SALEM — A program aimed at keeping soaring malpractice insurance costs from driving doctors out of small-town practices faces an overhaul.

Now on the desk of Gov. Ted Kulongoski is legislation to change the state program that partially reimburses physicians for their medical malpractice premiums, especially for those who deliver babies. The Democratic governor has indicated he will sign the bill.

State Sen. Alan Bates, an Ashland Democrat and a practicing primary care physician, said he felt compelled to introduce the measure after highly publicized reports revealed that some of the program's beneficiaries were wealthy specialists with thriving medical practices.

Dr. Scott Young, an Ashland plastic surgeon who lives in an 11,000-square-foot mansion, was among those doctors not struggling in a distinctly remote area of the state, providing essential medical care.

Bates said the program is a noble one, but conceded that the 2003 law had some "unintended consequences," adding that Young, who received $21,048 in state subsidy, was not errant in taking assistance from the state.

"The purpose (of the program) is not to lose primary care and obstetrics in rural and underserved areas of Oregon," said Bates, who does not qualify for the program since he practices in Medford.

Under the bill, physicians who work in urbanized areas of the state, as defined by the U.S. Census Bureau, will no longer be eligible for the program.

Ashland, in part because of its proximity to Medford, lost its rural designation under the new definition that the state Office of Rural Health has adopted to define eligibility for the program.

Bates, however, was able to safeguard local obstetricians, nurse practitioners and certified midwives because of the "vital service" they provide particularly to Ashland's low-income expectant mothers, who would otherwise likely have to travel to Medford for medical care.

Other types of physicians in Ashland, including orthopedists and ophthalmologists, will no longer be eligible to participate in the program.

Under Senate Bill 183, medical providers, including Ashland practitioners who deliver babies exclusively, will continue being reimbursed for 80 percent of their malpractice costs, which can run up to $50,000 annually.

Rural-based general practitioners who do not deliver babies, meanwhile, will receive a 40 percent subsidy while general practitioners who do some obstetrics work would receive a 60 percent rebate from the state.

Over the next four years, other types of specialists, including general surgeons and internists, in rural areas will see their subsidy payments shrink from 35 percent to 15 percent.

Administered by the state-chartered insurance company SAIF Corp., the program is funded by an assessment employers pay for workers' compensation insurance.

Set to end in four years, the program requires that its beneficiaries provide care to the uninsured and to those on Medicaid and Medicare, the federal insurance programs.

State Sen. Roger Beyer, R-Molalla, was the only "no" vote in the Senate, objecting to businesses being assessed a fee so that doctors can be reimbursed for some of their operating expenses.

covers the state Legislature for the Ashland Daily Tidings. You can reach him at csrizo@hotmail.com.