006 than in the 2000-2002 base period before the reforms were implemented.

return to menu

39. How does the ABC legislation help physicians?

• ABC Keeps Doctors Practicing in Pennsylvania.
  This bill ends the Mcare Fund and its liabilities. No longer will today’s doctors be assessed to cover the medical malpractice claims of the past. As a result, the cost of medical malpractice insurance for doctors will drop.
• ABC Brings Physicians Cost Relief
  Over the next 10 years, doctors will be relieved of $1.3 billion in Mcare malpractice costs. Furthermore, this bill gives physicians continued abatements of their MCARE assessment.
• ABC Gives Physicians 10 years of Cost Predictability
  Each year the legislature has to reauthorize the Mcare abatement. As a result, doctors cannot rely on their costs being abated. This bill guarantees the abatement for the next 10 years.
• ABC Legislation Will End Mcare
  ABC phases out the government-run Mcare Fund and replaces that coverage through the private market. This is a goal long-sought by the Pennsylvania Medical Society, HAP and other health care provider organizations.
• ABC Will Address Mcare’s $2 billion Unfunded Liability
  ABC pays off the $2 billion unfunded liability of the Mcare Fund. Absent this legislation, physicians would be responsible for paying off this tail.
• ABC Reimburses Physicians at Higher Rates than Medicaid and the Governor’s CAP plan.
  ABC will mean that more people who are seeking care will actually have insurance, meaning increased reimbursements for physicians.

return to menu

40. What conditions must doctors meet to receive the abatement under ABC?

First, physicians must be current on their taxes.

Second, physicians who accept the abatement must agree to see patients who have ABC, adultBasic and CHIP health care coverage. Pennsylvania’s doctors have benefited from more than $1 billion Mcare abatements in the last five years and moving forward physicians will benefit from continued abatements paying-off the unfunded liability; it is reasonable to require them to provide this social service in return.

Finally, doctors must complete a course on pharmaceutical prescription writing to learn about the cost and the effectiveness of the drugs they are prescribing. Currently a voluntary program, the initiative involves consultants who explain to doctors the real costs of the drugs they prescribe and supplies them with materials on generic and over –the-counter alternatives. While keeping drug costs down, the program primarily serves the purpose of ensuring that patients get the best and most appropriate care.  The consultants even counsel doctors on how lifestyle changes can benefit some patients more than prescribing medications.  According to a Carlisle Sentinel Editorial, “The state would be wise to increase its investment and expand it to more doctors in more counties.”

return to menu

GOVERNOR'S OFFICE OF HEALTH CARE REFORM | CONTACT US | COMMONWEALTH OF PA