Doctors seek ways to cover liability premium shortfalls

Instead of starting at home, charity is starting in the doctor's office in one New Jersey community.

This fall, four internists in Marlboro, N.J., sent a letter to patients with scheduled appointments asking them for a voluntary $25 donation to help the Jersey Shore Associates practice offset surging medical liability insurance rates.

"What surprised me is the patients who donated more than we asked for," said internist Michael Stark, MD, a founding member of the practice, which has been in business for 18 years. "Some said, 'Why didn't you do this before? We think this is a smart idea.' "

About 25% of the 400 patients who received letters responded in the first three weeks, with at least one patient donating $200. A handful of patients were offended. But others in the 15,000-patient practice questioned why they weren't asked to donate, said internist Joseph Romanella, DO, who has been with the practice for seven-plus years.

"Most of the patients are very aware of what is going on with medical liability insurance," he said.

What is going on in New Jersey, like numerous other areas of the country, is that doctors are facing large insurance premium increases and are finding fewer insurers willing to write policies. New Jersey is one of 20 states that the AMA lists as being in the midst of a medical liability crisis that has physicians retiring early, moving to other states or cutting services.

New Jersey doctors have asked lawmakers to pass caps on noneconomic damage awards in medical liability lawsuits, but efforts have been unsuccessful. Physicians believe that caps are a key ingredient in tort reforms needed to help reduce costs. Trial lawyers disagree and say that insurance reforms would have a bigger impact.

The four-doctor Jersey Shore Associates' insurance rate rose to $90,000 annually, up from the $25,000 premium several years ago. At the same time, doctors said, income is down.

"Primary care physicians are among the lowest paid," Dr. Stark said "Even though our insurance isn't as much as other specialties, percentage-wise our costs have nearly tripled."

Like other physicians, Dr. Romanella and his colleagues can't pass on their cost increases due to managed care contracts. Reimbursements from Medicare and Medicaid programs weren't making up the difference, either.

Without financial help from somewhere, Dr. Romanella said the group was considering dropping certain managed care contracts that were becoming cost-prohibitive.

The doctors also considered tacking on a fee to patient bills to help offset costs, but they weren't sure how to make it equitable, given that some patients are in the office on a regular basis and other patients might come in only once a year. They also were unclear on whether a fee would be legal. The Medical Society of New Jersey has cautioned doctors about adding mandatory fees because they could conflict with managed care contracts or Medicare, MSNJ spokesman John Shaffer said.

In addition, a New Jersey Senate committee in October passed a bill that would prohibit doctors from asking patients insured by managed care companies to pay "access fees." MSNJ opposes the measure.

The doctors also were aware of the Connecticut attorney general's letter earlier this year to an ob-gyn group advising them that a fee was not legal.

AMA studies fees

Access fees were a hot topic at the AMA's Annual Meeting in June in Chicago, with physicians questioning whether it was legal or ethical to charge a fee to help pay for liability insurance costs. The AMA does not have policy on the issue, and a report is expected to be issued at the AMA's December Interim Meeting in Atlanta.

"We want to make sure that doctors do what is within the law," said AMA President John C. Nelson, MD, MPH. The fact that some doctors are charging fees or asking patients for donations signals the need for changes in the medical liability system, he said. Tort reform is the AMA's No. 1 legislative priority.

"We've got to deal with the root cause of this," Dr. Nelson said. Donations and surcharges are "a way to pay for the broken system, not fix it. It's like treating the symptom and not the disease."