Health Care Reform Law Fails to Provide Remedies for Medical Malpractice

An area of primary concern for family physicians that was not addressed in the Patient Protection and Affordable Care Act is medical liability reform. Many physicians see this as a missed opportunity because, according to analysts interviewed by AAFP News Now, the current system has never really delivered on its promise of deterring medical errors and improving patient care. It is costly, inefficient and ineffective and fails to provide justice for either patients or physicians.

"We are spending an enormous amount of money to maintain a system that serves very few people very efficiently, and it has a lot of bad side effects," said Michelle Mello, Ph.D., professor of law and public health at the department of health policy and management at Harvard University. "We spend about 55 cents out of every malpractice premium dollar on the overhead costs of the system. About 2 or 3 percent of the patients who are injured by negligence file a claim, and only a third to a half of those receive compensation, even if there was evidence of negligence.

"We also know that (medical malpractice) has substantial effects on physicians' level of fear and willingness to practice good medicine."

Yet, the Patient Protection and Affordable Care Act does little to change the current liability system, making medical liability reform one of the biggest missed opportunities of the entire health care reform legislation, according to analysts.

The health care reform legislation addresses medical liability in two ways. First, it extends federal malpractice protections to nonmedical personnel working in free clinics. Second, it authorizes $50 million for the next five years for HHS to award demonstration project grants to states to develop, implement, institute and evaluate alternatives to the current tort litigation system for resolving disputes about injuries caused by physicians and other health care providers.

The demonstration projects are required to promote the reduction of health care errors by encouraging the collection and analysis of patient safety data.

In a sense, these demonstration projects are an attempt to build on seven existing medical liability projects proposed by the Obama administration last year and funded in June of this year by the Patient Safety and Medical Liability Initiative.

Those seven projects have the same goal as the demonstration projects called for in the health care reform legislation: develop alternatives to the current tort system to allow resolution of disputes about injuries allegedly caused by physicians and other health care providers.

Unlike the projects funded by the Patient Safety and Medical Liability Initiative, however, Congress has not yet appropriated funding for these new demonstration projects. Without funding, the net effect of the projects will be nil, said Mello. Even with funding, the demonstration projects will be inhibited by rules and regulations that could greatly diminish their effectiveness.

According to the law, only states can receive funding for the demonstration projects, and the projects cannot retract or modify a patient's existing remedies of state law, which is a major limitation, according to Mello.

"It means you cannot abridge the right of a patient to go to court," she explained. "You can't experiment with administrative compensation. You can't impose a limitation on the damages that a patient could be eligible for under state law. You can't do anything that leaves the patient in a different position legally than he or she was in before the demonstration project went into effect."

In the final analysis, the demonstration projects represent "a voluntary type of reform," said Mello. "There is always the possibility of someone coming up with a brilliant idea that no one has thought of and that would not run afoul of the (demonstration rules). But it certainly seems that the prospects for far-reaching experiments with reform are pretty circumscribed."

Mello knows about the costs associated with the current medical liability system. She, along with several colleagues, undertook a study of the current medical liability system that was published in the Sept. 1 Health Affairs. The study analyzed various components of the medical liability system, such as payments made to malpractice plaintiffs, defensive medicine costs, administrative costs, and the cost of lost physician and provider work time.

The researchers found that the annual cost of the medical malpractice system is $55.6 billion in 2008 dollars, or 2.4 percent of annual health care spending. According to Mello, costs consist of four components: indemnity payments; administrative expenses; defensive medicine costs and other expenses, such as lost physician work time.

The study found that defensive medicine costs comprise the biggest part of medical liability costs, at nearly $46 billion a year. Defensive medicine is defined as patient management practices undertaken by physicians to minimize the likelihood of malpractice litigation.

However, fixing the medical liability system from a national perspective is not an easy task, according to AAFP President Roland Goertz, M.D., M.B.A., of Waco, Texas. He noted that tort reform typically is a state issue, not a federal one, and states don't agree on how to address it. As a result, medical liability laws have been applied unevenly across the states, creating added frustrations for family physicians.

"There are some states that have very lawyer-friendly laws pertaining to torts and, particularly, medical liability," said Goertz in an interview with AAFP News Now. "There are other states, like Texas, that have tighter medical liability tort law."

The AAFP has long pushed for a medical liability system that protects both physicians and patients. "It needs to be fair to the patient," said Goertz. "It needs to be fair to the physician, and ... it needs to be based on fact." In addition when awarded, compensation needs to go predominantly to the patient.

The creation of such a system may require the establishment of national minimal standards, Goertz said, adding that the AAFP is pushing for just such a policy.