Medical Mutual Returning $100M to Maryland, Local Physicians

A major medical liability insurer will return nearly $100 million to the state of Maryland and local doctors, in a deal announced by state officials.

Maryland Gov. Martin O’Malley and Insurance Commissioner Ralph S. Tyler announced that Medical Mutual Liability Insurance Society of Maryland (Medical Mutual) will return to the state $84,075,699 in medical liability rate subsidy payments it received.

In addition, the insurer will return another $13.8 million to policyholders as a credit against future premiums, along with an 8 percent rate reduction for 2008 from 2007 rates.

Officials said the effect of this dividend credit and the rate reduction will be that providers will see stable premiums in 2008. Medical Mutual also will not participate further in the state subsidy plan.

Tyler negotiated the settlement after halting a Medical Mutual plan to return $68.6 million in dividends to policyholders. Tyler argued that some of those funds were owed to the state, which had provided premium subsidies.

He held hearings to decide who was entitled to receive the proposed $68.6 million. Out of those proceedings came this final agreement.

“This resolution accomplishes all my objectives,” said Tyler. “I was bound to enforce the law that requires the state to be made whole first and Medical Mutual found a way to give back to the physicians in this state by keeping rates stable. It was always my hope that physicians could be assisted to the greatest degree possible.”

“We are extremely pleased with the agreement we have worked out with Commissioner Tyler because it helps our physicians,” stated Medical Mutual C.E.O. David L. Murray.

The subsidy payments of $84 million be returned to the state’s subsidy fund, which is scheduled by statute to continue through 2009. At that point, any funds remaining are to be applied to Medicaid provider reimbursement rates.

The Maryland General Assembly created the Maryland Health Care Provider Rate Stabilization Fund, in 2005. It consists primarily of tax revenue collected from health maintenance organizations and managed care organizations. The fund is divided into three sub-funds: the Rate Stabilization Account, the Medical Assistance Program Account, and a third component consisting of funds that are not allocated to either.

Monies allocated to the Rate Stabilization Account are used to pay authorized medical professional liability insurance premium subsidies to medical professional liability insurers who wish to participate. State subsidies are available only to licensed physicians and certified midwives. They are not available to corporate entities through which they practice or to other health care providers.

Source: The Maryland Insurance Administration
www.mdinsurance.state.md.us