OBJECTIVE
Reduce costs and improve health care quality by reforming the current medical liability system and reducing the use of defensive medicine.
STRATEGY
Strategy: Convene stakeholder group to examine the medical liability problem, examine current state medical liability laws and policies, and develop reform proposals for consideration by the Oregon legislature.
The Institute of Medicine reported in 1999 that medical errors are the eighth leading cause of death in the United States.53 As many as 98,000 people die each year as a result of medical errors.54 In order to prevent errors so that deaths and injuries seldom or never occur, the health care system must have a coordinated strategy to integrate the medical liability system and quality improvement efforts. The liability system’s main objectives are to recognize sources of medical error, correct those causes to avoid reoccurrence, and pay damages to those who are affected by medical negligence. Nevertheless, only one medical liability claim is filed for every eight
medical injuries, and the average duration of a liability claim resolution is between four and eight years.55,56 The current health care liability system is at times an ineffective method for the
resolution of medical errors and can impede expeditious communication between health care professionals and patients, thus obstructing efforts to improve patient safety and quality of care. At the same time, Oregon health spending has reached unprecedented levels, with no clear sign of slower growth ahead. For much of the 1990s, Oregon was among the states with the fewest problems with medical liability costs and practice changes associated with these costs. At this time Oregon had a cap on non-economic damages; however, in 1999, the Oregon State Supreme Court ruled that the cap was unconstitutional. Since then, premiums for medical liability
coverage have risen sharply. The last several years have seen a more stable medical liability premium environment, but this stability is due to large returns in the stock market for insurers. This stabilizing influence is expected to have reduced influence in the next few years.
The rising cost of medical liability premiums is of concern for the state for several reasons. First, as premiums rise, so does the cost of defensive medicine. Defensive medicine is the ordering of tests, procedures, and visits, or avoidance of certain procedures for patients because of concern about medical liability risk.57 Estimates of the increased cost of health care due to defensive medicine vary. A 1984 study calculated that the cost of these practices designed to reduce the
53
Institute of Medicine. (1999) To Err is Human. Washington: National Academy Press.
54
Ibid., IOM, (1999).
55
Harvard Medical Practice Study Group. (1990). Patients, Doctors, and Lawyers: Medical Injury, Malpractice
Litigation, and Patient Compensation in New York. Cambridge, Mass.: Harvard University, 56
Sloan F.A., Githerns, P. B., Clayton, E. W., Hickson, G. B., Gentile, D. A., & Partlett, D. F. (1993). Suing for
Medical Malpractice, Table 2.4. Chicago: University of Chicago Press. 57
Defensive Medicine and Medical Malpractice. (1994). Washington DC: US Congress, Office of Technology Assessment; OTA-H-602.
likelihood of being sued for malpractice was equal to 14.1% of physicians' revenue.58 Studies have found that tort reform efforts, particularly caps on non-economic damages, can reduce the cost of defensive medicine. One study showed that in states with such caps, health care costs for Medicare patients with certain heart conditions were 5.3% to 9.0% lower than those for similar patients in states without such caps.59 Other analyses have shown that laws limiting medical liability payments lower state health care expenditures by 3% to 4%.60 However, other analyses of rising health care costs and review of the literature came to the conclusion that the liability system is not an important driver of cost trends or even a large factor in high costs.61
As medical liability costs rise in the state, health care providers leave less profitable practice environments, particularly in rural areas, and stop providing high risk services such as maternity care. 62 Such changes can lead to access problems for vulnerable populations, such as rural residents and pregnant women. Lack of ability to access medical services in a timely manner can lead to poorer health outcomes and complications that are more expensive to treat. Currently, the state subsidizes the premiums of rural providers, particularly those who provide maternity care. However, this subsidy is set to sunset in 2011.
Rising medical liability costs also impact patient safety initiatives. Hospitals, health systems, and medical groups regularly review unexpected medical outcomes to determine if any avoidable mistakes were made. Once a mistake or system issue is identified, then steps can be taken to redesign the system to help prevent such mistakes in the future. However, increased pressures on providers from rising premiums can inhibit the open disclosure of errors which is essential to this process. Protections have been enacted covering such disclosures, but these protections are incomplete and at risk in a highly litigious environment. If errors are not disclosed and steps not taken to make the system safer, expensive medical errors continue and patient outcomes are put at risk. Fortunately, the state Legislature established the Patient Safety Commission, which collects information on medical errors from hospitals, nursing homes, and ambulatory surgery centers. This program and many others are critical steps toward resolving problems in medical liability and improving quality.
Innovative solutions to the problems involved with medical liability costs have been proposed. For example, providers who care for OHP/Medicaid patients could be given some state immunity for the liability involved in such care. This would improve health care access for low-income Oregonians and provide relief for providers. Some other solutions include re-instatement of a cap on non-economic damages, a medical liability pool, and changes in the tort litigation system.
58
Reynolds R. A., Rizzo J. A., Gonzalez, M. L. (1987). The cost of medical professional liability. Journal of the
American Medical Association,.257:2776-2781. 59
Kessler, D. P., & McClellan, M. B. Do doctors practice defensive medicine? (1996). Quarterly Journal of
Economics, 111:353-390. 60
Hellinger, F. J., & Encinosa, W. E. (2006). The Impact of State Laws Limiting Malpractice Damage Awards on Health Care Expenditures. American Journal of Public Health, 96(8): 1375-1381.
61
Ginsburg, P. B. (October 2008). High and rising health care costs: Demystifying U.S. health care spending. The Robert Wood Johnson Foundation Research Synthesis Report No. 16..
62
Smits, A. K., Clark, E. C., Nichols, M., & Saultz, J.W. (2004, July/Aug). Factors affecting cessation of pregnancy care in Oregon. Family Medicine, 36(7): 490-495.
ACTION STEP 1. Establish a Medical Liability Reform Council.
The Authority establishes a Medical Liability Reform Council composed of physicians, plaintiff attorneys, and other stakeholders, including a representative from the Patient Safety Commission. The Council investigates opportunities to reform the current medical liability issues in Oregon including, but not limited to: structured attorney fees, periodic payments, expert witness disclosure, pre-screening panels, collateral source disclosure, and catastrophic insurance funds for awards in excess of specific maximum limits. This group addresses the effectiveness and viability of possible solutions, as well as various state and federal policy solutions. The work of this reform council culminates in recommendations for the
Legislature for state action as well as the Oregon Congressional delegation for federal action. Work on medical liability reform will coordinate with efforts to improve the use of evidence- based practice in medicine.