Maryland leaders raised hopes yesterday for a special session of the General Assembly next month that would focus on curbing insurance rate increases for doctors, but acknowledged that key details -- including how to pay for new initiatives -- remain unresolved.

Gov. Robert L. Ehrlich Jr. and the legislature's two Democratic leaders cited progress on the matter after an hour-long private meeting at the governor's mansion. Ehrlich (R) told reporters afterward that in coming days, he would flesh out a package of proposals that could include immediate relief for doctors as well as more substantive, longer-term changes to the medical malpractice system.

"In order to hammer out an agreement, there needs to be give by all sides," Ehrlich said of an issue that has pitted trial lawyers against doctors and insurance companies.

Finding common ground has become more urgent with the approach of Nov. 1, the day the state's largest malpractice insurer usually sends out its first bills for the coming year. Doctors are pressing lawmakers for action, with some physicians in such high-risk specialties as obstetrics saying they could be forced to quit practicing unless the state intervenes.

Medical Mutual Liability Insurance Society of Maryland, which provides coverage to more than three-fourths of the state's physicians in private practice, plans to raise rates by 33 percent next year, after raising rates by 28 percent this year. Med Mutual cites soaring malpractice payouts, which the firm said have nearly doubled in the past four years.

Senate President Thomas V. Mike Miller Jr. (D-Calvert) told reporters that the legislature's priority should be to head off the planned rate increase. He said a temporary state fund could effectively lead to a "zero rate increase" next year for doctors.

Appearing alongside Miller, House Speaker Michael E. Busch (D-Anne Arundel) also voiced support for a fund, which Ehrlich suggested he might back if it is coupled with legal reforms and initiatives to increase patient safety.

"In my estimation, I think there are a lot of things that we can come to agreement on," said Busch, who sought to underscore his commitment to finding solutions by visiting four hospitals yesterday afternoon.

Striking an agreement over legal changes remains an obstacle. During the last legislative session, Ehrlich unsuccessfully pushed a bill that included measures to curb jury awards and settlements for injured patients. Among the proposals he is considering is a plan mandating that payouts to medical malpractice victims be distributed over time rather than in lump sums. That measure, which would help insurance companies manage their costs, is opposed by trial lawyers, who argue that injured patients should have the flexibility to spend their payouts as they want.

Another significant hurdle is how to pay for a temporary fund and other reforms. Miller has suggested ending the state's exemption of HMOs from the 2 percent premium tax that is imposed on all for-profit insurance carriers.

State fiscal analysts determined that such a measure would generate nearly $50 million in its first year and increasingly more in subsequent years.

Ehrlich did not rule out that approach yesterday, though he vetoed a similar measure last year. The issue is politically ticklish for the governor, who has said Marylanders are overtaxed. His administration also is exploring steering money from the state's general fund to the medical malpractice initiatives, which could ultimately result in budget cuts in other areas.

Busch suggested yesterday that the state should consider boosting rates paid to doctors for treating patients on Medicaid, the state's insurance program for the poor. Doing so, he contended, could ease the financial crunch for some providers.

Medicaid, which pays for about one-third of deliveries in Maryland, pays doctors less than $1,500 for vaginal deliveries and births by Cesarean. Commercial HMOs, by contrast, typically pay more than $2,000 for those procedures.

Malpractice insurance rates vary based on a number of factors, including a doctor's specialty, location and history. The rate for a typical obstetrician-gynecologist working in Baltimore, the state's most expensive jurisdiction, is about $95,000 this year, according to state data.