Defensive Medicine is Fraud
“TORT REFORM” HAS NO IMPACT ON SO-CALLED DEFENSIVE MEDICINE.
In this myth buster article, we’ll examine several articles and studies that debunk the oft-repeated claim that taking away citizens’ 7th Amendment rights will reduce healthcare costs and reduce doctors’ practicing defensive medicine. Study after study refutes the claim, and it’s extremely helpful to have the information from these studies at our fingertips in case we need them. If you need help finding more information to refute bogus claims such as the ones surrounding defensive medicine, feel free to reach out to me or to call the ATLA office! We have a wealth of information at our disposal, and if there is something you’re looking for that we don’t have, we know where to look for it. And now, on to busting tort deform myths! Myth: Damage caps reduce healthcare costs by reducing defensive medicine.
Fact: Defensive medicine is insurance fraud and Medicare/Medicaid fraud.
Myth Buster #1: “Damage Caps and Defensive Medicine, Revisited,” Northwestern University Law School and Kellogg School of Management Professor Bernard S. Black et al., 2017. The authors examined health care spending trends in nine states that enacted caps during the last “hard” insurance market (2002 to 2005), 180 compared these data to other “control” states and found the following: “[D]amage caps do not significantly affect Medicare Part A (hospital) spending. However, caps predict 4-5% higher Part B [physician] spending.” 1 “A core policy argument used to support adoption of damage caps, is that caps will reduce defensive medicine and thus reduce healthcare spending. For the third-wave cap adoptions, we find evidence pointing, instead, toward higher Medicare Part B spending.” 2 “There is, at the least, no evidence that caps reduce healthcare spending.”3
Myth Buster #2: “Defensive Medicine in U.S. Spine Neurosurgery,” Brigham and Women’s Hospital Neurosurgeon Timothy R. Smith, M.D., Ph.D., M.P.H. et al., 2017. After analyzing survey responses from members of the American Board of Neurological Surgeons, researchers concluded that “[s]tate-based medical legal environment is not a significant driver of increased defensive medicine associated with neurosurgical spine procedures.”4
Myth Buster #3: “Should Physicians Be Afraid of Tort Claims? Reviewing the Empirical Evidence,” Tilburg University Director of Studies and Associate Law Professor Gijs van Dijck, 2016 “Do tort claims, or the fear of them, result in the adoption of practices aimed at protecting against tortious liability?…An analysis of empirical studies on defensive medicine raises doubts as to whether the assumption holds true. The findings indicate that the empirical evidence is weak and that, if there is a concern about defensive practices, it seems to exist primarily in physicians’ minds.” 5 “The outcomes of these studies suggest that the evidence for defensive medicine is weak at best. This applies for both studies using tort reforms as a measure of liability risk and research that uses claims history.”6 “The idea that physicians do not or hardly ever practise defensive medicine is consistent with empirical research focusing on psychiatrists, firemen, the police, and financial regulators. Studies in those fields have also shown small or no effects resulting from tortious liability.”7 “An interesting observation is that survey research does tend to produce evidence of the practice of defensive medicine. This suggests that defensive medicine merely or predominantly exists in the minds of people. Consequently, the belief physicians have with respect to medical malpractice is not necessarily related to the actual number of claims or the actual malpractice risk. This suggests there may not be a need to call for legal reforms, at least not to tackle defensive medicine issues. Perhaps it would be more meaningful to look into possibilities to change physicians’ perceptions about tort liability exposure and its effects.”8
Myth Buster #4: “The Effect of Malpractice Reform on Emergency Department Care,” RAND Corporation Adjunct Natural Scientist Daniel A. Waxman, M.D., Ph.D., et al., 2014. After examining 3.8 million Medicare patient records from 1,166 hospital emergency departments from 1997 to 2011 – comparing care in three states before and after they changed their emergency care standard to gross negligence with care in neighboring states that did not pass malpractice reform – researchers found that raising the legal standard for malpractice did not result in less expensive care.9 As explained in an October 15, 2014 RAND press release, the study “examined whether physicians ordered an advanced imaging study (CT or MRI scan), whether the patient was hospitalized after the emergency visit and total charges for the visit. Advanced imaging and hospitalization are among the most costly consequences of an emergency room visit, and physicians themselves have identified them as common defensive medicine practices.”10 The researchers discovered that “malpractice reform laws had no effect on the use of imaging or on the rate of hospitalization following emergency visits. For two of the states, Texas and South Carolina, the law did not appear to cause any reduction in charges. Relative to neighboring states, Georgia saw a small drop of 3.6 percent in average emergency room charges following its 2005 reform.”11 “Our findings suggest that malpractice reform may have less effect on costs than has been projected by conventional wisdom,” said Dr. Daniel A. Waxman, the study’s lead author. “Physicians say they order unnecessary tests strictly out of fear of being sued, but our results suggest the story is more complicated. … This study suggests that even when the risk of being sued for malpractice decreases, the path of least resistance still may favor resource intensive care, at least in hospital emergency departments….”12
Myth Buster #5: “The Relationship Between Tort Reform and Medical Utilization” Health Watch USA Chair Kevin T. Kavanagh, M.D., M.S. et al., 2013. “The comparison of the Dartmouth Atlas Medicare Reimbursement Data with Malpractice Reform State Rankings, which are used by the PRI [Pacific Research Institute], did not support the hypothesis that defensive medicine is a driver of rising health-care costs. Additionally, comparing Medicare reimbursements, premedical and postmedical tort reform, we found no consistent effect on health-care expenditures. Together, these data indicate that medical tort reform seems to have little to no effect on overall Medicare cost savings.”13
Myth Buster #6: “Defensive Medicine: A Continuing Issue in Professional Liability and Patient Safety Discussions,” Columbia University Mailman School of Public Health Clinical Professor Fred Hyde, M.D., 2011. “‘Defensive medicine’ by all accounts has become such a myth, a combination of surveys of interested parties and the ‘imagination’ that those parties are avoiding – or believe they are avoiding – liability through alteration of their medical practices.” “The cost, if any, of defensive medicine, are trivial, in comparison to the cost of healthcare.” Medical liability “acts as a guardian against under treatment, the primary concern which should now be facing policy-makers.” “If tort reform reduces or even eliminates sanctions associated with negligent care and activity, adverse events themselves may increase, and by a number far greater than .2, .3 or .7% of the American health care bill.” “The implicit hypothesis would appear to be the following: That, in contravention of good medical judgment, the basic rules of Medicare (payment only for services that are medically necessary), threats of the potential for False Claim Act (prescribing, referring, where medically unnecessary), physicians will, as a group, act in ways which are possibly contrary to the interests of their patients, certainly contrary to reimbursement and related rules, under a theory that excessive or unnecessary prescribing and referring will insulate them from medical liability. There are many more cases concerning incompetence in credentialing and privileging, negligent referral, unnecessary radiation, etc., to provide at least a counter hypothesis.” “[A]s reaffirmed in the CBO studies, and as reflected in the literature generally, all estimates of the ‘indirect’ costs of professional liability, including, for example, the cost, if any, of defensive medicine, are trivial, in comparison to the cost of health care. Controversies involving Senators, the CBO in 2009 appear entirely to reflect the difference between .2 and .5% of health costs.” “The import of the phrase ‘defensive medicine’ is in its ‘political’ or strategic use: ‘Defensive medicine has mainly been invoked as an argument for tort reform in the years between malpractice crises when other pressures for legal change have ebbed.’ The methods used to study the existence, prevalence and impact of defensive medicine have been, primarily, survey of those (practicing physicians) who may be perceived as having a position or stance in the political discussion, in addition to having access to information necessary to answer the questions posed above.” “Survey-type findings led to a conclusion that defensive medicine was significant among physicians in Pennsylvania who pay the most for liability insurance. In later studies (Mello [footnote omitted]), however, some of the same authors have cast doubt on the survey as an objectively verifiable means of establishing the presence, quantity or scope of defensive medicine.” “The fee for service system both empowers and encourages physicians to practice very low risk medicine. Health care reform may change financial incentives toward doing fewer rather than more tests and procedures. If that happens, concerns about malpractice liability may act to check potential tendencies to provide too few services.” “If most claims result from errors, and most errors result in injuries, and most injuries resulting from such errors result in compensation (73%), what is at stake in limiting access to the courts? If access is limited, it would be in recognition that the basic principle of civil justice, having a remedy available to enforce a right, is void.”
Myth Buster #7: Defensive Medicine and Medical Malpractice, Office of Technology Assessment, 1994. The congressional office found that less than 8 percent of all diagnostic procedures were likely to be caused primarily by liability concerns. According to its analysis, most physicians who “order aggressive diagnostic procedures…do so primarily because they believe such procedures are medically indicated, not primarily because of concerns aboutliability.” The effects of “tort reform” on defensive medicine “are likely to be small.”14
So, considering all of this evidence, what IS defensive medicine?
DEFENSIVE MEDICINE IS MEDICARE/MEDICAID FRAUD. A doctor who bills Medicare or Medicaid for tests and procedures done for a personal purpose – e.g., possible lawsuit protection – as opposed to what is medically necessary for a patient, is committing fraud under federal and state Medicare/Medicaid programs. The Medicare law states: “It shall be the obligation of any health care practitioner and any other person…who provides health care services for which payment may be made (in whole or in part) under this Act, to assure, to the extent of his authority that services or items ordered or provided by such practitioner or person to beneficiaries and recipients under this Act…will be provided economically and only when, and to the extent, medically necessary.”15 “[N]o payment may be made under part A or part B for any expenses incurred for items or services…which…are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”16 Providers cannot be paid and/or participate in the Medicare program unless they comply with these provisions, and they impliedly certify compliance with these provisions when they file claims. Thus, if they are not in compliance, the certifications and the claims are false. Providers who do not comply and/or file false claims can be excluded from the Medicare program.17 Perhaps more importantly, the Medicare claim form (Form 1500) requires providers to expressly certify that “the services shown on the form were medically indicated and necessary for the health of the patient.”18 If the services are, to the doctor’s knowledge, not medically necessary, the claim is false.
THE REAL REASONS DOCTORS MAY ORDER TOO MANY TESTS AND PROCEDURES: WORKLOAD AND REVENUE.
Physician Owned Distributorships: An Update on Key Issues and Areas of Congressional Concern, U.S. Senate Finance Committee Majority Staff Report, 2016
“Our analysis found that:
[Physician owned distributorships] (PODs) surgeons saw significantly more patients
(24% more) than non-POD surgeons.19
In absolute numbers, POD surgeons performed fusion surgery on nearly twice as many
patients (91% more) as non-POD surgeons.20
As a percentage of patients seen, POD surgeons performed surgery at a much higher
rate (44% higher) than non-POD surgeons.21
In absolute number, POD surgeons performed nearly twice as many fusion surgeries
(94% more) as non-POD surgeons.22
“These findings quantify, for the first time, the extent to which POD ownership influences the behavior of individual physicians. “In view of the findings summarized in this report, the Senate Finance Committee staff has six primary concerns about PODs,” among them:23
“POD physicians face an inherent conflict of interest when they have a financial incentive to perform surgeries. This incentive may compromise a doctor’s medical judgment and place financial incentives at odds with the best interest of the patient.”
“Overutilization may occur if physicians perform additional, more complex, or medically unnecessary surgeries to garner POD financial incentives. Analysis by the Committee and HHS OIG suggest that POD doctors are, in fact, overutilizing spinal implant products. Such overutilization results in higher costs for the entire health care system, and particularly for Medicare.” “As a result of potential conflicts of interest and overutilization, PODs compromise patient safety as patients receive high-risk treatment beyond what is medically warranted. Any unnecessary medical procedure increases the risk that the patient may be harmed. Committee staff has heard extremely troubling reports of POD surgeons performing revision surgery to replace previously implanted hardware with the same or nearly equivalent hardware sold by their own PODs. While surgeons may contend that they replace such hardware for purely medical reasons, they would receive a payout from installing the POD hardware. Our concerns about medically unnecessary services are especially acute in the case of seniors who, due to their age, are less physically capable of withstanding the rigors of complex, invasive spine surgery.”
“The Cost Conundrum: What a Texas town can teach us about health care,” New Yorker, 2009. The following exchange took place with a group of doctors and author, Dr. Atul Gawande:292 “It’s malpractice,” a family physician who had practiced here for thirty-three years said. “McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere. That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down? “Practically to zero,” the cardiologist admitted. “Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures.
You’ve read excerpts from several articles that refute the claim many tort reformers use to justify taking away our 7th Amendment rights. You can see that it will not reduce healthcare costs and won’t reduce doctors’ practicing defensive medicine. It’s clear this is just another myth that’s used to promote tort reform, and we have to keep ourselves armed with the appropriate knowledge so we can fight back!
1 Bernard S. Black, David A. Hyman and Myungho Paik, ““Damage Caps and Defensive Medicine, Revisited,” J. Health Econ. (January 2017) at 1-2, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2110656 [emphasis in original]. 2 Id. at 16 [emphasis in original]. 3 Ibid [emphasis in original]. 4 Timothy R. Smith et al., “Defensive Medicine in U.S. Spine Neurosurgery,” 42 Spine 177, (February 2017), http://journals.lww.com/spinejournal/Abstract/2017/02010/Defensive_Medicine_in_U_S__Spine_Neurosurgery.13.aspx 5 Gijs van Dijck, “Should Physicians Be Afraid of Tort Claims? Reviewing the Empirical Evidence,” Journal of European Tort Law (January 2016)http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2716627. 6 Ibid. 7 Ibid. 8 Ibid. 9 RAND Corporation, “Making It More Difficult to Sue Physicians for Malpractice May Not Reduce ‘Defensive Medicine,’” October 15, 2014, http://www.rand.org/news/press/2014/10/15.html, discussing Daniel A. Waxman et al., “The Effect of Malpractice Reform on Emergency Department Care,” 371 N. Engl. J. Med. 1518, October 16, 2014, http://www.nejm.org/doi/full/10.1056/NEJMsa1313308. 10 RAND Corporation, “Making It More Difficult to Sue Physicians for Malpractice May Not Reduce ‘Defensive Medicine,’” October 15, 2014, http://www.rand.org/news/press/2014/10/15.html. 11 Ibid. 12 Ibid 13 Lindsay E. Calderon, Kevin T. Kavanagh and Daniel M. Saman, “The Relationship Between Tort Reform and Medical Utilization,” Journal of Patient Safety (2013), http://journals.lww.com/journalpatientsafety/Abstract/publishahead/The_Relationship_Between_Tort_ Reform_and_ Medical.99809.aspx. 14 Office of Technology Assessment, Defensive Medicine and Medical Malpractice, OTA-H-6O2 (1994). 15 42 U.S.C. § 1320c-5(a)(1). 16 42 U.S.C. § 1395y(a)(1)(A). 17 See also, Mikes v. Strauss, 274 F. 3d 687, 700-1 (2d Cir. 2001) and cases cited therein (holding that compliance with § 1320c-5(a)(1) is a condition of participation in the Medicare program but not a condition of payment); other courts do not make that distinction, e.g., United States ex rel. Kneepkins v. Gambro Healthcare, Inc., 115 F. Supp. 2d 35, 41 (D. Mass. 2000) (holding that compliance with § 1320c-5(a)(1) is a condition of payment). 18 See, “Health Insurance Claim Form CMS-1500,” http://www.cms.gov/cmsforms/downloads/CMS1500805.pdf. 19 Emphasis in original. 20 Ibid. 21 Ibid. 22 Ibid. 23 U.S. Senate Finance Committee Majority Staff Report, Physician Owned Distributorships: An Update on Key Issues and Areas of Congressional Concern (May 2016), http://www.finance.senate.gov/imo/media/doc/Combined%20PODs%20report%202.24.16.pdf. 24 Atul Gawande, “The Cost Conundrum: What a Texas town can teach us about health care,”} New Yorker, June 1, 2009, http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=all.