Payers could curb defensive medicine with data and standardization


Physician behavior unaffected by malpractice risk.


Recent research suggests that limits on medical malpractice liability damages or other types of tort reform may not curb defensive medicine, but experts believe that sharing clinical data as well as standardizing and publishing guidelines could influence providers to avoid such behavior. Defensive medicine has long been a source of waste in the nation’s $3 trillion healthcare system.

A recent Health Affairs study analyzing earlier research and presenting new evidence showed that regardless of a state’s tort reform laws or actual risk of litigation, many office-based physicians still reported a high level of concern and perceived risk of being sued. These more concerned providers tended to practice using defensive medicine techniques, such as ordering unnecessary diagnostic tests, instructing patients to visit a hospital’s emergency department or admitting patients to the hospital.

The finding may be discouraging to payers whose margins have been limited under Affordable Care Act (ACA) regulations. Controlling medical losses due to defensive medicine, however, could be curbed, according to research and experts who spoke with Managed Healthcare Executive.

The experts contend that if payers were able to offer physicians more benchmark clinical data from unaffiliated providers, they would be less likely to have so much practice variation. Also, if payers adopted a standardized set of evidence-based guidelines for when patients present symptoms like chest pain, headache or lower back pain, for example, providers would be less concerned about liability.

“To influence physician behavior with respect to defensive medicine, payers basically have the same tools that they use to address physician behavior in other areas: they can change the way they pay for services,” says Emily Carrier, MD, senior health researcher, Center for Studying Health System Change. “However, this would need to be done carefully to avoid creating the appearance of encouraging stinting on care. For example, paying an additional per-member-per-month fee to practices that implement evidence-based decision support modules related to imaging studies, strengthening requirements for utilization review and changing payments for services that are commonly used defensively might all have different results,” said Dr. Carrier.

Changing physician behavior, the authors warn, is a slow process. Regardless of payers’ ability to supply providers with additional data or standardizing care guidelines, without a federal overhaul of the medical liability system, physicians will likely continue practicing to avoid their perceived risk.

Psychological impact

In the Health Affairs article, “High Physician Concern About Malpractice Risk Predicts More Aggressive Diagnostic Testing In Office-Based Practice,” authors assessed the physician malpractice liability concern level using a 2008 nationwide survey and compared their responses to each state’s risk of a malpractice lawsuit. The authors’ analysis of previous studies and the survey data indicates that monetary loss was only one concern driving physician behaviors toward defensive medicine. The psychological impact of being the defendant in a lengthy lawsuit seemed to be a much greater threat to providers.

Alleviating some of this concern in an effort to curb defensive medicine practices may begin with supplying providers with more real-time clinical data from outside their practice, says Eric Schenk, a partner within EY’s Health Care Advisory Services. Too often, the only clinical data payers are able to supply from outside providers is through claims, which may be dated and do not contain adequate clinical information to support decision making.

In one emerging trend, more payers are receiving robust laboratory results from testing companies and sharing that data to help guide providers, even those who may not have ordered the test but are involved in the patient’s care, says Terry Fouts, MD, chief medical officer for MedeAnalytics, a management software and consulting firm for hospitals, physician practices and payers.

Many of these plans have capitated arrangements with these large labs to receive results of the lab studies in exchange for a certain volume of patients.

The Agency for Healthcare Research and Quality sponsored a study that appeared in the Journal of the American Medical Informatics Association validates this view that greater data access supports improved decision making. Researchers analyzed EHR data from a large general internal medicine clinic in Chicago to identify women who were at low-risk of cervical cancer and eligible for an extended Pap testing interval of three years rather than the usual one test per year. If physicians had accessed and analyzed this data before the order, the clinic could have avoided overutilization of the screening for 66% of the women studied, saving payers more than $100,000.

Payer metrics

Increased access to real-time clinical data could be an asset in curbing defensive medicine, but part of what is driving testing overutilization by physicians could be an inconsistent quality target presented by payers.

Often the standard of care is followed by the provider, but the patient outcomes are worse than anticipated. Reforms need to allow communication between physicians and patients when adverse outcomes result, to explain the situation and prevent it from escalating into a full-blown litigation against the provider that was following best practices.

The “standard of care” dilemma may be another area where payers can help allay some physician concerns. Most practices contract with dozens of health plans, each with its own clinical quality guidelines that are impossible for a physician to remember at the point of care. 

If payers would collectively agree to one guideline for a certain set of symptoms, for example, physicians would not feel compelled to order additional costly tests, says Mike Deegan, MD, formerly of a Texas hospital chain and now clinical professor, University of Texas at Dallas Naveen Jindal School of Management.

When Dr. Deegan was the hospital system’s chief clinical officer, he says, its commercial payers could not agree on a common set of quality metrics that hospitals should collect, the collection method or what sharing those results meant. Administrative resources ended up being wasted trying to achieve the multiple customized payer metrics, he says.

A “safe harbor” defense approach, which allows providers to shield themselves against malpractice allegations by citing national, evidence-based standards of care instead of the prevailing standard in their state or community, also has the potential to reduce geographic variation in the provision of some services, according to the Health Affairs’ authors.

In addition, data transparency concerning physicians’ diagnostic testing utilization and hospital admissions would likely change clinical behavior.

As a physician leader of a 1,000-physician multispecialty group in Michigan, Dr. Deegan would post reports in the affiliated hospital’s physician lounge comparing his group’s admission rate to that of area private practices. The reports showed his group admitted less than half the number of patients than the area’s independent physicians. Eventually, the independent doctors quietly started following the group’s quality guidelines and their admissions numbers started to align.

Federal overhaul needed

Regardless of payer interventions, experts say that without a federal overhaul of the medical liability system, physicians will continue to mitigate their perceived risk with defensive medicine practices.

“Simply changing one state, even a big state, and expecting the behavioral change immediately would be naïve. There are things payers can do to help with that, but we need to let the change take place,” EY’s Schenk says. 

As of November 2013, no major federal legislation reforming the medical liability system is in the works, but the ACA did devote $350 million over 10 years to curb wasteful and potentially fraudulent activity. By increasing license checks and site visits to providers who may pose a higher risk of fraud or abuse and utilizing advanced predictive modeling technology when highly suspect behaviors are detected, federal regulators hope to control the symptoms of defensive medicine instead of tackling the cause. 

Meanwhile, payers can help keep their medical loss ratio at a minimum by helping providers access more data from across the care continuum and offer more quality guideline consistency across their insurance products. The result could be fewer unnecessary tests ordered, emergency department visits and hospital admissions.

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