Connecticut ob-gyn group delivers surcharge to offset liability pain

The Connecticut attorney general is questioning the legality of the $500 per-pregnancy fee.

By Damon Adams — Posted June 14, 2004

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The move is intended to threaten legislators. The rally cry: Pass a bill or pay the bill.

A practice of 150 obstetrician-gynecologists in Connecticut plans to charge an extra $500 per pregnancy starting Sept. 1 to help cover its rising medical liability premiums. The group, Women's Health Connecticut, said it wants to force a solution to the state's liability woes and would scrap the fee if legislators passed "meaningful medical malpractice reform."

"We're throwing a big rock in the pond," said Nancy Bernstein, president and CEO of Avon, Conn.-based Women's Health Connecticut, whose physicians make up about 30% of the state's estimated 400 to 500 ob-gyns.

The liability surcharge, announced in May, is a unique way of approaching the medical liability crisis. Medical leaders said it is rare for a practice to add a surcharge specifically designated for liability premiums.

At press time, the AMA House of Delegates, which is holding its Annual Meeting in Chicago this month, was expected to look at the issue of liability surcharges in physician offices. The AMA said 19 states, including Connecticut, have reached crisis stage due to the rising cost of medical liability insurance.

Other states are watching to see how the liability surcharge goes over with patients, insurers and lawmakers in Connecticut.

The Ohio State Medical Assn. in January gave legal guidance to physicians on the types of administrative fees they can charge and is waiting to see what happens with the Connecticut surcharge.

"The main concern is what will the patients think," said OSMA spokesman Lito Ramirez.

Some groups also wonder how insurers will respond.

"I don't think [the Connecticut group] will have an easy time, based on arrangements with insurance companies," said Pennsylvania Medical Society spokesman Chuck Moran.

One of the first clues is likely to come from Connecticut Attorney General Richard Blumenthal, who is looking at the legality of the surcharge.

Blumenthal said the Women's Health Connecticut surcharge "raises serious and significant legal questions," and he is investigating potential violations of laws or contracts. Surcharges that contradict physician contract agreements with insurers would violate state law in most instances, he said. He issued a consumer warning days after the practice's announcement, urging any women charged the fee to contact his office.

"I'm sympathetic to concerns about rising malpractice insurance rates, but the law may prevent certain fees or surcharges that are unauthorized by health care plans or Medicaid," Blumenthal said. "We're not aware of any [similar] doctor-imposed surcharges."

Karen Ignagni, president and CEO of America's Health Insurance Plans, said she does not know of similar liability surcharges. She said the reaction to such fees by insurers would depend on a practice's contract with individual insurers. For now, Ignagni, whose group represents health insurers, said the Connecticut fee is raising much-needed attention.

"There is a major malpractice crisis throughout the country, particularly for OBs, and legislators need to respond to the crisis. This shines a spotlight on a very, very serious matter," she said.

Connecticut doctors seek solutions

In mid-May, Connecticut Gov. John G. Rowland vetoed tort reform passed by the state Legislature. Physician groups supported the veto because the bill did not contain a cap on noneconomic damages.

Days after the veto, Women's Health Connecticut announced its plan to add a $500 liability surcharge per pregnancy beginning Sept. 1. The group said proceeds would go to a special fund to pay for liability premiums, which it said rose from $250 per delivery in 2002 to about $1,000 today.

The group pays $98,750 a year in premiums per doctor and expects that figure to rise to $100,000 to $125,000, Bernstein said. Women's Health Connecticut, which delivers 12,000 babies a year, figured a $500 surcharge would generate $6 million to use toward premiums. Bernstein said if health plans or employers don't pay the fee, patients would be billed.

"They [the practice's physicians] can't work enough to pay their premiums, and it's really sad," Bernstein said. "We don't want to go the way of Nevada or Pennsylvania, where [doctors] are closing their suites and people have to go across the state line to have their babies."

Publicly, some Connecticut insurers said they would not pay surcharges contrary to their contracts. And some legislators doubt the practice's threat to charge the fee would prompt a special session on medical liability.

Bernstein said legislators have told her "there's a snowball's chance in hell that they're going to call a special session, and that the legislative process is about compromise."

She said the group is not backing down. And it is finding sympathy among fellow state physicians. The Fairfield County Medical Assn., which represents 2,000 Connecticut doctors, is responding to rising liability rates and lower reimbursements by exploring the possibility of charging patients for routine services such as prescription refills.

"Physicians are fighting for their professional lives. They are desperate to stay in practice for their patients, and they're going to do everything they can," said Tim Norbeck, executive director of the Connecticut State Medical Society. "They see their practices running two plagues behind biblical Egypt."

The Connecticut group's move comes at a time when other physicians are turning to or considering extra fees to pay for the cost of practicing medicine.

The AMA in the past affirmed that it is the physician's right to set his or her own fees as long as they are not excessive. At the Annual Meeting this month, AMA delegates were expected to revisit the issue and consider a resolution on administrative surcharges.

Some practices now charge patients administrative fees for tasks such as solving insurance problems or giving advice by phone. Medical societies have fielded calls from doctors asking about fee structures and the legality of such practices. Consultants and medical associations have advised doctors to proceed with caution and to make sure their managed care contracts do not prohibit the fees.

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Many states still face tort crisis

Connecticut is one of 19 states facing a medical liability insurance crisis as of June 1, according to the American Medical Association.

In crisis: Arkansas, Connecticut, Florida, Georgia, Illinois, Kentucky, Mississippi, Missouri, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Washington, West Virginia and Wyoming.

Showing problem signs: Alabama, Alaska, Arizona, Delaware, Hawaii, Idaho, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia.

Currently OK: California, Colorado, Indiana, Louisiana, New Mexico, Wisconsin.

Source: American Medical Association

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Ob-gyn rates rise

Despite a one-year reprieve, obstetrician-gynecologists in Connecticut have seen the average medical liability premium for their specialty steadily climb.

Premium Change
1998 $52,575
1999 $50,263 -4.4%
2000 $57,022 13.4%
2001 $67,719 18.8%
2002 $82,238 21.4%
2003 $102,187 24.3%

Source: Medical Liability Monitor

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External links

AMA Medical Liability Crisis Map (link)

Women's Health Connecticut (link)

Connecticut State Medical Society (link)

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