Malpractice Reform, Defensive Medicine, and Real World Costs

A recent study (NEJM 2014; 371: 1518-25) showed that tort reform has little effect on medical costs, imaging rates, or admission by emergency room physicians.

One frequently heard argument in controlling medical costs is that fear of malpractice lawsuits drive physicians to order unnecessary care (“defensive medicine”); as such, if tort reform is broadly enacted this would presumably be an “easy” way to lower medical costs. To examine this issue more closely, the authors examined three states which changed the malpractice standard for emergency care from “ordinary negligence” to “gross negligence.”

  • Texas (in 2003)
  • Georgia (in 2005)
  • South Carolina (in 2005)

Using a 5% random sample of Medicare fee-for-service beneficiaries, the authors examined all ER visits to hospitals in the three reform states along with neighboring (control) states from 1997-2011 (total of 9 states examined).

Key finding: “We found no reduction in the rates of CT or MRI utilization or hospital admission in any of the three reform states and no reduction in charges in Texas or South Carolina.  In Georgia, reform was associated with a 3.6% reduction (95% confidence interval, 0.9 to 6.2%).”

While these reforms caused little changes in practice intensity and charges, the authors note that the Texas reforms, which affected other specialties as well, were associated with a 60% overall reduction in malpractice claims and 70% reduction in malpractice payments.

While the goal of tort reform may have been driven by costs, there could be other potential effects:

  • Physician job satisfaction
  • Improved physician regional supply
  • Reduction in claims
  • Less compensation for injured patients

Overall, the “effect of malpractice reform on the quality of care has been mixed.”

Take-away points (from authors)

  • “Physicians are less motivated by legal risk than they believe themselves to be”
  • “When legal risk decreases, the ‘path of least resistance’ may still favor resource-intensive care.”
  • “Malpractice reform may have less effect on costs than has been projected.”

Related blog post200 years of Health Law | gutsandgrowth




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