A bill aimed at settling a volatile medical malpractice insurance market as a means to slow rising health care costs in New Jersey advanced in a Senate committee.

Joseph Vitale

The Senate Commerce Committee approved a bill, sponsored by Sens. Loretta Weinberg (D-Bergen) and Joseph F. Vitale (D-Middlesex), by a unanimous vote. The bill now goes to the full Senate for action.

“New Jersey’s dedicated health care professionals deserve a level of predictability that just isn’t there right now when it comes to medical malpractice liability insurance,” said Weinberg, vice chairwoman of the Senate Health, Human Services and Senior Citizens Committee, in a statement. “The current regulatory structure just isn’t sufficient to allow health care providers to plan from one year to the next regarding the cost and availability of malpractice insurance. This bill would at least help to bring malpractice insurance rates under some level of control, and balance the stability of the insurance market with the impact that unexpected rate hikes have on the medical community.”

Vitale, chairman of the Senate Health Committee, said doctors find the expense and lack of availability of medical malpractice insurance for certain specialties “one of the major cost-drivers for health care in the Garden State.

“At a time when we’re actively trying to expand health care coverage for uninsured New Jerseyans, we need to address the high cost of care and limited access to high-risk medical specialties,” he said. “If we’re going to make a serious impact on the affordability and accessibility of medical care, we need to reduce the volatility of malpractice liability insurance.”

‘Rate band’ provision

The bill, S-2934, would require the New Jersey Department of Banking and Insurance (DOBI) to annually designate a flexible “rate band” for medical malpractice liability insurance rate increases. Under the bill, DOBI would specify a range of rate change – either an increase or decrease between 5% and 15% – for medical malpractice liability insurance rates. Any rate, supplementary rate information, or change or policy amendment filed by an insurer or rating organization which proposes a rate change exceeding the designated flexible rate band would be subject to DOBI approval.

“Rate increases are sometimes an inevitability, especially when malpractice liability insurance providers have to balance risk assessments for various medical specialties,” said Vitale. “While many health care professionals wouldn’t disagree with common-sense rate increases as part of the cost of business, malpractice liability insurance rates seem to be dictated by anything but common sense. If the rate increase is appropriate, it would continue to pass muster with DOBI regulators, but something has to be done to begin to rein in out-of-control malpractice liability insurance costs.”

The legislation also would make DOBI responsible for determining the categories, subcategories, specialties and subspecialties of health care providers to which the designated liability insurance rate band would apply.

The department would be allowed to consider the availability and affordability of medical malpractice liability insurance for different categories of practice, the capitalization and reserve requirements necessary to ensure the solvency of insurers, and the current data relating to the frequency and severity of medical malpractice claims and trends in the cost of investigating and settling claims when making regulatory decisions. The bill would remove the current provision that automatically deems annual premiums in excess of $10,000 a “special risk” and subject to an alternate route rate approval process.