Improving Value

Malpractice Reform

According to physicians, “aggressive” patterns of providing excessive or unnecessary care results from a variety of factors, including a perceived need to practice “defensive medicine” in order to mitigate malpractice concerns. Defensive medicine occurs when doctors order tests, procedures or other services, or avoid high-risk patients or procedures, to reduce the likelihood that they would be found negligent in a lawsuit if a negative outcome occurs.

Annual estimates for medical liability costs1 – including legal and administrative costs and costs from excess and unnecessary services – range from $55 billion to $200 billion. Malpractice reform, or tort reform, would limit malpractice awards (or damages resulting from a suit), tighten statutes of limitations for filing claims and screen cases before they go to trial in order to, ultimately, reduce costs associated with defensive medicine. 

Malpractice reform has largely been supported by physician groups and opposed by consumers who argue that it will diminish patient protections against negligent physicians. One study showed that, while malpractice reform may reduce the use of unnecessary tests and procedures, it could lead to costly medical errors and an uptick in profitable but risky procedures.2 Other studies found that only a small portion of medical costs would be avoided by tort reform.3

State tort reform strategies have shown mixed results. In the lasty decade, medical malpractice tort filings have decreased in both states with and without tort reform laws. In comparison to control states, researchers found that damage caps reduced overall payouts in Alabama by roughly $20,000.4 Though they observed reductions in payouts and the number of claims filed across states with tort reform laws, there is very little evidence around whether these reductions result in insurance premium reductions, a promised benefit of tort reform. Data on the impact of damage caps and insurance premiums has been mixed. The CBO, and follow-up studies published in the Journal of Health Economics, found that direct reforms, like instituting damage caps, did not significantly reduce payments for Medicare-covered services.5 Both direct and indirect reforms did not impact health outcomes. Thus, authors concluded that tort reform efforts do not have a significant effect on medical decisions.

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1. "Medical Malpractice Cost Containment," National Conference of State Legislatures (November 2014). 

2. "Does Tort Reform Reduce Health Care Costs?" National Bureau of Economic Research (2009). 

3. Rothberg, Michael B., "The Cost of Defensive Medicine on 3 Hospital Medicine Servics," JAMA Internal Medicine, Issue 174, No. 11 (November 2014). 

4. DeVito, Scott and Andrew W. Jurs, ""Doubling-Down" for Defendants: The Pernicious Effects of Tort Reform," Penn State Law Review, Vol. 118, No. 3 (2014). 

5. Sloan, Frank A. and John H. Shadle, "Is there empirical evidence for "Defensive Medicine"? A reassessment," Journal of Health Economics, Vol. 28, No. 2 (March 2009). 

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