Insurance Law

Justices to Mull Whether MCARE Assessments Must Apply Surplus

, The Legal Intelligencer

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© Valeriy-Fotolia

Allocatur Watch

The Pennsylvania Supreme Court has agreed to hear arguments over whether the Medical Care Availability and Reduction of Error Fund should have to apply any surplus funding from the previous year to the current year when determining contribution amounts for health care providers.

The Commonwealth Court ruled in an apparent case of first impression last August that it must.

In a Feb. 12 order granting allocatur in Hospital & Healthsystem Association of Pennsylvania v. Insurance Commissioner, the Supreme Court agreed to consider whether Section 712(d) of the MCARE Act requires the state to "'spend down'" any balance in the MCARE Fund when calculating annual provider assessments.

In August, an en banc panel ruled 6-1 in Hospital to reverse an adjudication of the Pennsylvania insurance commissioner that upheld assessments imposed upon doctors and health care providers by MCARE in 2009, 2010 and 2011.

The plaintiffs—which included several medical groups, such as the Hospital & Healthsystem Association of Pennsylvania, the Pennsylvania Medical Society and the Pennsylvania Podiatric Medical Association—asserted that their assessments were excessive because they resulted in a collection of more money than was needed by the MCARE Fund to pay claims for one year and provide a 10 percent reserve, Commonwealth Court Judge Mary Hannah Leavitt said in the court's majority opinion. The majority also included Judges Dan Pellegrini, Bernard L. McGinley, Renee Cohn Jubelirer, P. Kevin Brobson and Patricia A. McCullough.

Leavitt said that in making its annual assessment in 2009, the MCARE Fund failed to account for the $100 million surplus it had from 2008.

"The MCARE Fund must begin its annual aggregate assessment calculation with its unspent balance and add to it the amounts sufficient to cover the prior year's claims and expenses and to provide a 10 percent reserve," Leavitt said. "Instead, the MCARE Fund's calculation has provided a 64 percent reserve."

According to Leavitt, the MCARE Fund obtains its funding from an annual assessment levied on health care providers. The guidelines for establishing assessments are laid out in Section 712(d)(1).

Leavitt said the fund also failed to take its unspent balances into account when setting its assessments for 2010 and 2011.

The MCARE Fund had argued that having a surplus would provide "stability" to annual assessments, Leavitt said. But she said the act said nothing about stability or surpluses or how to spend them.

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