Practice Management

Challenges of Medical Liability Reform in a Rapidly Changing Healthcare Environment

Linda Peckel
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gavel on doctor's tray with money
gavel on doctor’s tray with money
A new bill aimed specifically at limiting medical liability was passed by Congress on March 1, 2017.

Medical liability is one of the most troubling issues in medicine today, resulting in a heavy burden of patient mortality and injury, while at the same time placing heavy financial burdens on medical practitioners and insurance providers, leading to limited patient access to the highest quality care.

In recent months, after many years of debate about the reform of existing medical liability laws, 2 new bills have been introduced in the US Congress:

Background

A 2011 study of medical malpractice lawsuits across 25 specialties reported that 1 in 4 US physicians is sued each year.1 During the study period from 1991 to 2005, 7.4% of the 40,916 physicians studied were faced with a malpractice suit, of which 78% did not result in a claims payout. Predictably, high-risk surgical specialties and obstetrics/gynecology were associated with the highest risk of claims (80% and 74%, respectively, compared with 55% for internal medicine); however, the study found that these were not always the specialties in which the most claims were reported or in which the highest payouts occurred.1

Prevalence

By any account, the numbers of deaths due to medical error or negligence are too high. In a 2017 issue of the Journal of Patient Safety, an article by Kavanagh et al2 explored a range of analyses of hospital-related deaths due to medical error and found estimates between 210,000 and 400,000 annually.3,4 The most recent and highly regarded of these analyses was performed by Makary and Daniel from Johns Hopkins University in Baltimore,4 who estimated that in excess of 250,000 preventable deaths occur annually.

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Costs

According to a National Conference of State Legislatures (NCSL) summary brief on healthcare cost-containment strategies for medical malpractice reform,5 overall costs for medical liability in the United States (including payouts, legal and administrative costs, and additional defensive medical practices) range from $55.6 to $200 billion annually, accounting for 2.4% to 10% of all healthcare spending.5

Assessing Impact to Stakeholders

Patients

A 2015 report from the Agency for Healthcare Research and Quality (AHRQ) found that 44% of hospital-related deaths are preventable.6 In 2011, the Partnership for Patients (PfP) initiative by the US Department of Health and Human Services (HHS), in combination with Medicare payment incentives designed to reward greater attention to safety control measures, resulted in rates of hospital-acquired conditions that were 21% lower in 2015 compared with 2010.  AHRQ estimated that such changes contributed to the prevention of as many as 125,000 deaths in 2015, with associated savings in healthcare costs of approximately $28 billion.6

In a similar manner, in 2012 the Leapfrog Group in Washington, DC, contracted with Johns Hopkins Medicine’s Armstrong Institute for Patient Safety and Quality in Baltimore, Maryland, to develop a hospital safety scoring system. They estimated that 206,021 avoidable deaths occurred in US hospitals each year.7 Despite improvements in safety, many hospitals continued to receive low scores, resulting in a 9% higher risk of avoidable patient deaths in a B-rated hospital compared with an A-rated hospital.7 That risk increased by 35% in C-rated hospitals and 50% in D-rated and F-rated hospitals.7 The most outstanding feature of the Leapfrog report was the projection that raising the performance rating of substandard hospitals to an A was projected to result in saving an estimated 33,429 lives per year. 7

Providers

By the age of 45, 36% of physicians in low-risk specialties and 88% of surgeons are likely to have been involved with their first medical malpractice claim. By the age of 65, those rates increase to 75% and 99%, respectively.1 

In a 2009 position statement on medical liability reform, the American Academy of Orthopaedic Surgeons (AAOS) pointed to a “hostile medical litigation climate” as one of the major problems with the existing malpractice insurance system, driving significant losses of access to quality healthcare as 40% of physicians chose to limit their practice due to liability concerns.9-14 At the same time, the AAOS reported concerns about the instinct toward defensive medicine, “driven by the intensity of conflict, the duration of tort action, the emotional drain on the physician, and the threat of a large jury award.”9-15

Insurance Payors

In recent years, federal reform has targeted a number of the current features of the malpractice system to reduce topline burdens to insurance payors. Under the Affordable Care Act (ACA), states were encouraged to seek alternatives to tort litigation for the resolution of malpractice claims. The major focus in 2010 was the limitation of damage awards by providing caps, ranging in most states from $250,000 to $500,000 per claim.5 Additional features of the ACA included restrictions on statutes of limitation and changes to standards of joint and several liability claims. In cases in which common law allowed for 100% liability for all defendants in a single claim incident, states initiated systems of shared liability among multiple defendants according to percentages of determined liability up to a total of 100%.5

Current Status

It is anticipated that the passage of the new Protecting Access to Care Act will significantly reduce the many inflated costs involved in medical liability as a consequence of extensive litigation and additional healthcare expenses resulting from defensive medicine.

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References

  1. Jena AB, Seabury S, Lakdawalla D, et al. Malpractice risk according to physician specialty. N Engl J Med. 2011;365:629-636.
  2. Kavanagh KT, Saman DM, Bartel R, et al. Estimating hospital-related deaths due to medical error: a perspective from patient advocates. J Patient Safety. 2017;13:1-5.
  3. Makary MA, Daniel M. Medical error-the third leading cause of death in the US. BMJ. 2016;353:21-39.
  4. Selecting the right hospital can reduce your risk of avoidable death by 50%, according to analysis of newly updated hospital safety score grades. Hospital Safety Score. www.hospitalsafetyscore.org/about-us/newsroom/display/442022. Accessed April 27, 2017.
  5. Summary Of Health Cost Containment And Efficiency Strategies – Brief #16- Medical Malpractice Reform. National Conference of State Legislators. www.ncsl.org/research/health/medical-malpractice-reform-health-cost-brief.aspx  Accessed on April 26, 2017.
  6. National scorecard on rates of hospital-acquired conditions 2010 to 2015:interim data from national efforts to make health care safer. Agency for Healthcare Research and Quality. www.ahrq.gov/professionals/quality-patient-safety/pfp/2015-interim.html.  Accessed April 27, 2017.
  7. Selecting the right hospital can reduce your risk of avoidable death by 50%, according to analysis of newly updated hospital safety score grades. The Leapfrog Group. www.hospitalsafetyscore.org/about-us/newsroom/display/442022. Accessed April 27, 2016.
  8. American Academy of Orthopaedic Surgeons (AAOS) Position statement: Medical Liability Reform. 2009.  http://www.aaos.org/Advocacy/MLR/ Accessed on April 26, 2017.
  9. Rock, SM. Malpractice premiums and primary cesarean section rates in New York and Illinois. Public Health Rep.  1988;103(5):459-468.
  10. Harvard Medical Practice Study. Patients, doctors, and lawyers: medical injury, malpractice litigation, and patient compensation in New York. Report of the Harvard Medical Practice Study to the State of New York. The President and Fellows of Harvard College, Cambridge, MA, 1990.
  11. Localio AR. Relationship between malpractice claims and cesarean delivery. JAMA. 1993;269:366-373.
  12. Kessler D, McClellan M. Do doctors practice defensive medicine? Q J Economics. 1996;111:353-390.
  13. Kessler D, McClellan M. Malpractice law and health care reform: optimal liability policy in an era of managed care. NBER WP. 2000;7537.
  14. Dubay L, Kaestner R, Waidmann T. The impact of malpractice fears on cesarean section rates. J Health Econ. 1999;18:491-522.
  15. Kessler DP, McClellan MB: How liability law affects medical productivity. J Health Econ. 2002;21:931-955.