The MEDIC proposal is attractive in its attempt to tie doctor-patient communication, patient safety, and liability together. And the anecdotal reports of success with isolated programs of its type are encouraging. It also moves the argument at a national level away from a fight about caps, which puts many physicians in the uncomfortable position of opposing Democrats who support many of their other positions—eg, Title VII funding, preservation of the traditional Medicare program, expansion of the Medicare Part D program, and better funding of public health programs. Nonetheless, there is a big row to hoe in making physicians more comfortable with acknowledging their errors, convincing them this would not be held against them in court, and assuring both physicians and hospitals that such efforts will actually lead to lower malpractice costs.
Surprising findings from recent research
Thorpe analyzed data from 1995–2001 collected by the National Association of Insurance Commissioners to see the relationship between state tort reforms and premium levels. Premiums in states with caps on awards were 17% lower than states without caps. There was no association between premium levels and other reforms, such as caps on attorney fees or collateral offset rules (decreasing awards by the amount the plaintiff receives from other sources). Some association was noted between decreased competition among insurers and higher premiums.1
Rodwin et al used data from AMA surveys of self-employed physicians (physicians in groups or solo practice who are not employees) from 1970 to 2000. They found that while premiums increased from 1970 to 1986 and from 1996 to 2000, they had only a small effect on physician income. Premiums made up a small percentage of total practice costs and had a negligible effect on practice income, arguing against a malpractice crisis. However, this study lacked more recent data on premium increases and practice expenses and did not take into account differences among states that might be due to tort reforms such as the institution of caps on awards.2
Studdert et al reviewed 1452 closed claims in 4 categories (obstetrics, surgery, missed or delayed diagnosis, and medication) from 5 liability insurers representing 4 regions of the US, and used objective criteria and independent reviewers to classify the merits of the claims. They found that 3% of the claims had no verifiable medical injury and 37% did not involve errors. About 73% of the claims not associated with errors or injuries resulted in no compensation, while 73% of those with errors did result in compensation. Further payment for claims not involving errors were lower than those that did involve errors. Looked at another way, of the 1452 claims reviewed, about 10% received payment but had no identifiable error, while about 17% had an identifiable error but no payment was made.3
This study demonstrated that: 1) the cost of defending claims involving no error was substantial but still only amounted to about 13% of direct system costs, meaning that contesting and paying for claims caused by errors accounts for most of the costs of the liability system, and 2) the malpractice system works reasonably well at separating claims without merit from those with merit.
Nonetheless, the study also demonstrated the unfairness of a system in which 1 in 6 valid claims received no payment (this in addition to the vast number of negligent injuries that never even lead to a claim as discussed in the 1999 IOM report). Then there is the frustration with a system wherein the average time between injury and claim resolution is 5 years and 54% of the payments are absorbed by defense costs and contingency fees. That 80% of expenses were incurred in resolving claims with errors suggests that steps to decrease frivolous litigation (claims without merit) will not lead to substantial savings and that steps to streamlining the system of handling claims will be more useful.
Blake et al looked at state-specific data from the National Practitioner Data Bank, which collects reports of all malpractice payments in the US on behalf of physicians, dentists, and nurses. They looked at the relationship between payments, physician premiums, and various state tort reforms. They found that mean payments were 26% lower in states with total damage caps ($196,000 vs $265,000) and 22% less in states with noneconomic (pain and suffering) damage caps ($212,000 vs $279,000). In addition, total damage caps were associated with lower mean annual premiums and hard, but not soft (caps with exceptions) noneconomic caps were associated with premium reductions. No other state tort reforms measured showed a significant association with payments or premiums.4
Studdert et al surveyed Pennsylvania physicians in high-risk specialties (obstetrics/gynecology, ortho, ER, surgery, neurosurgery) to ascertain self-report of defensive medicine practice. Almost all respondents reported practicing defensive medicine, the most common form (92%) being unnecessary ordering of tests and imaging studies and referring for consultation. In addition, 42% said they had restricted their practice by either decreasing the performance of more risky procedures (eg, trauma surgery) or avoiding complex cases or patients perceived as more likely to sue. Defensive medicine was highly correlated with physicians’ lack of confidence in their liability insurance or its cost.5
Kessler et al looked at physician supply from 1985–2001 and its correlates to state tort reforms during that time. Three years after States that adopted direct reforms (mainly caps on damage awards) showed an average physician growth rate within 3 years that was 3.3% greater than states not adopting such reforms. The authors controlled for a variety of factors that can influence physician supply including population growth and other state-level characteristics.6