Health Biz: Malpractice caps not enough

By ELLEN BECK  |  Jan. 6, 2005 at 4:45 PM
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WASHINGTON, Jan. 6 (UPI) -- Malpractice reform is back on the hot seat -- President Bush pushing hard this week for caps or limits on non-economic damages. The House has passed such legislation but Senate Democrats have repeatedly rebuffed efforts and despite losses in November, they still are able to muster 60 votes to stop legislation.

Sources tell HealthBiz there is new momentum -- new support from some on the Democratic side -- that could result in some type of legislation being passed this session. Sen. Majority Leader Bill Frist, R-Tenn., has pledged to bring malpractice legislation to the floor quickly.

Before the debate denigrates into political theatrics, with accusations the trial lawyers are in the back pocket of the Democrats and the physicians are the same with the Republicans -- it's a good idea to look at whether damages caps will accomplish what the Bush administration says they will.

The White House's Fact Sheet on malpractice issued Wednesday said: "President Bush's framework for addressing the medical liability crisis in America seeks to make healthcare more affordable and accessible for all Americans by making the medical liability system more stable and predictable, and to protect patients by reducing the disincentives for reporting medical errors and complications."

The key part of that is "reducing the disincentives for reporting medical errors and complications" because many malpractice experts believe reform must be tied to industry efforts to reduce medical errors. In fact, legislation should go beyond reducing disincentives and actually create incentives for reporting medical errors because then, finally, there can be healthcare system changes that reduce the likelihood of future errors -- future malpractice lawsuits.

The healthcare industry is struggling to move away from the individual blame game and move toward assessing how medical errors happen and what can be done to prevent them.

Michelle Mello, an expert on malpractice at the Harvard School of Public Health, wrote: "Many plaintiffs' attorneys view themselves as safety crusaders and believe that the threat of litigation makes providers practice more safely. But the tort approach to safety regulation -- which is punitive in orientation, individualistic in focus, and adversarial in process -- is in serious conflict with the non-punitive, systems-focused, cooperative approach of the "patient safety movement."

Incentives to encourage providers to report problems -- perhaps reducing liability exposure for the provider or hospital but ensuring adequate compensation for victims -- is one avenue to explore.

Simply imposing non-economic caps doesn't do a thing to reduce medical errors, but Congress has been shuffling back and forth studies and statistics from both parties that either support or discredit damage caps as a way to reduce malpractice litigation and lower insurance premiums that drive physicians out of healthcare.

Bush touted the 1975 California law that imposed caps on non-economic damages. "Patients in that state see their claims settled a third faster than states without those limits," he told an Illinois audience this week. "In other words, patients are treated more fairly where there's a cap. And since 1975, insurance premiums for California doctors have become much more affordable premiums than anywhere else in the country -- than in most states."

The non-profit Foundation for Taxpayer and Consumer Rights quickly shot back malpractice premiums rose 450 percent after the 1975 cap until a 1988 voter initiative passed that began regulating insurance premiums by law.

The foundation said the administration should be looking at insurance company profits if they want the root of the premium problem -- an idea posed to White House spokesman Scott McClellan during two regular media briefings this week.

McClellan repeatedly dodged the questions but said: "The lawsuit abuse is the issue we need to address to fix the medical liability system. We have too many frivolous lawsuits being filed."

It's estimated only about 1 in 7 people who suffer an injury related to medical negligence actually files suit -- but many people who do file claims don't have a case. That argues for establishment of an independent way to determine fair liability and set forth reasonable guidelines for awards that make the process predictable for attorneys, patients and healthcare providers.

Some countries in Europe have no-fault insurance systems. Here in the United States, the insurance industry already has an external review process for patients who have claims denied.

Karen Ignagni, president of America's Health Insurance Plans, the lobby group for health plans, told HealthBiz, "We also need to look at administrative remedies that can be put into place to have complaints heard at a far earlier stage."

Ignagni said the concept of the external review system could be broadened to work in a malpractice review process.

The Bush administration has a golden opportunity and some momentum to create solid legislation that reforms the malpractice system and helps the industry reduce medical errors. It just needs to get beyond damage caps.


Reforms to New Hampshire's Medicaid program face a potential roadblock with the swearing in of a new governor Thursday.

Outgoing Republican Craig Benson supported a plan that would bring health savings accounts to the state's Medicaid families. New Democratic Gov. John Lynch has not voiced support so far but said he would look at it.

Called GraniteCare by state Department of Health and Human Services Commissioner John Stephen, the reformed program would not only create HSAs but also reduce the Medicaid-covered nursing home population -- shifting them to home care and saving more than $50 million.

Stephen said the entire plan would save $283 million without reducing services and reduce the annual rate of program growth from 11 percent to 8 percent.

"We hope to dispel the notion that GraniteCare is built on service cuts or reductions in eligibility," Stephen said in announcing the program. "This plan is based on changing the way we deliver services to make the Medicaid program sustainable for years to come."

GraniteCare still must get a waiver from the federal government, which should not be a problem, and a sign-off by the Legislature.


The AIDS Healthcare Foundation is worried some doctors still may be giving patients Trizivir, even though a 2003 National Institutes of Health study found the pill -- actually three drugs in one -- did not perform well in a stand-alone test when compared with two other triple regimens.

The foundation, the nation's largest AIDS group, has written to each state Medicaid program asking that GlaxoSmithKline's Trizivir be put under "treatment authorization request" procedures to restrict distribution. The concern is that physicians who are not experts in HIV treatment might continue to prescribe the drug to patients who also might not be up-to-date on the treatments available.

Michael Weinstein, president of AIDS Healthcare Foundation, issued a statement that said: "Since most people do not regularly thumb through the New England Journal of Medicine and since months after the NIH study was released, GSK continued to run ads stating that 'Trizivir treats HIV infection alone or in combination...' we believe it is important to relay this message to health officials."

At least six states are considering action.


Politics likely will get in the way of fixing a big problem with healthcare flexible spending accounts that require people to spend all the money in their accounts by the end of the plan year or lose it.

Removing the so-called "use it or lose it" provision would -- according to the Treasury Department -- make FSAs more attractive then the new health savings accounts. Treasury estimated 10 percent of people who would have opened HSAs would opt for FSAs instead.

HSAs are tied to high-deductible lower-cost health insurance plans -- which could save money -- while FSAs have no such requirement. It's not likely the Bush administration, which is banking on HSAs to pull in the uninsured and save healthcare dollars, will do anything that might scuttle those efforts.

Treasury Secretary John Snow, in responding this week to a letter on the subject by Senate Finance Committee Chairman Charles Grassley, R-Iowa, said Treasury simply does not believe it has "sufficient legal authority to administratively change this long-standing rule."

Grassley responded that he is "disappointed that the department seems reluctant to make changes to a proposed rule that's never been finalized. That rule doesn't pass the common sense test, and it's hurt taxpayers for more than 20 years."

Snow held out an olive branch of sorts, however, suggesting the creation of a "brief administrative grace period" that would extend the time period for spending FSA money "slightly beyond one year" before the money is forfeited.



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