Opening Argument
The Impact of Malpractice on Access is Grossly Inflated

by Maxwell S. Kennerly, Esq.

A 2006 American College of Surgeons report concluded, “the single most important factor shaping the [emergency] surgical workforce today is declining reimbursement,” a euphemism for cutthroat health insurer tactics. Last month, Bayonne Hospital sued Horizon Blue Cross Blue Shield for a parade of horribles, such as calling patients, lying about their coverage, and instructing them to leave the ED prior to screening or stabilization.

Against this backdrop, malpractice premiums are at a per-physician thirty-year low. Unbiased analysis of their effect, however, is in short supply. A.M. Best, which rates insurers’ creditworthiness for banks, says premiums represent 0.45% of national health care expenditures; Towers Perrin, an insurance consulting firm, says 1.5%. Least credible is the American Hospital Association, which relies on the Lewin Group, part of Ingenix, a UnitedHealth subsidiary that recently agreed to a $400 million settlement for manufacturing phony fees data to short-change physicians.

After a decade of declining premiums and claims payments in the 1990s, the stock market collapsed, prompting insurers to raise premiums rapidly. In 2003, the peak of the increases, the General Accounting Office surveyed five states with “reported malpractice-related problems” (including Nevada and Mississippi) and four without for the impact of liability on access to care. The GAO found no impact in the latter and “scattered” reductions in the former by providers of ER surgical coverage and obstetricians, most of whom also faulted other “long-standing factors” like reimbursement.  The GAO concluded most reports were “unsubstantiated” and that malpractice liability “did not widely affect access to health care.”

The same report found little evidence of “defensive medicine,” criticizing a widely-cited Health & Human Services report (the source of that “$300 billion” figure) for its transparently flawed generalization from two narrow examples of elderly heart disease treatment. In 2004, the Congressional Budget Office followed up on the H&HS report, even using the same methods, yet “found no evidence that restrictions on tort liability reduce medical spending,” deeming the evidence for defensive medicine “weak or inconclusive” and noting “some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients.”

Such did little to stop a wave of “tort reform” in many states, like capping noneconomic damages and eliminating joint and several liability. Several years later, we have control and experimental groups in our laboratory of democracy.

The 2009 American College of Emergency Physicians’ Report Card on the State of Emergency Medicine is a revelation: of the ten states with an “A” or “B” grade for their “medical liability environment” (the most hostile to patients), six had an “F” for “access to emergency care,” one had a “D-,” two had a “C-,” and one had a “B-,” together averaging below a “D-.”  Mississippi and Nevada, too, took WhiteCoat’s “tort reform” advice: years later, they have, respectively, a “C” and “C+” for liability and a “C-” and an “F” for access to care. Conversely, the nine states with an “F” for liability earned the only “A,” had only one “F,” and averaged a “C” for access to care, better than the national average of “D-.”

But, tort reformers say, there are other factors. That’s my point: the impact of malpractice liability on access to care is so small it appears positive because it is dwarfed by other factors such as Aetna, Cigna and WellPoint, all of whom the AMA recently sued for also using the bogus Ingenix database, and the increase in uninsured or underinsured patients. The big change in the past generation has not been an increase in malpractice premiums or claims (both are at historic lows in inflation-adjusted dollars) but an extraordinary decrease in reimbursement.

A 2003 AMA report found physicians lost $4.2 billion in annual revenue providing unreimbursed emergency care; compare that loss in a single field to the $4.7 billion paid in 2008 to resolve all malpractice claims nationwide. The same study said emergency physicians incurred an annual average of $138,300 in uncollectable fees, double the average insurance premium for specialists and nine times the average premium for primary care physicians. It seems an ounce of reimbursement is worth a pound of tort reform.

Max Kennerly, Esq., is a Philadelphia trial lawyer and author of the blog

Continue to next page for the counter argument by "WhiteCoat"
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Counter Argument

Defensive Medicine is Real...and Goes Beyond Costs
by "WhiteCoat"

Doctors fear malpractice liability. And why shouldn’t they? Last month a woman was awarded $60 million dollars after a cosmetic surgeon allegedly botched her thigh lift. Medical malpractice law firms proudly display news releases about their multimillion dollar malpractice verdicts against physicians.

Does malpractice liability affect access to medical care, though? Access to medical care is limited by two factors: Available providers and willing providers. The best vascular surgery program in the world can’t help you if there’s no surgeon available or if you’re 150 miles away when your aortic aneurysm ruptures. Similarly, an abundance of nearby neurosurgeons helps no one with a brain hemorrhage if none of those neurosurgeons is willing to perform brain surgery.

What factors affect whether a provider is available or willing to provide services?

Money undoubtedly affects access to care. Even though patients with Medicaid ostensibly have a means to pay for their care, they often have difficulty finding a physician to treat them because payments do not cover the costs of providing care. In this case, physicians may be available, but they are unwilling to provide care for the proposed payment. Conversely, patients with commercial insurance don’t seem to have such problems.

Liability also affects access to care. At first glance, it is easy to discount that effect. How could something that amounts to only 1.5% of total healthcare expenditures affect a physician’s willingness to provide care? The answer is that direct liability costs are only a small piece of the puzzle. Fear of liability creates a tremendous ripple effect. No physician wants to be at the receiving end of the next $60 million verdict. Residents in high-risk fields cite malpractice costs as by far the largest reason for leaving one state in favor of another. More than half of hospitals in medical liability crisis states have difficulty recruiting physicians, resulting in less physician coverage for their EDs. A survey of some Nevada Ob/Gyns showed that 60% planned to drop obstetrical coverage due to malpractice premium increases. Similarly, many Mississippi Ob/Gyns have dropped obstetrical care due to malpractice liability, leaving some counties with no obstetrical care at all. Trauma centers in several states have temporarily closed due to malpractice issues.

Texas tort reform shows that liability reduction can increase access to healthcare. Since tort reform was passed in Texas six years ago, the number of applications for physician licenses has increased dramatically. The number of emergency physicians has increased in 76 Texas counties - many of which were considered “underserved” for emergency care before tort reform. The number of malpractice insurers in Texas increased from 4 to more than 30 and insurance premiums dropped more than 40%. One Texas health system was able to spend $100 million extra dollars helping poor patients. That money had previously been held in reserves for legal defense fees and insurance premiums.

Some might try to draw conclusions by comparing metrics on ACEP’s Report Card. Doing so does not take into account multiple other factors affecting each metric. We cannot directly compare better access to higher liability any more than we can directly compare better access to colder climate. After all, states that scored worst in “access to care” were exclusively in the South and West United States - which generally have warmer climates.

Finally, defensive medicine costs our system up to $300 billion each year. Eliminating defensive medicine could provide each one of the 46 million uninsured patients in the US with $6500 in health care. Unfortunately, there is little tolerance for errors or misdiagnosis in medicine. While no lawyer will ever admit an expectation that medical care should be perfect, I still haven’t found a lawyer who will give me an example of a heart attack, a ruptured appendix, or a leaking cerebral aneurysm that it is OK to misdiagnose. Instead, doctors perform one low-yield test after another to “prove” that every haystack really doesn’t have a needle in it.

I respect Max and I respect his opinions. It just seems ironic that some of the strongest supporters of the notion that we can “sue our way to better health care” are those who stand to benefit the most from trying to do so.

“WhiteCoat” is an emergency physician and anonymous author of EPM’s blog WhiteCoat’s Call Room www.epmonthly.com/whitecoat

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# medical aid unit wilmington de 2012-06-24 16:54
Yes, media serves as hype, but the the risk should be taken in serious consideration. See the story on Electric medical records.

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