Understanding How Pennsylvania’s Mcare Program Regulates Medical Liability Insurance Providers

In 2016, Mcare paid out $174 million in covered claims based on medical malpractice. All approvals for insurers who provide professional medical liability insurance must do so based on the requirements of the Insurance Company Law of 1921. This applies to policies for medical care providers, corporations, and partnerships owned by those providing medical care. 

The Insurance Commission does not approve “claims made” insurance policies. These are policies that do not extend liability coverage protection after a closure of a professional healthcare practice or the cancellation of a policy for potential malpractice claims that may occur within the statute of limitations. Acceptable policies have a “tail coverage” provision to cover claims that could still potentially arise from actions which occurred during the policy period.

Annual Reporting Duties

All medical liability insurance providers and those health care providers and organizations that “self-insure” are required to annually submit a report of claims data on October 15. The department then compiles a report within the first 60 days of the year summarizing the date, venue, total amount of the claims paid out and other relative expenses. End-of-year claim reports indicate assessments collected and reimbursements paid. Copies of these reports are then provided to the Banking & Insurance Committees of the House and Senate.

Actuarial Data

An actuary is one who makes calculations for insurance and annuity premiums, reserves, and dividends. Mcare requires insurance providers to file loss data, which is strictly enforced by monetary penalty. The commissioner conducts research to determine insurance coverage capacity which is evaluated by an actuary, who is compensated from the Mcare fund. In completing the study, the actuary uses current ratemaking data. This process is somewhat of a “financial stress test”, an evaluation to confirm that the insurer has adequate financial resources and capability to pay claims as needed.

Payment Reporting

Any insurer or self-insured provider that makes a settlement payment (or partial payment) based on a judgment stemming from medical liability shall report to the Federal Government in accordance with the Health Care Quality Improvement Act of 1986. The department is responsible for enforcement of this requirement and the information is subject to access by the Bureau of Professional & Occupational Affairs for compliance purposes. A liability insurer or individual who makes this report is immune from civil or criminal liability as long as reported in good faith and without malice. Based on the Right-to Know Law, information received is not treated as public information.

Policy Cancellation

If a policy for medical liability insurance is terminated (canceled) by the insurer, it requires that notice of intent to cancel is done within 60 days after issuing the policy. This does not apply in instances where the insured’s medical license has been suspended or revoked, or if the policy premium is unpaid. No cancellation takes effect without notifying the commissioner in writing informing them of the reason for cancellation and the date the termination is effective.