Malpractice Malaise

By now, you know the devastating effects that ever-mounting malpractice insurance costs are having on physicians and access to medical care in many parts of the country. But are things doomed to get worse? Here's how Chuck Moran describes the situation: "We've been saying for the past 18 months that it's like the Titanic. We're on a course to hit this iceberg ... we see it, it's sticking out a little bit. And eventually we will hit it if we don't steer the boat away from it. Each day we get closer."

Moran, who is director of media and public relations for the Pennsylvania Medical Society, is right to feel his organization is up against a formidable foe. Pennsylvania is one of a dozen states deemed "in crisis" in a recently released national analysis by the AMA. In Pennsylvania, as in Nevada, Texas, and other hard-hit areas, trauma centers are shutting down, hospital positions are being eliminated, and OB/GYNs are closing their practices.

But what puts a state in crisis mode isn't always based on a straightforward set of criteria; it has more to do with "magnitude," according to an AMA spokesperson. For example, in Arizona, OB clinics are closing, but costs are relatively stable. Nevada is, overall, more litigious than its neighbors. In other states, premiums are way up, but access is not yet affected.

Not only is it variable, the malpractice mess is also "cyclical," says Thomas Stearns, vice president of medical practice services for Tennessee-based State Volunteer Mutual Insurance Company (SVMIC). Basically, it all began in 1974, when many of the large commercial insurance carriers dropped their malpractice lines. In California and elsewhere, premiums increased by more than 300 percent and physicians were forced to close their doors. Then-governor Jerry Brown called a special session of the California legislature, and MICRA (the Medical Injury Compensation Reform Act of 1975) was born.

MICRA: model in crisis?

Today, history is repeating itself and most states look to MICRA -- which, among other provisions, places a $250,000 cap on non-economic damages - as the model for protection against out-of-control insurance costs.

Notably, the bipartisan HEALTH (Help Efficient, Accessible, Low-Cost, Timely Health Care) Act of 2002, introduced to lawmakers in April, "is basically the California MICRA bill," says Moran. The HEALTH Act calls for MICRA's same quarter of a million dollar cap on pain and suffering awards, a sliding scale for attorneys' fees, and "reasonable limits on punitive damages without preempting existing state law," according to the AMA's online summary of current legislation. (Visit www.ama-assn.org and go to the AMA in Washington section.)

AMA President-elect Donald J. Palmisano, MD, adds, "The HEALTH Act embodies the items of MICRA and allows states that have caps to [keep them] in place -- so it respects state laws that have acted on this. States with tested caps can be assured that they can continue to do what works for them."

But while more than 40 medical societies support implementing MICRA's provisions on a national level in the form of the HEALTH Act, the venerable California law is facing a fight for its life -- "a very huge attack on the system," says Susan Penney, an attorney for the California Medical Association.

At issue are two cases in which trial courts have ruled that physician partnerships are not the same as the "healthcare providers" protected under MICRA. If the decision is not overturned, California could be facing the same medical malpractice crisis it responded to so resoundingly in the '70s.

"I think there will be a serious attempt to abolish the non-economic damages cap or abolish MICRA entirely," says Mike Hotra, director of public education for the American Tort Reform Association in Washington, D.C. But, he adds, "if the ground swell of opposition to tinkering with MICRA comes out in 2003 the way it did in 1999, ... I think it will be a big fight." The cycle continues.

Be a political animal

Despite the daily headlines about physicians shutting their doors and patients scrambling to find care, it's not a hopeless situation. Industry experts emphasize that the best ways to make a difference are to become involved in the legislative and political processes and to educate your patients on the malpractice issue.

"What physicians can do with their patients and what they can do in the legislature are inextricably linked," says Hotra. "Understandably, many doctors have been reluctant to bring politics into the office; however, by educating patients about the medical liability crisis and urging them to contact their legislators and elected officials, we may stand a better chance of getting some good liability reforms."

Hotra urges physicians to contact their state medical association or specialty practice association to keep abreast of legislative issues -- and to vote. "Find out about whether the person who represents you supports reform, whether they are hearing from physicians and recognizing the crisis that many physicians face. If not, it may be time to start looking at other candidates," he says.

For physicians in "crisis" states, becoming more active in tort reform may be a positive way to spend newfound time in the wake of a curtailed practice. "Certainly political involvement is an alternative to dislocating one's family and practice and leaving patients behind," says Hotra. "In certain border areas, such as Natchez, Miss., moving a practice across the border to Louisiana is probably easier. For someone practicing in, say, Dallas, political involvement is a lot easier than picking up stakes and moving."

In states like Mississippi and Nevada, Hotra says there has been a "tremendous ground swell of physicians -- particularly in the specialty professions of neurosurgery and obstetrics -- who are finding out about candidates, supporting reform and the campaigns of candidates who will carry their views to the legislature."

But it's not all up to physicians and politicos. "Patients are, in effect, the grassroots voice in this debate," Hotra continues. "Physicians and patients together are a very effective combination, but legislators don't often hear from them. They hear more often from personal injury lawyers. ... That gets their voice heard in the capital -- and makes them effective advocates for stopping tort reform and continuing with the status quo."

Talk to your patients

Moran agrees that getting physicians involved "at the grassroots level is sometimes difficult," and that outreach to patients is a step in the right direction. He says it's a given that physicians "want to be in their offices, not at the capital. Certainly there are some very active physicians, especially the high-risk specialists. But there are doctors out there who this hasn't really impacted yet from a financial perspective. What they can be doing is helping to educate their patients on what could happen."

And what would get patients' attention? According to Hotra: "If a physician sees a sharp increase [in malpractice insurance costs] and continues to practice, that physician must pass that cost on to patients. For Medicaid and Medicare patients, those costs often can't be passed along because the reimbursement rates are fixed. One physician I spoke to estimated she would have to log more than 1,000 office visits -- about six months of work -- just to pay the cost of her liability insurance."

In his state of Pennsylvania, Moran says medical malpractice lawsuits cost each person about $1,200 annually; nationwide it adds up to $5 billion (about 7 percent of total healthcare costs), according to the American Association of Health Plans. Figure in estimates that range from $27 to $50 billion to cover the cost of practicing defensive medicine. So when patients complain about the cost of care, share these statistics with them.

Moran adds that, particularly in rural areas that bear the brunt of the burden, "there's a very good chance that a person will be born, deliver their children, and maybe even die in [the same] hospital, so there's a very personal connection to it."

Keeping your coverage

Even if you're paying the price, almost all physicians agree it's better than practicing "bare," or without malpractice insurance. So what can you do to hang onto your coverage -- and keep your risks at a minimum?

"The most obvious thing that comes out of any risk management discussion is to document, document, document. And then don't change your documentation. That's a never-ending mantra," says Stearns of SVMIC.

He says most malpractice insurance companies are looking beyond the performance of individual doctors to include whole groups, as well as processes that involve other staff members. "We will sometimes not provide coverage for a group because there is one so-called 'bad' physician in the group. From the group perspective, the practice needs to have mechanisms in place to evaluate the physicians. We've seen practices that, in order to get coverage, have had to ask a physician to leave. That's a new phenomenon."

Stearns, who is a former practice manager and a Fellow in the American College of Medical Practice Executives, says it all revolves around quality care and communication. For example, "that means the physicians should not overextend themselves by seeing more patients than they can practically see. They need to be willing to ask for help when they need it, and they need adequate training before they do new procedures."

Also, make sure the entire practice projects a patient-friendly, responsive, and responsible atmosphere. "The whole system needs to create a happy patient," Stearns says. "If the billing clerk makes a mistake on the bill, the patient will be angry and the entire process becomes an unhappy experience. We know that a happy patient is less likely to bring an action than an unhappy patient. We are seeing more claims revolving around system errors, where somebody has dropped the ball. It's important that the physician be involved in the process to ensure there are good systems along the way."

Hotra concurs that the best form of risk reduction is good communication. It's "not just sticking a form in front of them, but talking about the risks of a procedure, making sure the risks of medications are explained," he says. "The second thing is to mitigate errors. Clear handwriting is absolutely important and is a form of clear communication."

Beyond the moment

While premiums may be painful or even out of reach for some physicians, Stearns says it's about more than just money. "The whole crisis right now is concentrating on costs. One thing we tell physicians is to not lose sight of the fact that what they lose when they get involved in a lawsuit is much more. The financial loss is insignificant compared to their reputation, loss of time, anguish, and emotion. Next to a death and divorce, it's the most traumatic thing that can happen."

With that said, is there hope for a resolution to out-of-control costs and the "lottery mentality" of jury awards that contributes to it?

"In the short term, it likely will get worse," predicts Moran. "A lot of the tort reforms, like periodic payment for future damages, are long term so they may not show up for two or three years. But there is hope for improvement if you use California as a model. They passed their reforms in the '70s and they've held the line for 30 years now."

Joanne Tetrault, director of editorial services for Physicians Practice, can be reached at jtetrault@physicianspractice.com.

This article originally appeared in the September/October 2002 issue of Physicians Practice.