Does malpractice reform work?

July 1, 2005

Obstetricians and surgeons are among those attracted to reform states.

WASHINGTON, D.C.-Proponents of legislation limiting damages awarded in medical malpractice suits got a shot in the arm last month from new analysis indicating that such reform can improve the healthcare system. One study published in the June 1 Journal of the American Medical Association (JAMA) finds that states adopting caps on noneconomic damages in malpractice suits experienced an increase in their supply of physicians compared with nonreform states. Another analysis supported by the Agency for Healthcare Research and Quality (AHRQ) and published online by Health Affairs finds that liability caps influence where doctors choose to practice.

States with caps on noneconomic damages generally increased physician supply by 2% to 3% three years after adoption of tort reform, a modest gain, but one that is having a noticeable impact on rural counties. Obstetricians and surgeons who have been hit the hardest by insurance premium hikes and lawsuits are particularly attracted to reform states.

ON THE DEFENSE Taking another approach, doctors in states with high malpractice premiums tend to practice "defensive medicine" and order more tests to help shield them from lawsuits, according to another study in the same issue of JAMA. Almost all (93%) of some 800 Pennsylvania specialists (surgeons, OB/GYNs, emergency physicians, radiologists) acknowledge some defensive medicine practices, and more than half admit that they often order more diagnostic tests than medically indicated, particularly costly imaging studies. These doctors say they request additional referrals and have restricted some activities due to liability concerns.

While insurers and health plans support medical liability reform efforts, they are working to ensure that MCOs are included in any legislative changes. Physicians have backed measures that make it easier for patients to sue health plans, and MCOs are anxious that liability "reform" does not merely shift insurance costs from doctors to insurers.