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Medical Malpractice Insurance Fallout Varies Across Communities

Physician Responses to Rising Premiums Threaten to Diminish Access and Increase Costs

News Release
Sept. 29, 2003

Alwyn Cassil: (202) 264-3484

ASHINGTON, D.C.—The fallout from rapidly rising medical malpractice insurance premiums is prompting some physicians to refer more patients to already crowded emergency departments, refuse to provide on-call emergency department coverage and decline elective referrals, according to a study released today by the Center for Studying Health System Change (HSC).

Along with more commonly recognized forms of defensive medicine to stem liability risk, such as ordering excessive tests or giving up performing certain high-risk procedures, HSC researchers identified a range of emerging physician responses to liability concerns.

For example, rather than treating patients in their offices, more physicians are referring patients to emergency departments, potentially raising costs. Liability concerns also have prompted some specialists to decline on-call emergency department coverage or demand payment from hospitals for taking call or caring for uninsured patients. Moreover, some specialists are declining elective referrals from emergency departments and safety net clinics, especially for uninsured patients.

"While we didn’t find breakdowns in access to care, it’s clear liability pressures are altering physicians’ treatment decisions and affecting patient care in unexpected ways in many communities," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation.

"As physicians stop performing high-risk procedures, close portions of their practices and refer more patients to other care settings, continuity of care and patient choices are being affected, although it’s unclear what impact these changes have on quality of care," said Robert Berenson, M.D., an HSC consulting health researcher and co-author of the study, along with Sylvia Kuo, Ph.D., of Mathematica Policy Research Inc., and Jessica May, an HSC health research assistant.

"As policy makers grapple with resolving the latest malpractice crisis, they should consider carefully how potential solutions would influence physician behavior and affect patient care-for better or worse," Berenson said.

The study’s findings are detailed in a new HSC Issue Brief—Medical Malpractice Liability Crisis Meets Markets: Stress in Unexpected Places. Based on site visits to 12 nationally representative communities in 2002-03, the study examines how malpractice concerns were affecting care in Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

While physicians and hospitals in 11 of the 12 markets raised concerns about the cost and availability of malpractice insurance, the intensity of concern varied substantially. In some markets, rising malpractice premiums were viewed as a modest cost pressure, while skyrocketing premiums in other markets were altering physicians’ treatment decisions.

The fallout on patient care was most severe in Miami, where more and more physicians are opting to drop malpractice coverage, or "go bare." Many Miami obstetricians have practiced without liability coverage since the last malpractice insurance crisis in the 1980s, but now other specialists and even some primary care physicians have dropped coverage.

The malpractice insurance climate also was volatile in northern New Jersey and Cleveland-where some physicians, especially obstetricians, reportedly faced premium increases of 100 percent or more. In Boston, Little Rock, Phoenix, Seattle, Orange County and Greenville, where recent annual premium increases were reported to average 20 percent to 30 percent, there were occasional examples of providers making business and practice decisions in response to malpractice pressures.

Conditions were relatively stable, however, in Lansing and Syracuse. Some providers reported substantial premium increases, while others reported premium stability, but malpractice insurance concerns affected neither provider practice decisions nor patient access to care to any significant extent. Professional liability problems were not mentioned in Indianapolis; of note, Indiana passed far-reaching, provider-friendly tort reform in the 1970s that significantly limited physician liability as well as payments to malpractice victims.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.


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The Center for Studying Health System Change Ceased operation on Dec. 31, 2013.