Malpractice liability costs and the practice of medicine in the medicare program

Health Affairs

Volumn 26, Issue 3, 2007, Pages 841-852

  Baicker, Katherine ^a,b,e   Fisher, Elliott S ^b,c   Chandra, Amitabh ^b,d,e  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b DARTMOUTH MEDICAL SCHOOL   (United States)

^c VA MEDICAL CENTER   (United States)

^d HARVARD UNIVERSITY   (United States)

^e NATIONAL BUREAU OF ECONOMIC RESEARCH   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; CLINICAL PRACTICE; ECONOMICS; HUMAN; INSURANCE; LONGITUDINAL STUDY; MALPRACTICE; MEDICARE; MULTIVARIATE ANALYSIS; REGRESSION ANALYSIS; STATISTICS; UNITED STATES;

HUMANS; INSURANCE, LIABILITY; LONGITUDINAL STUDIES; MALPRACTICE; MEDICARE; MULTIVARIATE ANALYSIS; PHYSICIAN'S PRACTICE PATTERNS; REGRESSION ANALYSIS; UNITED STATES;

EID: 34248549600     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.26.3.841     Document Type: Article

References (39)

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2. and D.M. Studdert, M.M. Mello, and T.A. Brennan, "Medical Malpractice," New England Journal of Medicine 350, no. 3 (2004): 283-292.
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4. and A.R. Localio et al., "Relation between Malpractice Claims and Adverse Events Due to Negligence: Results of the Harvard Medical Practice Study III," New England Journal of Medicine 325, no. 4 (1991): 245-251.
5. D.M. Studdert et al., "Defensive Medicine among High-Risk Specialist Physicians in a Volatile Malpractice Environment," Journal of the American Medical Association 293, no. 21 (2005): 2609-2617.
6. We used the term "malpractice liability costs" to refer to both malpractice insurance premiums and the size and number of malpractice judgments and settlements. As discussed below, the term is not intended to imply any specific causal relationship between these components of the malpractice liability environment and physician behavior or the value of services performed.
7. Studdert et al., "Defensive Medicine among High-Risk Specialist Physicians"; L.M. Baldwin et al., "Defensive Medicine and Obstetrics," Journal of the American Medical Association 274, no. 20 (1995): 1606-1610;
8. A.R. Localio et al., "Relationship between Malpractice Claims and Cesarean Delivery," Journal of the American Medical Association 269, no. 3 (1993): 366-373;
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10. U.S. Congress Office of Technology Assessment, Defensive Medicine and Medical Malpractice, Report no. OTA-H-602 (Washington: OTA, 1994);
11. and D.P. Kessler and M.B. McClellan, "Do Doctors Practice Defensive Medicine?" Quarterly Journal of Economics 111, no. 2 (1996): 353-390.
12. Medicare Payment Advisory Commission, Healthcare Spending and the Medicare Program (Washington: MedPAC, 2005);
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15. D.P. Kessler, W.M. Sage, and D.J. Becker, "Impact of Malpractice Reforms on the Supply of Physician Services," Journal of the American Medical Association 293, no. 21 (2005): 2618-2625;
16. and K. Baicker and A. Chandra, "The Effect of Malpractice Liability on the Delivery of Health Care," in Frontiers of Health Policy Research, ed. D. Cutler and A.M. Garber (Cambridge, Mass.: MIT Press, 2005), 16-18.
17. Kessler and McClellan, "Do Doctors Practice Defensive Medicine?"
18. We weighted each state according to its population in the 2000 census (so that results can be interpreted as applying to the average person).
19. Kessler and McClellan, "Do Doctors Practice Defensive Medicine?";
20. and D.P. Kessler and M.B. McClellan, "How Liability Law Affects Medical Productivity," Journal of Health Economics 21, no. 6 (2002): 931-955.
21. Z. Griliches and J.A. Hausman, "Errors in Variables in Panel Data: A Note with an Example," Journal of Econometrics 31, no. 1 (1985): 93-118.
22. National Center for Health Workforce Analysis, Area Resource File (Rockville, Md.: Health Resources and Services Administration, 2003). Sensitivity to these choices, discussion of other potentially omitted factors, and estimates with additional controls are included in an online appendix, available at http://content.healthaffairs.org/cgi/content/full/26/3/841/DC1.
23. Kessler and McClellan, "How Liability Law Affects Medical Productivity."
24. A. Chandra, S. Nundy, and S.A. Seabury, "The Growth of Physician Malpractice Payments: Evidence from the National Practitioner Data Bank," Health Affairs 24 (2005): w240-w249 (published online 31May 2005; 10.1377/hlthaff.w5.240).
25. B. Black et al., "Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002," Journal of Empirical Legal Studies 2, no. 2 (2005): 207.
26. Baicker and Chandra, "The Effect of Malpractice Liability" ";
27. and Chandra et al., "The Growth of Physician Malpractice Payments."
28. Federal Reserve Bank of St. Louis, "Gross Domestic Product: Implicit Price Deflator," 2004, http://research.stlouisfed.org/fred2/data/GDPDEF. txt (accessed 14 February 2007).
29. Berenson-Eggers Type of Service (BETOS) Codes, 2005, http://www.cms.hhs. gov/HCPCSReleaseCodeSets/20_BETOS.asp (accessed 12 March 2007);
30. and J. Wennberg and M. Cooper, The Dartmouth Atlas of Health Care (Chicago: American Hospital Association Press, 1999). This study, and its underlying protocol guaranteeing the confidentiality of the Medicare claims data, was approved by the Institutional Review Board (IRB) at Dartmouth College.
31. A 5 percent sample of Medicare fee-for-service physician (Part B) claims was used to calculate age-, race-, and sex-adjusted rates of spending on total physician services and for each of the major BETOS categories. Total Medicare spending per beneficiary was also ascertained from the same 5 percent sample, using records from the Continuous Medical History Sample File. Rates of major elective inpatient surgical procedures were based upon a 100 percent sample drawn from the Medicare Provider Analysis and Review (MEDPAR) file, and rates of specific physician services were calculated from a 20 percent sample of Part B physician claims in later years and a 5 percent sample in earlier years. The population denominator for all rates was the midyear population of fee-for-service Medicare beneficiaries, age sixty-five and older, who were eligible for both Parts A and B.
32. We used a state-level cost-of-living adjustment to adjust all premium, payment, and spending dollar values for state-level variation in prices, although as shown in the appendix, this does not affect subsequent regression results. See Note 13.
33. In the appendix exhibits we report a number of specification tests, including results from models using two alternative sets of weights (state population from the 1990 census and the number of physicians in each state) as well as including other covariates. See Note 13.
34. See Appendix Exhibit 3; ibid.
35. Ibid.
36. L.M. Schwartz et al., "Enthusiasm for Cancer Screening in the United States," Journal of the American Medical Association 291, no. 1 (2004): 71-78. Geographic identifiers in this study were limited to the four major census regions. We performed a chi-square test to examine if there were geographic differences in preferences for screening.
37. Studdert et al., "Defensive Medicine among High-Risk Specialist Physicians."
38. Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2005 to 2014, January 2004, http://www.cbo.gov/showdoc.cfm?index= 4985&sequence=0&from=0#anchor (accessed 14 February 2007). We focused on the responsiveness of health care spending to malpractice liability in the Medicare population. There is evidence that elderly beneficiaries are much less likely than others to litigate, which suggests that our analysis might understate the response in the general population. However, most beneficiaries are enrolled in fee-for-service, where, unlike capitated plans, there are few restrictions on a physician's ability to order additional tests - a possibility that suggests that results from Medicare might be larger than the economywide responsiveness of physicians to malpractice costs. If these effects roughly offset each other, extrapolating these estimates to the general population would suggest that the 60 percent increase in malpractice premiums between 2000 and 2003 would be associated with a 6 percent, or $95 billion, increase in national health spending. Given that our data drew only from the Medicare population, however, the true effect on national health spending might be quite different.
39. E.S. Fisher and H.G. Welch, "Avoiding the Unintended Consequences of Growth in Medical Care: How Might More Be Worse?" Journal of the American Medical Association 281, no. 5 (1999): 446-453.