Proposed malpractice reforms' effects unclear

Key Points

Washington-Organized medicine, including groups representing urologists, have long contended that limiting jury awards for pain and suffering and controlling frivolous but potentially costly lawsuits would reduce medical malpractice costs, including insurance, and keep many physicians who can't afford skyrocketing premiums from closing their practices.

"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," said a Feb. 23 letter to President Obama from the coalition. "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."

Little evidence of reforms' effects

However, a new study from the Harvard School of Public Health and the Harvard Medical School, Boston for the Medicare Payment Advisory Commission (MedPAC) raises questions about the value of tort reform. The study's results indicate 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 and defensive medicine, or improving the supply of health care services and quality of care. But, the study authors also 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 health care reform law did not do enough to resolve the medical liability crisis, it actually may have been on target-at least if compared to the conclusions of Michelle M. Mello, JD, PhD, of Harvard School of Public Health, and Allen Kachalia, MD, JD, of Harvard Medical School, who conducted the analysis.

Their analysis covered eight reforms 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 more innovative, 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 malpractice claims frequency and costs, medical liability system overhead costs, health care providers' liability costs, defensive medicine (including health care utilization and spending), supply of health care services (including physician supply and patient health insurance coverage), and quality of care.

For most of the reforms, the researchers said, "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.

The 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% to 30%.

The authors cited one study that showed that 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 authors said it is reasonable to conclude that they "moderately constrain" the growth of premiums over time.

Caps constrain premium growth

Their overall conclusion on the impact of caps on noneconomic damages: "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. Evidence concerning their effects on claim frequency, health insurance, and quality of care is too limited or equivocal to support firm conclusions."

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

Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.