Healthcare groups continue fight for greater malpractice reform

June 1, 2010

Organized medicine, including groups representing dermatologists, has long fought for medical liability reforms that would limit jury-granted noneconomic awards for pain and suffering and include provisions to keep frivolous (but potentially costly) cases out of court. Their pitch: Effective reform would reduce medical malpractice costs, including insurance, and make it possible for many physicians who can't afford skyrocketing premiums to continue their practices.

Key Points

The medical groups attempted to inject their argument into the debate over healthcare reform legislation earlier this year, but they were largely unsuccessful. The American Academy of Dermatology Association (AAD) was part of a coalition of medical groups that asked President Obama to include meaningful medical liability reform in the broader healthcare reform package.

"We urge you to support federal legislation that includes proven liability reforms like those enacted in California and Texas, while preserving existing and future medical liability reforms enacted by the states," stated a Feb. 23 letter to President Obama from the AAD and 76 other organizations. "We also urge you to seek bipartisan agreement on moving forward with federal legislation that provides incentives for states to pursue a wide range of alternative reforms including health courts, administrative determination of compensation, early offers and safe harbors for the practice of evidence-based medicine."

Harvard study

A new study from the Harvard School of Public Health and the Harvard Medical School for the Medicare Payment Advisory Commission (MedPAC) indicates that existing evidence is insufficient to show that most of the reforms sought - with the exception of caps on noneconomic damages - would be effective in reducing malpractice claims frequency and costs or defensive medicine, or improve the supply of healthcare services and quality of care. But, the study said, "Most of these reforms are promising enough to merit controlled experimentation in the U.S., such as through demonstration projects."

Thus, while the medical organizations complained that the new healthcare reform law did not do enough to resolve the medical liability crisis, the law actually may have been on target - at least if compared to the conclusions of the Harvard team led by Michelle M. Mello, J.D., Ph.D., professor of law and public law at Harvard School of Public Health, and Allen Kachalia, M.D., J.D., assistant professor of medicine, Harvard Medical School, and medical director for quality and safety at Brigham and Women's Hospital, Boston.

Their analysis covered eight reforms widely and variously implemented in several states: caps on noneconomic damages; pretrial screening panels; certificate of merit requirements; attorney fee limits; joint-and-several liability rule reform; collateral source rule reform; periodic payment; and statutes of limitation/repose. It also examined six less-tested reforms: schedules of noneconomic damages; health courts; disclosure-and-offer programs; safe harbors for adherence to evidence-based clinical practice guidelines; subsidized reinsurance that is made conditional upon meeting particular patient safety goals; and enterprise medical liability.

The reforms were evaluated for their effects on the following: Malpractice claims frequency and costs; medical liability system overhead costs; healthcare providers' liability costs; defensive medicine (including healthcare utilization and spending); supply of healthcare services (including physician supply and patient health insurance coverage); and quality of care.

For most of the reforms, the researchers said that "the evidence does not identify significant effects on the key outcome variables," with the exception of caps on noneconomic damages. The study noted that 26 states currently impose limits on noneconomic damages, and six cap total damages. Awards in California, Texas and many of the other states are capped at $250,000.

'Equivocal' evidence

The researchers' analysis showed that the evidence "is too equivocal" to conclude that such caps reduce claim frequency, but that they do effectively reduce average awards by some 20 percent to 30 percent. They cited one study that showed such caps may increase defense costs in malpractice litigation, because insurers may allow cases to go to trial since awards are lower in jurisdictions that cap awards. Regarding the cost of premiums, the study said it is reasonable to conclude that caps "moderately constrain" the growth of premiums over time.

"There is a good evidence base regarding the effects of damages caps, though studies have returned mixed findings. The weight of the evidence suggests that caps achieve substantial savings in average claims payments, modestly constrain the growth of malpractice insurance premiums, modestly improve physician supply and reduce at least some defensive medical practices. They may increase litigation expenses," the researchers concluded.

The entire report may be seen at http://www.medpac.gov/documents/Apr10_MedicalMalpractice_CONTRACTOR.pdf.

Bob Gatty, former congressional aide, covers Washington for businesses specializing in healthcare and related issues. Contact him at bob@gattyedits.com
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