Michelle Mello, the author of two studies which found that malpractice costs make up a small percentage of national health care expenditures and that malpractice reform does not significantly decrease physicians’ malpractice anxiety, appeared on C-SPAN’s Washington Journal this morning to discuss her findings and answer viewer questions. Mello argued that even though tort reform is not the silver bullet for lowering health spending, it may help increase the number of physicians and improve the quality of health care.

Importantly, Mello also said that the nation’s poor unemployment and disability systems may be pushing a growing number of individuals to look “toward tort litigation to get those expenses covered”:

MELLO: There is more of a culture of accountability here in U.S. than in other countries, and there is certainly higher level of litigation across all sectors, not just the medical malpractice arena. What makes it, I think, even more complicated with respect to medical malpractice is that we historically have done a lousy job of providing other kinds of social insurance that might meet patients’ needs in the aftermath of a medical injury. Most of the other countries that litigation is low, have made other provisions for taking care of these folks. Whether it’s through a disability insurance scheme, a comprehensive health insurance system that covers everybody without them having to pay. Or an accident injury compensation fund that’s administered by the government or private entities to which people can apply for compensation. So I think there are two factors going on here. One is cultural and the other is, do we drive people to the liability system by failing to provide fo their needs in other ways?

Watch a compilation of her appearance:

The liability system is also sometimes used to weed out poor physicians, Mello explained. “We’re not particularly aggressive using our state medical boards and other disciplinary problems to go over these quality problems. We tend to rely on lawsuits as a means of highlighting those practicing substandard care,” she said, explaining that since only a small number of patients ever file a claim, substandard physicians are often left intact.

Indeed, even though just 2% of malpractice events are ever brought as claims, malpractice litigation is much more common in the United States than in other countries. According to a Health Affairs study from 2005, “the United States had 50 percent more malpractice claims filed per 1,000 population filed than the United Kingdom and Australia, and 350 percent more than Canada.” U.S. malpractice payments, however, were on average lower “than those in Canada and the United Kingdom. In 2001 the average payment in the United States was $265,103, which was higher than in Australia but 14 percent below Canada and 36 percent below the United Kingdom.”

When I debated him last year, Rep. Mike Burgess (R-TX) — the chairman of the Congressional Healthcare Caucus — insisted that tort reform presented one of the best solutions to lowering health care costs. But now, in light of a new study which finds that malpractice adds just 2.4% to health spending, Burgess may be softening his rhetoric — and if that’s any indication of where the party is as a whole, it may suggest that the GOP is willing to reconsider its favorite cost prescription.

Healthwatch’s Mike Lillis has the story:

Rep. Michael Burgess (R-Texas) argued that the cost of malpractice to the healthcare system is “a huge sum of money,” but also conceded that limiting malpractice claims won’t translate into instant healthcare savings.

“Defensive medicine is a learned methodology, and one that cannot be unlearned quickly, and I believe this contributes significantly to the reason why costs do not decrease quickly and steeply immediately after medical liability reforms are passed,” he said in an e-mail. “Our nation’s healthcare system is very complex, and I have never suggested that medical liability reform is a silver bullet.”

The authors of the new Health Affairs study point out that “physician and insurer groups like to collapse all conversations about cost growth in health care to malpractice reform, while their opponents trivialize the role of defensive medicine.” Burgess is both a physician and a Republican. He’s from a state that has capped non-economic damages but has seen no corresponding decrease in health spending. When I debated him, he (like the whole of the GOP) insisted that caps should be a big part of the solution. These statements seems to be far more reflective of the literature.

The health care law does try to address malpractice costs. It “includes some pilot programs to test alternative systems for settling malpractice cases” and while those projects have been authorized but not yet funded, HHS has distributed $20 million in development grants and planning grants “to states and health care systems” developing ways to reduce malpractice costs. My sense is that it’s easy for politicians to argue that the government can or should do more on this side of reform and it probably should. But providers also have a responsibility to begin adopting innovative solutions (i.e. Sorry Works programs) without waiting for lawmakers to act. The hospitals that received the HHS grants are leading the way in testing successful alternative models and if the GOP is really moving away from its caps-centric focus, it’s the kind of programs Republicans and Democrats can both champion.

Since President Obama supported alternative malpractice reforms as a Senator, I expected health care reform to include something more robust than demonstration projects dedicated to exploring different initiatives for improving patient safety and reducing costs. After all, Obama co-sponsored Sorry Works legislation — an initiative built on the assumption that “disclosure and apology” encourages providers to “deal with medical mistakes: [r]ather than stonewalling patients and relatives.” The approach pushes hospitals and institutions to address their mistakes and has found some success in lowering costs.

Just yesterday, a new study in the Annals of Internal Medicine of the period in which such a program was implemented at the University of Michigan Health System found that “legal costs went down, as did the number of new claims for compensation, the number of claims compensated and the time it took to resolve a claim.”

But whether costs and the number of claims declined as a result of the new policy isn’t clear, since there was no control group — and claims in the state were generally on the decline. (The university system did have fewer claims than were predicted by historical trends and its own models, the study says.)

It’s also unclear whether the same results would apply to physicians in private practice or who purchase their own liability insurance; UMHS docs were covered by their institution. The authors say the results suggest that such a disclose-with-offer program can be implemented without exacerbating legal costs and that it can address some of the problems of the medical liability system, including long waits for compensation.

The accompanying editorial calls the study “promising” but notes a couple of other limitations, including the fact that “the authors could not distinguish disclosures initiated by the health system from those offered in response to a patient complaint.” (In other words, it’s hard to know how many of the voluntary disclosures were voluntary.)

Sorry Works may not be a silver bullet, but it’s at least part of the answer to controlling malpractice costs. And its success in this study only suggests that doctors and hospitals can implement solutions that are independent of Congressional action, with government funding. In June, HHS announced that it would be distributing $20 million in development grants and planning grants “to states and health care system” to develop and test successful models for reducing malpractice costs. The funding provides systems with an opportunity to test run some of these alternative models.

In September of 2009, President Obama responded to the Republican criticism that health care reform was not doing enough to address malpractice reform by directing HHS Secretary Kathleen Sebelius to form the Patient Safety and Medical Liability Initiative, dedicated to exploring different initiatives for improving patient safety and reducing malpractice costs.

After evaluating the success of existing efforts and consulting with a seven-member panel of diverse stakeholders, the initiative announced the availability of $20 million in development grants and planning grants “to states and health care system” and yesterday, on a conference call with reporters, the group unveiled some of the applications they received and the projects that would be funded.

The initiatives eschew the most talked about malpractice reform efforts — caps on economic damages (which would require additional legislative action) or special health care costs — and instead look a lot like the kind of initiative then Senator Obama proposed to limiting both medical errors and lawsuits. For the most part, the grants focus on “reducing preventable injuries, improving communication between doctors and patients, ensuring patients are compensated more quickly,” reducing liability insurance premiums,” and determining the effectiveness of the various approaches:

The comprehensive review that we did of the literature, looking at liability reforms and patient safety efforts. The bottom line message was that we really don’t know what works and what doesn’t work and we don’t know, with reforms which have already been implemented in states — are they having the intended effect? Are they reducing malpractice premiums and the number of lawsuits? Are they improving quality and reducing preventable errors.

The new health care reform law also includes a provision that would allow for similar demonstration projects, but as the experts on the call noted, “it is authorized but not yet funded.” The hope that these projects could provide “a very solid foundation for moving forward, if in fact that provision is funded.” For a full list of what will be funded, click here.

While progressives generally support the new health care law, many remain disappointed that the plan did not include a public option, a national exchange, or stronger rate-review provisions. I share these concerns, but I’m also surprised that the administration did not include stronger malpractice reforms, particularly after it made a big show of incorporating Republican ideas into the final legislation.

Republicans like to talk about capping non-economic damages in malpractice suits. But since that’s failed to significantly reduce health care spending or lower the use of unnecessary treatments, some reform advocates have looked to other alternatives that would lower lawsuit abuse while also reducing the practice of defensive medicine. One such option is a “disclose and apology” model, which encourages providers to “deal with medical mistakes: [r]ather than stonewalling patients and relatives.” As the New America Foundation’s Joann Kenen explains these programs are reducing lawsuits and improving care in some hospitals:

Disclose and apologize doesn’t mean the hospitals or doctors say to a patient or family, “Something went wrong. We’re sorry. Here’s a check. Ciao.” It means, or should mean, they say something like, “You had a bad outcome. We are sorry. We will try to help you while we investigate what happened. If it was our fault, we will take financial and moral responsibility. We will do our best to make sure it never happens again to anyone else.”

Maggie Mahar makes one additional observation about the advantages of this model to the traditional conservative approach of simply capping rewards: “More importantly, tort reform does nothing to improve hospital safety. By contrast, hospitals that “disclose” also “fix.” No one pretends that that the hospital makes no mistakes. They trace what went wrong, (often it’s a system error) and repair.”

Indeed, Senator Obama co-sponsored so-called Sorry Works legislation that would have given physicians who disclosed their errors “certain protections from liability within the context of the program, in order to promote a safe environment for disclosure.” The administration may have been pressured against including the provision in this first reform package, but I suspect they’ll have to revisit it in the future.

President Barack Obama hinted that he may incorporate some Republican tort reform proposals into the existing health care reform legislation, but warned that “bipartisanship cannot mean simply that Democrats give up everything they believe in, find the handful of things Republicans have been advocating for and then we do those things.” “There’s gotta be some give and take..and that’s what I hope is accomplished,” Obama said of the forthcoming February 25th health summit:

Let’s establish some common facts. Let’s establish what the issues are, what the problems are and let’s test out, in front of the American people, what ideas work and what ideas don’t. And if we can establish that factual accuracy about how different approaches would work then I think we can make some progress. And it may be that some of the facts that come up, are ones that make my party a little bit uncomfortable.

Watch it:

“If it’s established that by working seriously on malpractice and tort reform, that we can reduce some of those costs, I’ve said from the beginning of this debate, I’d be willing to work on that,” Obama said. “On the other hand, if I’m told that that’s only a faction of the problem and that’s not the biggest driver of health care costs, then I’m also going to insist ‘okay, let’s look at that as one aspect of it, but let’s do what we were going to do,’” Obama added.

The Congressional Budget Office (CBO) has recently estimated that common Republican tort reform proposals — like capping awards for noneconomic damages — could save the federal government $54 billion over 10 years, but some progressives have questioned the budget office’s conclusion. In a letter to CBO director Douglas Elmendorf, Sen. Jay Rockefeller (D-WV) argued that the new CBO report reverses years of precedent and relies on academic studies that actually undermine the savings projection. “CBO has repeatedly concluded that cost savings associated with medical malpractice reforms would be minimal and the at evidence concerning defensive medicine is ‘inconsistent,’” Rockefeller wrote, noting that the budget office has previously determined that “the effect of medical malpractice reform “would be relatively small — less than 0.5 percent of total health care spending” and would “save [only] $5.6 billion over 10 years.””

In September, Obama directed Health and Human Services Secretary Kathleen Sebelius to authorize “demonstration projects in individual states” to test various approaches to tort reform. The Senate health care bill includes money for such demonstrations.

While in the Senate, Obama also co-sponsored “legislation aimed at reducing both medical errors and lawsuits through a program known as Sorry Works, rooted in the idea that injured patients value an apology as much as money.” That legislation would have given physicians who disclosed their errors “certain protections from liability within the context of the program, in order to promote a safe environment for disclosure.“

Sen. Jay Rockefeller (D-WV) doesn’t believe the Congressional Budget Office (CBO) when it says that tort reform could reduce the use of ‘defensive medicine’ and save the federal government $54 billion over 10 years. In a six page letter to ‘Doug’ (Elmendorf, the director of the CBO), Rockefeller points out that the CBO recent conclusion reverses years of precedent and relies on academic studies that actually undermine the budget office’s final conclusion:

CBO’s recent letter to Senator Hatch creates more questions that it answers. The several cited reports contain conflicting data, which tends to support CBO’s prior conclusion that the evidence available on the issue of defensive medicine is “inconsistent” and “mixed.” It is impossible for CBO to conclude that we will see cost savings from a reduction in health care services without analyzing the effects on patient health.

“CBO has repeatedly concluded that cost savings associated with medical malpractice reforms would be minimal and the at evidence concerning defensive medicine is ‘inconsistent,’” Rockefeller writes, noting that the budget office has previously determined that “the effect of medical malpractice reform “would be relativley small — less than 0.5 percent of total health care spending” and would “save [only] $5.6 billion over 10 years.”

Indeed, states that have adopted tort reform have failed to significantly lower health care costs. When Texas capped non economic medical malpractice damages to $250,000 in 2003, most conservatives argued that the reform would free doctors from having to prescribe unnecessary treatment. It didn’t happen. According to the Dartmouth research on disparities in health care spending, many Texan doctors are still prescribing aggressive treatments that don’t improve outcomes. In fact, as of 2006, Texas was still at the top of the list of high-spending states.

A physician’s motivation for engaging in ‘defensive’ behavior or overtreatment is far more complicated than the fear of lawsuits, health expert Maggie Mahar explained during an interview with the Wonk Room:

It may be that he saw a case like this once before and it went sour, and he doesn’t know why and so he wants to be extra careful. It may be that he has been seeing Ms. O’Connell for years, she is a dear person and he really cares for her and he just wants to make sure that no stone is left unturned. Could be that he has been seeing Ms. O’Connell for years, she is a pain in the ass, and he knows that if he doesn’t order every treatment that her neighbor says he needs, he’s going to be hearing from her. And it could be that he is afraid of being sued. If I were the doctor, I wouldn’t be able to untangle my motives and say to what degree fear of malpractice suits is driving my actions.

Experts believe that the current reimbursement structure does more to shape practice patterns than fear of liability. “The current health system reimburses doctors, hospitals, and other health care providers based on the number of visits and procedures that are done. As a result, health care providers’ revenues and profits increase when they deliver more services and the cost of health care goes up,” Ellen-Marie Whelan, a Senior Policy Analyst at the Center for American Progress, wrote in a recent report.

The current reform legislation attempts to re-align the incentives in the current system. It encourages providers to coordinate primary care services, expands pilot programs that reimburse providers in bundles and for episodes of care and allows the Secretary of Health and Human Services or the Center for Medicare and Medicaid Services to expand successful models. These kinds of reforms have saved money in places like Cleavland Clinic and the Mayo Clinic and will likely do more to reduce defensive medicine than the largely unsubstantiated reliance on tort reform.

As Democrats move to reconcile the Senate Finance bill with the far more progressive HELP legislation, some are hoping to attract the vote of so-called moderate Sen. Susan Collins (R-ME). This morning, during an appearance on Fox & Friends, Collins laid out her objections to the Senate Finance legislation. “I have a lot of concerns about the Baucus bill,” she began:

- Better affordability measures: “I think it could very well drive up the costs of insurance for middle income families.”

- Opposes the free-rider provision: “I think it unfairly penalizes small businesses when they hire low income workers.”

- Better cost controls: “I don’t think it does enough to reign in costs.”

Watch it:

Some of this is reconcilable. Progressives want to improve the bill’s affordability measures and replace the clunky free-rider provision with a real pay-or-play mandate that would require large employers to offer coverage or pay a fee. To improve affordability standards, policy makers can either lower the value of the benefits packages, exclude more people from the individual mandate, expand subsidies, give the Exchange some real bargaining power, and/or insert a real robust public option. But Collins won’t support a bill with a higher price tag (so the subsidy option is out) and she is unwilling to consider a public plan. Unfortunately, diminishing the value of the benefit packages or leaving more Americans without coverage would only increase costs over the long term and undermine Collin’s third objection. And that should be taken seriously.

The Baucus bill goes a long way towards “reining in costs” and controlling spending (over the long term and the short term). It restructures payments to Medicare Advantage plans (to base payments on plan bids with bonus payments), establishes an independent Medicare Commission to submit proposals for reducing excess Medicare cost growth by targeted amounts, reduces Medicare DSH payments by an amount proportional to the percentage point decrease in the uninsured, reduces payments for preventable hospital readmissions in Medicare, establishes a hospital value-based purchasing program in Medicare to pay hospitals based on performance on quality measures, and invests in all kinds of payment reform models.

Collins says that “reining in costs” should be “one of the primary goals” of health reform, yet she opposes many of these measures. She wants to reign in costs without voting for cost containment policies and Medicare cuts. Rally against the expensive health care system without conceding that the Baucus bill actually moves the system in that direction. To be fair, Collins does call for medical liability reform, which could save some $54 billion over 10 years. The Baucus bill encourages states to develop and test alternatives to the current civil litigation system, and the Senate may include stronger tort reforms in the final bill. But $54 billion isn’t enough to fund health reform and it has done little to reduce the practice of so-called “defensive medicine.” Again, if Collins was interested in reducing costs or making coverage more affordable, she would support the existing measures in the Baucus bill or a robust public option (which according to the CBO, saves twice as much as tort reform).

If Collins is unwilling to recognize or support real cost containment measures, then Democrats are wasting their time wooing the other Senator from Maine. After all, she’s not willing to back policies that support her own rhetoric.