The MDU announced last week that it would ditch the 'occurrence model' indemnity package that all medical defence organisations (MDOs) currently offer. The announcement came shortly after health secretary Jeremy Hunt set out plans to develop a state-backed GP indemnity system.
Any GPs joining or renewing their indemnity after 1 November with the MDU will move onto its new 'transitional' deal until the state-backed system is operational.
The transitional scheme will operate on a 'claims-paid' model, allowing the organisation to halve its annual fees for GPs. DH guidance describes this model as 'an alternative form of indemnity which requires policy holders to obtain run-off cover at the end of any period of coverage, since it only covers claims made and settled in the period of the cover'.
State indemnity: what we know so far
The MDU had hoped the government would absorb the cost of this run-off cover. In a statement published on GPonline last week, it said it was offering the 50% reduced fees 'in the expectation that members remain with the MDU until the government scheme launches at which point their liabilities relating to this transitional period will pass in to the scheme'.
However, the DH ruled this out in an update to guidance on GP indemnity this week, suggesting that doctors on the transitional deal could face a bill for tens of thousands of pounds for run-off cover that would need to be maintained for the rest of their lives.
Rival medical defence organisations said the MDU had been 'hasty' in announcing its transitional indemnity model, particularly given that the state-backed scheme is unlikely to be in place until at least 2019 and many details of how it will work remain unclear.
But the MDU hit back at those claims today, saying its revised indemnity package had been launched 'not a moment too soon'. It pointed out that the government had taken eight months to announce plans for a state-backed indemnity deal from the date when it decided to impose a 'catastrophic' change in the discount rate that is set to more than double the cost of GP claims.
With the government admitting that it will take 12 to 18 months from now to develop the state indemnity scheme in talks with MDOs and GP leaders, the MDU felt it had no choice but to bring in a new deal now.
Funding shortfall
It warned that continuing to provide the 'occurrence' model of cover for GPs without hiking fees to a level that GPs could not afford would mean that there was a growing shortfall between funding coming in and the cost of claims.
A statement from the MDU says that although changes to the discount rate will mean that claims which previously could have been settled for around £8m could now cost as much as £20m, it did not initially impose an increase in its indemnity fees.
'We did this because GPs simply cannot afford to pay any more for indemnity – it is not a problem of their making and we don’t think GPs should foot the bill. Also, there was a commitment by the Lord Chancellor who said: "The DH will work closely with GPs and the medical defence organisations to ensure that appropriate funding is available to meet additional costs to GPs, recognising the crucial role they play in the delivery of the NHS."
'However, we could not continue with this stance indefinitely since it would result in claims being underfunded. It took the DH over eight months to reach the position where it could make its announcement on 12 October, and the DoH envisages it will take at least 12-18 months to introduce a state-backed scheme. As a result we had to take action to ensure that our GP members could afford indemnity and that claims would be correctly funded pending the introduction of a state-backed scheme.'
GP costs
The MDU has also moved to reassure GPs about the threat of long-term run-off costs, pledging that for GPs that remain with the organisation until after their NHS pension scheme retirement date will not face additional costs.
It has also warned the government that to be 'workable, fair and to meet the financial commitments given to all GPs, the government’s scheme will need to pick up both future claims costs and existing unpaid (or historic) claims at the date when the scheme is introduced – for all GPs'.
But other defence organisations have questioned the package on offer from the MDU.
MDDUS chief executive Chris Kenny warned that the MDU deal 'waters down current protection' - although the MDU insists GPs on its transitional deal will 'remain as secure as members of any other MDO'. Mr Kenny added: 'The subscriptions we charge represent our best estimate of our future costs in protecting and defending members. We can and do lower prices where this is sustainable and will continue to look for every opportunity to do so in the difficult market conditions caused by the government’s action on the discount rate and proposal for a state scheme.
'What all sides need to do is take concerted action to tackle the causes of high indemnity, not reach for commercial or policy gimmicks.'
Medical Protection Society (MPS) chief executive Simon Kayll said the MDU offer may appear attractive 'at first glance' but urged GPs to be aware that the indemnity product on offer from the organisation was 'significantly different to traditional occurrence-based indemnity'. He said the MDU package had been announced when 'crucial details about the proposed state-backed indemnity scheme, and how it will operate, are unknown'.
