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AAOS Now

Published 5/1/2008
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James Genuario, MD, MS; Samir Mehta, MD; the Washington Health Policy Fellows

Issues facing America: Medical liability reform

The U.S. healthcare system is broken, say both political pundits and healthcare insiders. Although the United States spends more on health care than any other nation, millions of people are uninsured, Medicare reimbursements threaten to spiral down, and access to care for millions is threatened. The “access to care” issue, in part, is a direct reaction to the increased liability threat that patients and their attorneys pose. As a result, healthcare reform is one of the most debated issues during the current presidential race.

According to William M. Sage, author of Medical Malpractice and the U.S. Health Care System, “American health care today sits at the intersection of a perceived epidemic of medical injuries and medical malpractice crisis. The concern over medical errors has brought demands for increased regulation in the interest of patient safety, including regulation through the tort system, but rising professional liability costs have created strong political pressure to decrease malpractice litigation.”

The impact on patient access
The medical liability crisis is not a crisis in malpractice, but a crisis in patient access. Medical liability premiums have increased 920 percent from 1976 to 2002. Many physicians have altered their practices, stopped or decreased emergency coverage, and limited or discontinued high-risk procedures.

Fear of litigation has eroded the physician-patient relationship and fostered defensive medicine. The deviation in practice patterns and in scope of practice has both increased overall healthcare costs and decreased access.

Causes and proposed legislative solutions to the crisis have been debated on both a state and national level. An analysis of state and federal efforts at implementing medical malpractice reform to determine the most efficacious methods to reshape the liability crisis concluded that “significant reductions in malpractice payments could be realized if total or noneconomic damage caps were operating nationally.”

Several attempts have been made to legislate caps on nonecomonic damages in medical liability cases on the national level, the most recent being the Medical Care Access Protection Act proposed by Sen. John Ensign, R-Nev. Although evidence exists to indicate the effectiveness of this measure, medical liability reform legislation that includes caps consistently passes the House and fails in the Senate.

The candidates’ stances
Within his package on healthcare reform, the Republican candidate, Sen. John McCain of Arizona, outlines the following approach to medical liability reform: “Adapt malpractice reforms that limit frivolous lawsuits and excessive damages and provide safe harbors for practice within clinical guidelines and safety protocols.”

Although Sen. McCain does not specifically address how he intends to enact these changes, he has historically voted with fellow Republicans to establish a federal cap on noneconomic damages.

In an address at Dartmouth College where she unveiled her strategy for healthcare reform, Democratic presidential hopeful Sen. Hillary Clinton of New York linked medical error disclosure and physician liability. Along with her colleague and primary opponent for the Democratic presidential nomination, Sen. Barack Obama of Illinois, she introduced the National Medical Error Disclosure and Compensation Act (MEDiC Act) in 2005. Among its provisions are the following:

  • disclosure of errors to patients with an offer of reasonable financial settlements when appropriate
  • creation of a national safety database composed of confidential reports from healthcare institutions
  • protection of statements about apologies for error that providers make to patients from being used in later action

Although the MEDiC Act has not passed at the federal level, seven states have pursued disclosure-related legislation and 34 states have “apology laws” that protect specific information conveyed in disclosures.

The success of this legislation in reducing the number of liability claims has been mixed. Opponents are skeptical about the government’s ability to enforce disclosure or to regulate the content of disclosure; they are also concerned that disclosure may ignite an interest in litigation despite the apology laws.

The Veteran’s Administration in Lexington, Va., was the first to publish reports on the effect of an open-disclosure program. It found no change in either the number of claims or the size of payouts. The University of Michigan Health System, however, was more successful in reducing litigation-related expenses and the number of claims when it implemented an open disclosure plan. Although the effectiveness of these programs in reducing liability expenses is still under debate, full and frank disclosure will likely become standard of care and is in the patients’ best interest.

Sen. Clinton has opposed caps on noneconomic damages and has voted against the Medical Care Access Protection Act. Sen. Obama, who abstained from voting on the Medical Care Access Protection Act, has historically been opposed to caps as a part of medical liability reform.

In his “Plan for a Healthy America,” Sen. Obama says he would address liability reform by “strengthening antitrust laws to prevent insurers from overcharging physicians for malpractice insurance [and] promoting new models for addressing physician errors that improve patient safety, strengthen the doctor-patient relationship, and reduce the need for malpractice suits.” The senator focuses on the need for reform at the level of the insurance companies and an insistence on early physician disclosure of errors (through his support of the MEDiC Act) as mechanisms for reducing lawsuits while improving patient care.

Next steps
Although each of the candidates may take a different pathway to medical liability reform, clearly something needs to be done to protect patients’ access to care. To learn more about both the medical liability crisis and the candidates’ different views on healthcare reform, visit
www.protectpatientsnow.org and www.health08.org

The Washington Health Policy Fellows include James Genuario, MD, MS; Samir Mehta, MD; Sharat K. Kusuma, MD; Ryan M. Nunley, MD; Aaron Covey, MD; A. Alex Jahangir, MD; Alok D. Sharan, MD; Anil Ranawat, MD; and John Flint, MD.

Did you know?
46%: Percentage of compensation that actually goes to the plaintiff in a medical liability case, after litigation and lawyers’ fees.

$126 billion: Cost to the already overburdened U.S. healthcare system related to medical liability in 2002.

5 years: Average time between a medical injury and settlement of a medical liability lawsuit.

57%: Proportion of orthopaedists who avoid caring for high-risk patients for fear of liability repercussion—the highest of all specialties surveyed.

920%: The average percentage increase in medical liability premiums from 1976 to 2002.

References

  1. Studdert DM, Mello MM, Gawande AA, Gandhi TK, et al. Claims, Errors, and Compensation Payments in Medical Malpractice Litigation. NEJM 2006; 354: 2024-33. http://content.nejm.org
  2. Confronting the New Health Care Crisis: Improving Health Care Quality and Lowering Costs by Fixing Our Meical Liability System. Washington DC: Office of the Assistant Secretary for Planning and Evaluation, US Department of Helath and Human Services 2002. Available at: http://aspe.hhs.gov
  3. Studdert DM, Mello MM, Sage WM, DesRoches CM, Peugh J, Zapert K, Brennan TA. Defensive Medicine Among High-Risk Specialist Physicians in a Volatile Malpractice Environment. JAMA 2005;293:2609-2617 http://jama.ama-assn.org
  4. Sage WM and Kersh R. Medical Malpractice and the US Health Care System. New York NY, Cambridge University Press, 2006. http://www.cambridge.org
  5. Profitability by Line by State in 1976 and 2002. Kansas City, MO: National Association of Insurance Commissioners, 2003.
  6. Medical Malpractice Insurance: Multiple Factors Have Contributed to Increased Premium Rates> Washington, DC: General Accounting Office; 2003. GAO-03-702.
  7. Guirguis-Blake J, Fryer GE, Phillips RL, Szabat R, Green LA. The US Medical Liability System: Evidence for Legislative Reform. Ann Fam Med 2006; 4:240-246. http://www.annfammed.org
  8. Kraman SS, Hamm G. Risk management: extreme honesty may be the best policy. Ann Intern Med 1999; 131: 963-967. http://www.annals.org/cgi
  9. Clinton HR, Obama B. Making patient safety the centerpiece of medical liability reform. NEJM 2006; 354: 2205-2208. http://content.nejm.org