Doctors ask patients to pay malpractice 'surcharge'.(Practice Trends)

Ira Warshaw, M.D., felt he had no choice but to ask his patients to help save his practice.

The family physician in North Palm Beach, Fla., had depleted his practice's line of credit at the end of 2003 and was operating at a continuing deficit.

Medicare regulations and managed care rules prevented him from raising his fees for 95% of his patients. Unwilling to set up a boutique practice, join a VA hospital, or see an extra 30 patients per day, "I felt I needed to do something, to continue to provide the kind of care my patients had come to appreciate."

He communicated his solution in a letter to his patients, asking them to contribute $125 per year ($25 for those 25 and under) to help defray his $30,000 annual malpractice insurance bill. At least a third of his patient base, which peaks at 3,000 in the wintertime, responded.

"Clearly, I don't think it should be the patient's responsibility to have to pay extra for quality care," Dr. Warshaw said in an interview. But in the absence of a comprehensive solution to fix rising premiums, he's keeping his surcharge. "Hopefully, this will remain a viable option if patients are able and willing to support the idea."

For many physicians, asking patients to subsidize medical liability insurance bills may be too risky to entertain. The practice has already been criticized for breaching ethical barriers, and there are signs that the federal government won't abide by it. "It's my personal legal opinion that malpractice surcharges are probably unwise," Aaron Krupp, senior counsel, with the Medical Group Management Association, told this newspaper.

Medicare already accounts for malpractice costs in its payments for each physician service. The higher the malpractice risk a service has, the more relative value units are assigned to the malpractice component of that service. This is why the surcharges are potentially illegal in the first place. Mr. Krupp said. A memorandum issued by the Department of Health and Human Service's Office of Inspector General earlier this year warned physicians about the potential violations of adding charges for services under Medicare.