A bill being considered by the Colorado General Assembly would either provide more transparency about medical malpractice insurance for consumers, or would drive doctors out of Colorado — depending on whom you ask.
Senate Bill 248 is known as the “disclosure bill” to the Colorado Trial Lawyers Association, which is supporting the bill. It would require insurance companies that serve more than 65 percent of the market to publicly announce rate changes of more than 5 percent. “Any qualified person” could request a public hearing at the Department of Insurance to challenge the rate adjustment.
Only one insurance company — Colorado Physicians Insurance Co. (COPIC) — has that large of a market share.
“They might as well have said COPIC. It would have saved paper,” said COPIC President Ted Clarke, who also is a physician.
The Trial Lawyers Association said the bill will benefit doctors, making medical malpractice premiums more transparent. But most doctors oppose the bill, said John Suits, associate administrator of business and government affairs at Memorial Health System.
“Physicians haven’t asked for this bill,” he said. “And the majority of physicians at Memorial are opposed to it.”
COPIC says the lawyers are targeting it because the company aggressively defends clients in malpractice suits. COPIC said it has not been ordered to pay damages in about 62 percent of the cases filed against its clients.
“You have to ask yourself why they are targeting us,” Clarke said. “And it’s obviously because of our record of defending our clients. We don’t settle claims out of court, if they are frivolous claims.”
The bill would require COPIC to announce its rate changes — but does not require the same of its competitors, many of whom are large, national insurers with a smaller percentage of the Colorado market.
“There are two very, very large national companies who would not have to disclose their rate details,” said Steve Rubin, the company’s chief operating officer. “It puts us — and our clients — at a significant disadvantage.”
The clients are doctors who specialize in high risk fields — obstetrics, orthopedics and neurosurgery. COPIC says the legislation could affect those who it insures, and that could affect the availability of health care.
Dr. Robert Masferrer, a Colorado Springs neurosurgeon and COPIC client, agrees.
“If this bill passes, COPIC could choose not to underwrite those high-risk specialties — and other insurance companies could do the same,” he said. “Or they might selectively increase the price for those specialties to a point where it is detrimental to those of us practicing.”
Masferrer pays about $100,000 annually in malpractice insurance premiums.
“Everything keeps going up, insurance rates, overhead costs,” he said. “But reimbursement rates are going down — when Medicare lowers its reimbursement rate, private insurers follow. Last year, the reimbursement rate dropped 12 percent. It’s getting harder to make ends meet.”
But what he worries about most is the availability of care.
“There are only six neurosurgeons in Colorado Springs,” Masferrer said. “If half of us who are close to retirement age are forced to retire early because of this issue, then it reduces the access to care to the general public.”
Patients from the Pikes Peak region would have to go to Denver, he said, where there are more high-risk specialty doctors, meaning lower insurance premiums.
“This bill forces insurers to select high risk areas for a ‘super increase,’” he said. “The impact on patient care access will be very serious.”
Memorial Health System also opposes the bill because it could lose many of its high-risk specialty doctors, Suits said.
“Our fear is that if COPIC is required to go back and ask for permission or receive a review every time they increase rates, they’ll get to the point where insuring higher risk specialties isn’t worth it to cover them,” he said. “It’s a concern of ours, and it’s a concern of the majority of physicians we talked to.”
COPIC was created in the early 1980s in response to major medical insurers departing the Colorado market. The company’s board is made up solely of doctors.
Since COPIC has no shareholders, it operates more like a nonprofit than an insurance company. Last year, the company gave more than $10 million in refunds to its clients, and has returned more than $112 million since its inception.
Because the bill affects competition, it could affect the reimbursement rate, Rubin said. COPIC insures 6,000 of the roughly 13,000 licensed doctors in Colorado. Not all doctors require the type of malpractice insurance that COPIC provides.
The trial lawyers deny they are targeting COPIC.
“This bill makes sure that consumers, doctors (and the) insurance industry can all see how rates increase, and why,” said Sara Odendahl, communications director for the Trial Lawyers Association. “It’s intent was not to target COPIC — it targets any Type 1 insurance provider controlling more than 65 percent of the market.”
Odendahl denies the bill is designed to affect competition between insurance groups.
“Everyone should be aware of why insurance malpractice premiums are going up,” she said. “It’s in the public interest.”
But Masferrer disagrees.
He remembers what it was like to practice medicine in Colorado in the 1980s, when many insurance companies were leaving and Colorado was considered one of the most volatile states for malpractice litigation. That volatility affected physician recruitment, he said.
“States like Florida and Pennsylvania are highly volatile,” he said. “Doctors never know if a patient is going to sue them after receiving treatment. It isn’t like that here because we have stable laws in place that affect non-economic caps on settlements. But this bill, if it passes, could change that.”
Doctors could find Colorado a much less hospitable place to practice medicine, he said, and physician recruitment, as well as patient access to high-risk specialties, could suffer.
Odendahl said the bill will have no effect on recruitment or retention of specialists.
“This bill will prevent this insurance industry from fleecing doctors with excessive premiums,” she said. “Secondly, it will not increase insurance rates or drive doctors out of state. It’s not designed to do that.”
Suits said he finds it interesting that Trial Lawyers Association says the bill is intended to benefit doctors.
“My opinion is that they want to encourage litigation,” he said. “Physicians haven’t asked for this bill and they are, in the majority, opposed to it.”
The bill will have unintended consequences, Rubin said. Colorado is one of eight states ranked as “stable” by the American Medical Association, meaning the association considers many areas of the country to be at the mercy of “out of control legal system.” According to the AMA, 17 states are in a “medical liability crisis,” where patients continue to lose access to care.
Colorado is one of eight states that has enacted tort reforms and has seen malpractice premiums stabilize, Rubin said.
The bill passed its third reading in the Senate this week and is now being considered by the House of Representatives.