Malpractice Insurer Exit From Mass. Worries Physicians

The impending departure of one of the few remaining commercial insurance companies offering liability coverage for physicians in Massachusetts is yet more evidence that the state faces a real crisis in professional liability insurance for physicians, according to the top officer of the statewide physicians’ association.

Alan C. Woodward, M.D., president of the 18,000-member Massachusetts Medical Society, said that the departure of the Medical Liability Mutual Insurance Company (MLMIC) of New York from the state is another clear sign that the liability situation in the state is getting worse and that physicians continue to face greater challenges to the viability of their practices and their ability to deliver patient care.

The recent announcement that MLMIC will be withdrawing from the Massachusetts malpractice marketplace at the request of the Division of Insurance means that approximately 1,600 physicians will have to find another insurance carrier to provide professional liability coverage. MLMIC currently insures about 7 percent of the state’s practicing physicians, with many of those in solo or small group practices.

“The exit of MLMIC means less competition in the marketplace,” said Woodward, “and it means those 1,600 physicians will have few options for coverage that will likely be at higher prices. This development, along with physicians facing their fourth consecutive year of double-digit increases from the state’s largest commercial insurer, makes it unmistakably clear that the liability crisis in Massachusetts has two sides – affordability and availability.”

The departure of MLMIC leaves GE Medical Protective, with 1.3 percent of the market, and ProMutual Group, with some 38 percent of the market, as the only two commercial insurers left in the state, according to MMS.

The remaining physicians are covered through “captive” insurance plans, set up by institutions such as large hospitals or medical groups, available only to those physicians who work at those institutions. Currently, the state has approximately 21,000 insured physicians.

Woodward said it is likely that most of the 1,600 physicians covered by MLMIC will eventually be insured with ProMutual Group, the state’s largest commercial insurer.

ProMutual Group has announced an average 11.3 percent increase in rates for 2004, pending review by the insurance department. The 11.3 percent jump follows annual average rate increases of 9.5, 14, 12.5, and 20 percent over the last four years. And while the 11.3 percent rise is an average rate increase, 68 of 114 physician specialty classifications are slated for increases of 15 percent or more.

With this latest increase for 2004, the average medical liability rate for physicians covered by ProMutual has nearly doubled – soaring 99 percent – on a compounded basis over a six-year period since 1998, Woodward maintained.

“As reimbursements for services are lagging, and as both liability rates and the costs of maintaining a practice rise dramatically,” said Woodward, “the situation is becoming financially untenable for some physicians, and that’s affecting patient care.”

Woodward said the liability situation has become the primary driving force in a what he said is a deteriorating physician practice environment in Massachusetts, one which is hindering recruitment and retention of physicians, and one which is leading many of them to retire early, leave for other states, or change careers. He said the medical society’s physician workforce studies and its practice index – annual indicators of the practice environment for doctors — offer evidence of the declining conditions that physicians face.

In the 2004 workforce study, for example, 49 percent of physician respondents said that the fear of being sued has caused them to alter or limit their scope of practice, and for four specialties, the rate exceeded 60 percent: Emergency Medicine (68), Obstetrics/Gynecology (64), Neurosurgery (64), and Orthopedics (60).

Further, the percent of physicians whose liability insurance expense exceeds 10 percent of total operating costs jumped to 47 percent – 12 percentage points higher than last year.

But Woodward said there are signs of hope. “We are encouraged by some of the steps the legislature has recently taken to initiate professional liability reform,” said Woodward. “The Joint Committee on Insurance has reported out a bill, and the state Senate has approved an amendment to its budget that provide the first steps toward appropriate liability reform. But we still have a long way to go.

“The crisis grows daily,” said Woodward, “and the departure of MLMIC only further demonstrates that it has become more severe and more acute. We hope the legislature acts expeditiously on these initiatives to offer relief to the state’s physicians.”