CHAPTER 5. SURCHARGE
IC 34-18-5
Chapter 5. Surcharge
IC 34-18-5-1
Annual surcharge on health care providers
Sec. 1. To create a source of money for the patient's compensationfund, an annual surcharge shall be levied on all health care providersin Indiana.
As added by P.L.1-1998, SEC.13.
IC 34-18-5-2
Amount of surcharge
Sec. 2. (a) As used in this section, "actuarial program" means aprogram used or created by the department to determine the actuarialrisk posed to the patient compensation fund under IC 34-18-6 (orIC 27-12-6 before its repeal) by a hospital. The program must be:
(1) developed to calculate actuarial risk posed by a hospital,taking into consideration risk management programs used bythe hospital;
(2) an efficient and accurate means of calculating a hospital'smalpractice actuarial risk;
(3) publicly identified by the department by July 1 of each year;and
(4) made available to a hospital's malpractice insurance carrierfor purposes of calculating the hospital's surcharge undersubsection (g).
(b) Beginning July 1, 1999, the amount of the annual surchargeshall be one hundred percent (100%) of the cost to each health careprovider for maintenance of financial responsibility. Beginning July1, 2001, the annual surcharge shall be set by a rule adopted by thecommissioner under IC 4-22-2.
(c) The amount of the surcharge shall be determined based uponactuarial principles and actuarial studies and must be adequate forthe payment of claims and expenses from the patient's compensationfund.
(d) The surcharge for qualified providers other than:
(1) physicians licensed under IC 25-22.5; and
(2) hospitals licensed under IC 16-21;
may not exceed the actuarial risk posed to the patient's compensationfund under IC 34-18 (or IC 27-12 before its repeal) by qualifiedproviders other than physicians licensed under IC 25-22.5 andhospitals licensed under IC 16-21.
(e) There is imposed a minimum annual surcharge of one hundreddollars ($100).
(f) Notwithstanding subsections (b), (c), and (e), beginning July1, 1999, the surcharge for a qualified provider who is licensed underIC 25-22.5 is calculated as follows:
(1) The commissioner shall contract with an actuary that hasexperience in calculating the actuarial risks posed byphysicians. Not later than July 1 of each year, the actuary shall
calculate the median of the premiums paid for malpracticeliability policies to the three (3) malpractice insurance carriersin the state that have underwritten the most malpracticeinsurance policies for all physicians practicing in the samespecialty class in Indiana during the previous twelve (12) monthperiod. In calculating the median, the actuary shall consider the:
(A) manual rates of the three (3) leading malpracticeinsurance carriers in the state; and
(B) aggregate credits or debits to the manual rates givenduring the previous twelve (12) month period.
(2) After making the calculation described in subdivision (1),the actuary shall establish a uniform surcharge for all licensedphysicians practicing in the same specialty class. This surchargemust be based on a percentage of the median calculated insubdivision (1) for all licensed physicians practicing in the samespecialty class under rules adopted by the commissioner underIC 4-22-2. The surcharge:
(A) must be sufficient to cover; and
(B) may not exceed;
the actuarial risk posed to the patient compensation fund underIC 34-18-6 (or IC 27-12-6 before its repeal) by physicianspracticing in the specialty class.
(g) Beginning July 1, 1999, the surcharge for a hospital licensedunder IC 16-21 that establishes financial responsibility underIC 34-18-4 after June 30, 1999, is established by the departmentthrough the use of an actuarial program. At the time financialresponsibility is established for the hospital, the hospital shall paythe surcharge amount established for the hospital under this section.The surcharge:
(1) must be sufficient to cover; and
(2) may not exceed;
the actuarial risk posed to the patient compensation fund underIC 34-18-6 by the hospital.
(h) An actuarial program used or developed under subsection (a)shall be treated as a public record under IC 5-14-3.
As added by P.L.1-1998, SEC.13. Amended by P.L.111-1998, SEC.7;P.L.233-1999, SEC.14.
IC 34-18-5-3
Collection of surcharge; time for payment
Sec. 3. (a) The surcharge shall be collected on the same basis aspremiums by each insurer, risk manager, or surplus lines producer.
(b) The surcharge is due and payable within thirty (30) days afterthe premium for malpractice liability insurance has been received bythe insurer, risk manager, or surplus lines producer from a health careprovider in Indiana. If a surcharge is not paid as required by thissection, the insurer, risk manager, or surplus lines producerresponsible for the delinquency is liable for the surcharge plus apenalty equal to ten percent (10%) of the amount of the surcharge.
(c) If the annual premium surcharge is not paid within the time
limit specified in subsection (b), the certificate of authority of theinsurer, risk manager, and surplus lines producer shall be suspendeduntil the annual premium surcharge is paid.
As added by P.L.1-1998, SEC.13. Amended by P.L.178-2003,SEC.96.
IC 34-18-5-4
Adoption of rules; comparability of rates
Sec. 4. (a) The commissioner may adopt rules establishing thefollowing:
(1) The manner of determination of the surcharge for a healthcare provider that establishes financial responsibility in a wayother than by a policy of malpractice liability insurance.
(2) The manner of payment of the surcharge by such a healthcare provider.
(b) The surcharge calculation established under subsection (a)must provide comparability in rates for insured and self-insuredhospitals. This surcharge may not exceed the surcharge that wouldbe charged by the residual authority if the health care providerelecting to establish financial responsibility in this manner hadapplied to the residual authority for insurance.
As added by P.L.1-1998, SEC.13.