MHA690 Healthcare Capstone

MedicalEconomics .com 40 In Depth Medical econoMics ❚ December 25, 2014 Icd-10 costs: Are they overblown?

A new analysis suggests the costs of the transition are not as high as previously thought [49] by Scott Baltic Contributing editor Is tort reform capable of achieving gains for physicians when it comes to medical liability? The jury is out The future of malpractice reform Beyond specifc recommendations, proposals and legislation for fxing the natio s medical liability issues, there seems to be a growing sens and mounting evidenc that tort reform broadly construed, may not be efective at accomplishing what i s supposed to. So where does that leave reformers and physicians?   MAlprActIce reforMers have pur- sued many strategies in an attempt to rein in the natio s malpractice costs and craft a system that benefts physicians, patients and the healthcare system as a whole. A growing body of evidence suggests that many tort refor eforts simply do t ac- complish what the re intended to. In fact, earlier this year the American College of Physicians (ACP) released a de- tailed position paper on malpractice reform that revisits many old ideas, according to some experts who follow reform eforts. I s a pretty standard list of tort reform propos- als says David Orentlicher, J.D., codirector of the Hall Center for Law and Health at the Indiana University McKinney School of Law.

Another malpractice expert goes further.

Ter s nothing new here. Some of this stuf is literally decades old says Keith Hebeisen, J.D., former chairman of the American Bar Associatio s Standing Committee on Medi- cal Professional Liability. Even the newe reforms on the AC s list typically are at least 10 years old, though HIGHLIGHTS 01 Earlier this year the American College of Physicians released a detailed position paper on malpractice reform that revisits many old ideas, according to some experts who follow reform efforts. 02 While malpractice reform has stalled at the federal level, many states are exploring reform options. Continued on page 41 ES539190_ME122514_040.pgs 12.03.2014 04:49 ADV black yellow magenta cyan MedicalEconomics .com 41 Medical econoMics ❚ December 25, 2014 Malpractice reform some, such as safe harbors, have not been tried much in the United States, says Allen Kachalia, J.D., associate professor at the Harvard School of Public Health.

PaTienT safeTy In its frst recommendation, the ACP paper nods to quality control, then switches to We should make it harder to sue doctors followed by suggestions how, says Bernard S. Black, J.D., of Northwestern Universit s School of Law and Kellogg School of Man- agement. We do t learn from our mis- takes he says. We need incentives for safe- ty that are stronger than what we have now For example, Black suggests, if a hospital makes a mistake, it should have to fx it at no cost to the patient. As things stand now, he says, Hospitals get paid more if patients get complications Orentlicher agrees with the pape s em- phasis on patient safety, but adds, Te medical profession has t done enough to police itself On a more positive note, both men like the ABIM Foundatio s Choosing Wisely campaign that aims to help patients choose care that is supported by evidence, does not duplicate other tests or procedures, is free from harm and is truly necessary.

Damage caPs Caps on malpractice damages, particularly those on non-economic damages, are a sta- ple of malpractice reform eforts and still get a lot of attention, says Kachalia, but ther s a broad feeling that they can be unfair to pa- tients. Caps do t necessarily get at the core is- sues, he says, which include the realities that injured patients often do t sue and that injured patients can nonetheless lose suits. Caps on non-economic damages can prevent full restitution to the patient adds Orentlicher, because of the customary one- third cut for the plaintif s legal fees. Moving beyond caps, Orentlicher likes the periodic-payments idea, because a lump sum can under- or over-estimate the patien s needs. Tat strikes me as reason- able he says. In addition, he says a sliding scale for at- torneys fees makes sense though it would make fnding an attorney more difcult for some patients. Orentlicher cites a recent Wall Street Journal article that identifed a threshold of about $100,000 for being able to engage an attorney.

H s concerned that mandating the dis- closure of collateral-source payments, such as those from health insurers, might under- mine the deterrence signa to physicians. communicaTe anD Disclose Te position pape s Recommendation 5 is an important one, because communication and disclosure gets away from the whole deny-and-defend attitude...It benefts the patient to have an honest conversation, and i s the ethical thing to do says Ryan Crow- ley, senior associate for health policy at the ACP and the position pape s author. He suggests also that the growth of team- based care might help push communica- tions and disclosure as an approach for pre- empting litigation. In 2012, Massachusetts enacted a law to facilitate a Disclosure, Apology, and Ofe approach to medical malpractice claims. It provides for a six-month cooling-of period before litigation begins, allowing time to go through a DA&O process, which would fea- ture sharing of all pertinent medical records and full disclosure by providers. Statements of apology by providers would be inadmis- sible in court. Te Massachusetts Medical Society, Mas- sachusetts Bar Association and Massachu- setts Academy of Trial Attorneys all agreed on the bil s language.

safe harbors Te idea of gaining some liability protection from following evidence-based guidelines is an appealing one, but Hebeisen sees an obstacle to their general acceptance: Most medical societies do t want their practice guidelines used as standards of care. More broadly, Hebeisen notes, medical societies want guidelines to protect doctors, but do t want them used against doctors (as in the ACP position paper). I s the lack of balance that especially frustrates him: Ev- ery safe harbor proposal ve seen has been one-way he says.

healTh courTs anD acm s Health courts are another proposal for mal- practice reform, and have the advantage of having been tried outside the country. Administrative compensation models The American College of Physicians position paper on malpractice reform recommends:

1/ Improving patient safety and preventing medical errors, including the use of risk- management programs in all healthcare institutions and reviews of physician malpractice and professional disciplinary records, with disciplinary actions taken against reckless or incompetent physicians. 2/ Passage of a comprehensive tort reform package, including caps on non-economic damages, preferably at the national level.

Included in this are periodic (rather than lump-sum) payment of damages, collateral-source disclosure and ofsets, a sliding scale for attorne s fees and limits on punitive damages. 3/ Pilot-testing, and if warranted, expanding communication and resolution (a/k/a early disclosure and apology) programs that should include legal protections making apologies by healthcare professionals inadmissible in court. 4/ Developing safe harbor protections when physicians, under specifed conditions, provide care consistent with evidence-based guidelines developed by medical experts organized under a qualifed entity, such as the Institute of Medicine. The ACP also recommends that a physician not be held culpable in court if he or she, in applying their best professional judgment, did not follow such guidelines. 5/ Expanded testing of health courts and administrative compensation systems, which are starting to build a successful record in some other countries. Continued from page 40 ES539192_ME122514_041.pgs 12.03.2014 04:49 ADV black yellow magenta cyan MedicalEconomics .com 42 Medical econoMics ❚ December 25, 2014 In 2013, David A. Hyman, M.D., J.D., of the University of Illinois, and \ Charles Silver, J.D., of the University of Texas at Austin, published an article in Chest titled “Five Myths of Medical Malpractice.” The piece is a useful overview of common misperceptions and evidence-supported truths about medical malpractice.

Myths and truths about Medical Malpractice Myths truths myth #1: Malpractice crises are caused by sudden rises in payouts and claim frequency. The evidence: Most payments to plaintifs result from voluntary settlements, not from highly publicized jaw-droppin awards to patients with questionable claims. Further, Hyman and Silver wrote, the only malpractice crisis for which high-quality data are available was not caused by spikes in malpractice litigation myth #2: The tort system doles out compensation randomly The evidence: Although the liability system is simultaneously beset by over-claiming and under-claiming the authors conclude, it does much better than conventional wisdom suggests; it sorts the wheat from the chaf reasonably wel .

patients treated negligently recover damages far more often than patients who were treated non-negligently myth #3: Physicians are just one malpractice verdict away from bankruptcy. The evidence: Jury trials are uncommon, plaintif victories are even less common and even patients who win often receive awards that do not cover their actual losses. Further, Out-of-pocket payments by physicians were extraordinarily rare, particularly when physicians had policy limits of [at least] $500,000. One might say, with only the slightest exaggeration, that physicians have efectively no personal [fnancial] exposure on malpractice claims myth #4: Tort reform will lower healthcare spending dramatically. The evidence: the direct costs of the malpractice system are relatively modest about 2% of healthcare spending, and numerous studies have found either mixed results or only modest declines in healthcare spending from malpractice reform. Truth #1: The malpractice system is slow, taking on average about two years between an injury and the time a lawsuit is fled and roughly the same amount of time again for the case to be settled. This time frame means, as Hyman and Silver point out, i s unrealistic to expect the malpractice system to provide much in the way of useful feedback ... Tr u t h # 2: The system is extremely expensive. Earlier research by these authors found that the cost of defending paid medical malpractice claims has roughly doubled since 1988 and was about 20% of the amount paid to the plaintif ... Tr u t h # 3: The malpractice system is broadly perceived as unpleasant and often unjust or unfair Providers who were not negligent resent being dragged into lawsuits ... Patients who were injured are usually unable to fnd out what happened to them unless they fnd a lawyer, and must wait several years for the process to complete. Tr u t h # 4: Damages caps do little to improve the malpractice system Although caps can dramatically reduce claims, payouts, or insurance premiums, they do not make health-care safer, reduce health-care spending, compensate those who are negligently injured, or make the liability system work better Malpractice reform difer from judge-directed health courts in that claims decisions are made outside of court by an administrative agency. ACMs are currently in use in Sweden (which also has no-fault health courts), Denmark and New Zealand. All three reportedly apply collateral-source ofset rules. Crowley highlights the diference be- tween the negligence standard currently used in malpractice litigation and the avoid- ability standard often used in health courts and ACMs.

Te ACP position paper quotes Admin- istrative Compensation for Medical Injuries:

Lessons from Tree Foreign Systems a re- port published by Te Commonwealth Fund ES539191_ME122514_042.pgs 12.03.2014 04:49 ADV black yellow magenta cyan MedicalEconomics .com 43 Medical econoMics ❚ December 25, 2014 in 2011: Replacing the negligence standard with a more liberal, less stigmatizing com- pensation standard, such as avoidability, reaps multiple benefts. In addition to easing injured patient access to compensation for preventable injuries, it preserves physician- patient relationships, encourages transpar- ency about adverse events, and fosters physi- cian participation in the claims process Tis proposal also lacks balance, says Hebeisen, who uses the analogy of worker compensation. When worker comp was adopted, a guarantee of (at least limited) re- covery by an injured worker was traded of against the loss of the right to sue the em- ployer. Malpractice reform state efforts at Malpractice reforM Below is a list of recent efforts in which the American Medical Association has worked with state medical societies in support of malpractice reform efforts. connecticut A bill that would have weakened the certifcate- of-merit statute died. (The statute essentially requires a patien s attorney to obtain a written opinion from an expert stating that there appears to be evidence of negligence.) florida The AMA and the Florida Medical Association worked on a bill to strengthen expert witness standards. The bill passed.

idaho and Oklahoma in 2014 adopted AMA model legislation designed to protect the standard of care. Similar legislation in Mississippi was unsuccessful. The AMA model legislation, the Standard of Care Protection Act, is intended to ensure that practice standards or guidelines under Medicare, Medicaid and the Afordable Care Act ca t be misconstrued to create new causes of legal action against physicians. iowa An Iowa Medical Society task force is in talks with medical professional liability insurers and trial lawyers regarding early-disclosure legislation. Maryland As in previous years, the AMA worked with the state medical association to block legislation that would have tripled the cap on non- economic damages.

Kentucky The state medical association and the AMA supported legislation that would have established a pretrial screening panel. The bill stalled in committee.

Missouri The state medical association and the AMA supported legislation to reinstate a cap on non-economic damages that the state Supreme Court had struck down a few years previously, but the new bill failed.

pennsylvania The Pennsylvania Medical Society and the AMA supported successful legislation to make apologies by physicians inadmissible in any subsequent litigation.

oklahoma A special legislative session in 2013 passed 23 pieces of tort reform legislation, including an afdavit-of-merit requirement, expert testimony standards, and emergency and volunteer liability protections. The session was called after a 2009 tort reform law was ruled unconstitutional by the Oklahoma Supreme Court for violating the single subjec rule. california In November, voters defeated Proposition 46, which would have raised a cap on medical malpractice awards. TX LAMS AL GASCNC VA FL OR NV CA NH VT AK OH PA MI IL KYWV NY WA MT ID UT WY SD NE KS MO OK AZ NMCO ND MN WI IA AR TN IN NJ DE MD DC HI MA ME RI CT CA CT FL ID IA KY MD MO OK PA ES539194_ME122514_043.pgs 12.03.2014 04:49 ADV black yellow magenta cyan MedicalEconomics .com 44 Medical econoMics ❚ December 25, 2014 Malpractice reform In contrast, Hebeisen says, health courts would limit only the plaintifs. ACMs or health courts also raise constitutional con- cerns about the right to trial, says Kachalia, though they could be constitutional if struc- tured properly. As to the likelihood of health courts and ACMs being used here, Crowley concedes that the re a pretty drastic departure from the way things are done now limiTeD success Beyond all of the specifc recommendations, proposals and legislation, there seems to be a growing sense that tort reform broadly and perhaps vaguely construed, may not accomplish what i s supposed to. A lot of these reforms do t have the desired im- pact says Orentlicher. First, some eforts at the state level have been invalidated by state supreme courts over constitutional issues. For example, some state supreme courts have struck down damages caps, says Orentlicher. Nine states adopted non-economic dam- ages caps in 2002 to 2005 and in two states these were overturned by courts, according to Black. No federal cases have ever chal- lenged caps on damages, Hebeisen says, be- cause they have usually been struck down by courts at the state level. As a rule, he says, Anything that takes anything away from ju- ries gets shot down A paper that Black and coauthors pub- lished on the Social Science Research Net- work (SSRN) in 2013 reported that the per- physician rate of paid medical malpractice claims has been dropping for 20 years, and in 2012 was less than half of the 1992 level.

Tough the wave of damage cap adoptions contributed to this, the researchers noted that there are also large declines in no-cap states Some advocates have focused on the hope that malpractice reform could help a state improve its supply of physicians. However, another paper that Black co- authored, published in February on SSRN, found that in Texas, Physician supply was not measurably stunted prior to reform, and it did not measurably improve after reform.

Tis is true for all patient care physicians in Texas, high-malpractice-risk specialties, pri- mary care physicians, and rural physicians Finally, Black notes that while other stud- ies have found no connection between tort reform and mortality, he and Northwestern University economist Zenon Zabinski, Ph.D., used measures of adverse events developed by the Agency for Healthcare Research and Quality to examine whether malpractice reforms afect in-patient safety. With analy- ses of fve states that adopted caps on non- economic damages from 2003 to 2005, Black and Zabinski found consistent evidence that patient safety generally falls after the reforms, compared to control states Black summarizes the fndings for Medi- cal Economics as: Bad things in hospitals go up, but they are t bad enough to kill you Perhaps following tort reform, he says, You do fewer defensive things, but more risky- but-proftable things once more inTo The breach Tough Crowley predicts that tort reform at the federal level is t going to happen any time soon eforts have not stopped. He and Kachalia point to H.R. 4106, the Saving Lives, Saving Costs Act that was introduced in February, 2014. Te bill would:

❚ establish a framework for health care liability lawsuits to undergo review by independent medical review panels if providers allege adherence to applicable clinical practice guidelines ❚ require HHS to publish clinical practice guidelines provided by national or state medical societies or medical specialty societies designated by the Secretary and to set up standards for the development of such guidelines, and ❚ require an independent medical review if eligible medical professionals assert that they adhered to applicable clinical practice guidelines and establish procedures for the use of such a pane s fndings at trial.

Te bill was referred to the House Subcom- mittee on the Constitution and Civil Justice.

Whether at the state or federal level, something does need to be done. I s pretty clear that the current system does t work for the patients or the doctors says Kachal- ia. Any new system, he says, has to compen- sate patients and take pressure of physi- cians, whose concerns about being sued are more psychological, emotional and profes- sional than fnancial. Black puts it this way : Le s replace med- ical malpractice with something better, not with something less ES539193_ME122514_044.pgs 12.03.2014 04:49 ADV black yellow magenta cyan R epro duce d w ith p erm is sio n o f th e c o pyrig ht o w ner. F urth er r e pro ductio n p ro hib ite d w ith out p erm is sio n.