(03-04-2010 03:42 PM)OptimisticOwl Wrote:  

(03-04-2010 12:23 PM)kinderowl Wrote:  they did not overall. and, a key driver of tort reform was doctor's malpractice insurance premiums, which also did not go down after tort reform.

I think there was an extensive study done by profs from UT, UI, and Columbia about the stability of medical malpractice claim outcomes, including an examination to date of every medical malpractice claim resolved by an insurer in Texas over a fifteen year period. Their findings included a conclusion that, post tort-reform, the three biggest insurers in the state increased rates by an average of more than 100% over a 5 year period.

Interesting, but what does it prove? That tort reform causes rate increases? One could take a leaf from the Administration's book, and just say, as they do about the Stimulus, "It would have been so much worse without this action." Maybe without reform, they would have risen 200%. Totally unprovable either way. "Sure unemployment's at 10% but without our brave actions it would have been XX.5% or so." Maybe. Maybe not. We'll never know for sure.

Tort reform is one of those things like manmade global warming - seems to make sense, but...does it really? People are driving more cars, and malpractice insurance is going up. Must prove something, this doesn't happen in a vacuum. Oops, mixed my cause and effect, but it still makes sense. A happened, B happened too, A must cause B. QED.

It seems reasonable that capping awards would reduce the pressure to raise rates more than if there was no cap, but it cannot be proved. The error IMO is in expecting no change at all. Similar to the effects of trading out a few million cars for ones with better gas mileage. Seems reasonable that it would have some SOME environmental impact, just how much and the relative cost of same is unknown. Same thing for extermining wolves in wolves in Yellowstone. Turns out it did have an effect, just not a good one, unless you are an elk. (I urge everyone to read the latest National Geographic). Cash for clunkers must have done SOME good, just how much no one knows. Just common sense, right? Maybe solved the problem, probably not. Tort reform, maybe the same.

I understand that insurance rates have risen in Mass more than in any other state since they enacted their system. Is that true, and if so, why are we trying to do it nationally?

I understand that Indiana has a better system.

keep arguing against stuff i didn't say. my point was responding to d1 who seemed to think a combination of tort reform and deregulation would help. i don't think that's right. that's all.

and, btw, reducing costs (if that happens) leads to lower rates ONLY IF you pass the savings to your customers. the article i read some time ago about the study was interesting in that it suggested that the insurers had not done so.

(03-04-2010 04:06 PM)Owl 69/70/75 Wrote:  

(03-04-2010 12:23 PM)kinderowl Wrote:  they did not overall. and, a key driver of tort reform was doctor's malpractice insurance premiums, which also did not go down after tort reform.
I think there was an extensive study done by profs from UT, UI, and Columbia about the stability of medical malpractice claim outcomes, including an examination to date of every medical malpractice claim resolved by an insurer in Texas over a fifteen year period. Their findings included a conclusion that, post tort-reform, the three biggest insurers in the state increased rates by an average of more than 100% over a 5 year period.

I've actually read some article or articles making the point that Texas rates either went down, or perhaps increased less than other states, following the change. I can't find any of them now, so this is just something coming up from the recesses of my memory. If you have something hard that supports a different conclusion, I will defer to that. I do know that my own insurance got cheaper for a period about then, but that could have been any one of several things, so I'm not certain what that was really about.

The real cost of malpractice is in the otherwise unnecessary procedures that are performed as defensive medicine. The problem with getting a handle on that is obviously classification, and I think it's fair criticism of everything I've seen on this point to say that those who wanted to make the number as big as possible used a methodology that made the number pretty big, and those who wanted the number to be as small as possible used a methodology that made the number pretty small, and short of splitting the difference between the two I don't think there's any way to get a reasonable objective estimate at this point. The extremes I've seen are 40% of total costs and 1% of total costs, so the "split the baby" number would be about 20%, which is clearly significant. But obviously if two different groups come up with answers as far apart as 40% and 1%, nobody has really nailed it down.

I would go with a combination of French health care and Swedish "no fault" malpractice. The one area that the French system takes hits when benchmarked against other world class systems is electronic healthcare applications, but even there they are way ahead of us (everyone in France has a health ID card with all their health info--insurance, allergies, history, the whole nine yards--imbedded on a chip). I do think it's at least somewhat disingenuous for Obama to say something to the effect that "all options/alternatives have been considered" (don't have the verbatim quote available) when clearly those haven't. But I think it is the duty of the republicans, as loyal opposition, to put ideas like that on the table, and they clearly haven't.

So we have dishonest democrats and stupid republicans figting over where we are going. Wonderful!!!

there are all kinds of special interest articles out there about tort reform, and not surprisingly both sides are argued. i focused on the study because my recollection (which granted may be remote in time and no longer accurate) was that it seemed like a neutral study and had results that suggested tort reform didn't achieve much of what had been hoped for by its proponents.

(03-04-2010 06:01 PM)kinderowl Wrote:  keep arguing against stuff i didn't say. my point was responding to d1 who seemed to think a combination of tort reform and deregulation would help. i don't think that's right. that's all.

The Economist would agree with d1, and the European experience would suggest that as well.

(03-04-2010 06:03 PM)kinderowl Wrote:  had results that suggested tort reform didn't achieve much of what had been hoped for by its proponents.

Well, that is what I thought you said.

let me try again. your post asked what does it prove -- that tort reform causes premiums to rise -- or something along those lines and went on from there.

i didn't argue anything of the sort. what i said was a response to D1 who seemed to be under the impression that tort reform and dereg would help such things. my point was that in texas it apparently did not. the side point merely was that a study showed the rates actually went up not down.

(03-05-2010 01:33 PM)kinderowl Wrote:  let me try again. your post asked what does it prove -- that tort reform causes premiums to rise -- or something along those lines and went on from there.

i didn't argue anything of the sort. what i said was a response to D1 who seemed to be under the impression that tort reform and dereg would help such things. my point was that in texas it apparently did not. the side point merely was that a study showed the rates actually went up not down.

I guess I could have clearer - without knowing what premiums were expected to do before tort reform, it cannot be determined if the actual results reflected a positive, negative, or no result.

I used the unemployment rate as an example. We got 10%. By itself, it does not tell that the stimulus was or was not effective- only if we take take into consideration what unemployment was expected to be without it. I remember one authority mentioned 8%, but I think that authority now says it would have much worse. Still a judgement matter, but we at least have something to judge against. Of course unemployment is just one measure of effectiveness, but it does show the principle - that the results after the change must be compared to the expected results without the change - and that latter info was not in your post.

100% sounds bad, but what if rates were expected to rise 200%? Or 5%? Quite different results - that's why the expected rise has to be taken into account.

There seems to be some disagreement on whether or not insurance rates actually did increase, and if so how much. I would like to get a definitive measure on that, too.

100%, without supporting data, seems as far out of the realm of possiblity as a report that NYC averaged 114 degrees this summer - just seems outlandish. If you can find that report, I would interested in seeing it.

(03-05-2010 05:36 PM)OptimisticOwl Wrote:  I guess I could have clearer - without knowing what premiums were expected to do before tort reform, it cannot be determined if the actual results reflected a positive, negative, or no result.

Why couldn't you? Texas passed tort reform, other states didn't. Compare the results. [n.b. - I don't know if anyone has actually done this or what their results were if they did.]

btw, allowing insurance sales across state lines makes this kind of comparison almost impossible. There won't be a Healthy Indiana plan to compare with Massachusetts, etc.

(03-07-2010 07:01 PM)Old Sammy Wrote:  

(03-05-2010 05:36 PM)OptimisticOwl Wrote:  I guess I could have clearer - without knowing what premiums were expected to do before tort reform, it cannot be determined if the actual results reflected a positive, negative, or no result.

Why couldn't you? Texas passed tort reform, other states didn't. Compare the results. [n.b. - I don't know if anyone has actually done this or what their results were if they did.]

btw, allowing insurance sales across state lines makes this kind of comparison almost impossible. There won't be a Healthy Indiana plan to compare with Massachusetts, etc.

You have to compare actual results after a change with the expected results without a change to know if the change was successful or not in doing what it was supposed to do. For example, you want to change auto insurance companies to save money. After changing, you paid $611. So what? Proves nothing unless you also tell us that it would have cost $814 if you didn't change providers. Granted, there is a reasonable presumption that 100% increase is probably higher than expected, but I think that number has also been discredited.

BTW, works both ways - suppose the malpractice premiums remained unchanged. Good result? Bad result? We don't know. Depends on what the expectation was without tort reform.

As for allowing insurance across state lines, it would just make the comparisons as easy as comparing Geico to Progressive to
State Farm.

BTW, good to see my oldest friend at the game tonight. And I mean oldest in the kindest possible way. :-)

Does anyone have any actual hard results?

My sense was that both malpractice and health insurance premiums declined, or at least saw their rate of growth curtailed significantly. I seem to recall contemporaneous analyses suggesting that, but that was a few years ago, and I haven't seen much about it lately.

I've located one study online that purports to show precisely that result, but it's not from what I'd call an objective source. Still, I haven't found anything suggesting a contrary result. Do any of you have something that does? I'd like to know what the real impact was.

Intuitively, one would expect a decrease in costs somewhere, but it could have been lost in the noise of other things going on around it. Another thought may be that malpractice premiums are sort of the tip of the iceberg compared to factors like defensive medicine costs, and those benefits are much harder to quantify. It does seem to be pretty well documented that what had been in outflow of docs has turned into an inflow--that seems to be one result, and a happy one.

(03-08-2010 12:06 AM)OptimisticOwl Wrote:  

(03-07-2010 07:01 PM)Old Sammy Wrote:  

(03-05-2010 05:36 PM)OptimisticOwl Wrote:  I guess I could have clearer - without knowing what premiums were expected to do before tort reform, it cannot be determined if the actual results reflected a positive, negative, or no result.

Why couldn't you? Texas passed tort reform, other states didn't. Compare the results. [n.b. - I don't know if anyone has actually done this or what their results were if they did.]

btw, allowing insurance sales across state lines makes this kind of comparison almost impossible. There won't be a Healthy Indiana plan to compare with Massachusetts, etc.

You have to compare actual results after a change with the expected results without a change to know if the change was successful or not in doing what it was supposed to do. For example, you want to change auto insurance companies to save money. After changing, you paid $611. So what? Proves nothing unless you also tell us that it would have cost $814 if you didn't change providers. Granted, there is a reasonable presumption that 100% increase is probably higher than expected, but I think that number has also been discredited.

BTW, works both ways - suppose the malpractice premiums remained unchanged. Good result? Bad result? We don't know. Depends on what the expectation was without tort reform.

As for allowing insurance across state lines, it would just make the comparisons as easy as comparing Geico to Progressive to
State Farm.

BTW, good to see my oldest friend at the game tonight. And I mean oldest in the kindest possible way. :-)

I agree that you can't say what the benefit of tort reform in Texas is directly, just as you can't say what Obama's stimulus has done to unemployment. But I think there's a proxy. My analysis would work like this: assuming health care costs are consistent across state lines, i.e., MD's in state A are paid comparably with MD's in state B, hospital and lab costs compare, etc, if state A does "tort reform" and state B doesn't, what happens to 1) malpractice insurance rates in state A vs state B and 2) what happens to overall health care costs in state A vs state B. #1 is probably a valid comparison, #2 probably isn't because there are too many variables in the overall cost comparison.

I don't think your Geico/Progressive/State Farm analogy works. Even though these are national companies, their policies are regulated by each state they offer insurance in. A Geico policy in Texas must meet Texas standards. Writing across state lines means to me that Geico could write a policy for a Texas policyholder which meets North Dakota standards for underwriting, reserves, etc.

Good to see you, happy you have the upper hand dealing with the Frog fans in Ft Worth and Weatherford. I'm always happy to be your wingman. Left wing, of course.

(03-08-2010 10:35 AM)Old Sammy Wrote:  I agree that you can't say what the benefit of tort reform in Texas is directly, just as you can't say what Obama's stimulus has done to unemployment. But I think there's a proxy. My analysis would work like this: assuming health care costs are consistent across state lines, i.e., MD's in state A are paid comparably with MD's in state B, hospital and lab costs compare, etc, if state A does "tort reform" and state B doesn't, what happens to 1) malpractice insurance rates in state A vs state B and 2) what happens to overall health care costs in state A vs state B. #1 is probably a valid comparison, #2 probably isn't because there are too many variables in the overall cost comparison.

I agree as to methodology. What I don't understand is that everything I've seen done along those lines sugests that tort reform had a significant positive impact on Texas, and what's being posted here is that it didn't.

Is there something out there that I'm not aware of?

Because what's being posted here, and apparently accepted as gospel, is not what I've seen and heard in the past.

(03-08-2010 10:35 AM)Old Sammy Wrote:  

(03-08-2010 12:06 AM)OptimisticOwl Wrote:  

(03-07-2010 07:01 PM)Old Sammy Wrote:  

(03-05-2010 05:36 PM)OptimisticOwl Wrote:  I guess I could have clearer - without knowing what premiums were expected to do before tort reform, it cannot be determined if the actual results reflected a positive, negative, or no result.

Why couldn't you? Texas passed tort reform, other states didn't. Compare the results. [n.b. - I don't know if anyone has actually done this or what their results were if they did.]

btw, allowing insurance sales across state lines makes this kind of comparison almost impossible. There won't be a Healthy Indiana plan to compare with Massachusetts, etc.

You have to compare actual results after a change with the expected results without a change to know if the change was successful or not in doing what it was supposed to do. For example, you want to change auto insurance companies to save money. After changing, you paid $611. So what? Proves nothing unless you also tell us that it would have cost $814 if you didn't change providers. Granted, there is a reasonable presumption that 100% increase is probably higher than expected, but I think that number has also been discredited.

BTW, works both ways - suppose the malpractice premiums remained unchanged. Good result? Bad result? We don't know. Depends on what the expectation was without tort reform.

As for allowing insurance across state lines, it would just make the comparisons as easy as comparing Geico to Progressive to
State Farm.

BTW, good to see my oldest friend at the game tonight. And I mean oldest in the kindest possible way. :-)

I agree that you can't say what the benefit of tort reform in Texas is directly, just as you can't say what Obama's stimulus has done to unemployment. But I think there's a proxy. My analysis would work like this: assuming health care costs are consistent across state lines, i.e., MD's in state A are paid comparably with MD's in state B, hospital and lab costs compare, etc, if state A does "tort reform" and state B doesn't, what happens to 1) malpractice insurance rates in state A vs state B and 2) what happens to overall health care costs in state A vs state B. #1 is probably a valid comparison, #2 probably isn't because there are too many variables in the overall cost comparison.

I don't think your Geico/Progressive/State Farm analogy works. Even though these are national companies, their policies are regulated by each state they offer insurance in. A Geico policy in Texas must meet Texas standards. Writing across state lines means to me that Geico could write a policy for a Texas policyholder which meets North Dakota standards for underwriting, reserves, etc.

Good to see you, happy you have the upper hand dealing with the Frog fans in Ft Worth and Weatherford. I'm always happy to be your wingman. Left wing, of course.

Always happy to have you on my side - either side.

Seriously, I am glad to have your input here. You are always thoughtful and well-informed. I appreciate having someone like that on the other side of the net.

In the morning, I am going to see my best friend, a man whose son played baseball for the Frogs. Although I have succeeded in making the Owls his second favorite team, I am happy that I don't have to give any excuses/reasons for losing. I'll just wander into his office, pour myself a cup of coffee, sit down, and with a small smile say, "What's been happening?"

(03-08-2010 01:39 PM)Owl 69/70/75 Wrote:  

(03-08-2010 10:35 AM)Old Sammy Wrote:  I agree that you can't say what the benefit of tort reform in Texas is directly, just as you can't say what Obama's stimulus has done to unemployment. But I think there's a proxy. My analysis would work like this: assuming health care costs are consistent across state lines, i.e., MD's in state A are paid comparably with MD's in state B, hospital and lab costs compare, etc, if state A does "tort reform" and state B doesn't, what happens to 1) malpractice insurance rates in state A vs state B and 2) what happens to overall health care costs in state A vs state B. #1 is probably a valid comparison, #2 probably isn't because there are too many variables in the overall cost comparison.

I agree as to methodology. What I don't understand is that everything I've seen done along those lines sugests that tort reform had a significant positive impact on Texas, and what's being posted here is that it didn't.

Is there something out there that I'm not aware of?

Because what's being posted here, and apparently accepted as gospel, is not what I've seen and heard in the past.

Hey, I'm not among those shouting "Amen!"

(03-08-2010 04:42 PM)OptimisticOwl Wrote:  In the morning, I am going to see my best friend, a man whose son played baseball for the Frogs. Although I have succeeded in making the Owls his second favorite team, I am happy that I don't have to give any excuses/reasons for losing. I'll just wander into his office, pour myself a cup of coffee, sit down, and with a small smile say, "What's been happening?"

"What's been happening? You missed a good game at the Juice Box! ;-)" is currently on my brother in law (my wife's sister's husband's) facebook wall. I'm sure it would have been the same question on my wall if TCWho had won.

(03-08-2010 01:39 PM)Owl 69/70/75 Wrote:  

(03-08-2010 10:35 AM)Old Sammy Wrote:  I agree that you can't say what the benefit of tort reform in Texas is directly, just as you can't say what Obama's stimulus has done to unemployment. But I think there's a proxy. My analysis would work like this: assuming health care costs are consistent across state lines, i.e., MD's in state A are paid comparably with MD's in state B, hospital and lab costs compare, etc, if state A does "tort reform" and state B doesn't, what happens to 1) malpractice insurance rates in state A vs state B and 2) what happens to overall health care costs in state A vs state B. #1 is probably a valid comparison, #2 probably isn't because there are too many variables in the overall cost comparison.

I agree as to methodology. What I don't understand is that everything I've seen done along those lines sugests that tort reform had a significant positive impact on Texas, and what's being posted here is that it didn't.

Is there something out there that I'm not aware of?

Because what's being posted here, and apparently accepted as gospel, is not what I've seen and heard in the past.

I agree. Two issues here.
#1 - has tort reform saved money in Texas and California? While I don't recall any specifics, my deteriorating memory says yes. We've probably seen and heard some of the same sources.
#2 - are those savings significant in the health cost equation? My gut says no. Anyone have any information on this?

It gets even more nebulous if you get outside of malpractice insurance rates. I've heard it argued that reduced malpractice risk should translate into less defensive medicine being practiced, and that's not fully appreciated in the analysis [straw man alert!]. I doubt that. My perception is that MDs aren't sensitive enough to cost issues. Tests are ordered with little regard for cost, so long as insurance is paying.

There was an NPR piece on drug costs a while back. It gave examples where drug companies rebate copays for proprietary drugs where the insurance cost of the proprietary is 2X or more than the equivalent generic or alternative. MDs happily give out the rebate coupons. I have an uninsured low income client with medical issues. She qualifies for a particular drug free from AstraZenica if it's done direct by mail from A-Z. The MD wrote the prescription on the same form with a couple of non A-Z drugs - she needs the A-Z drug on its own form. The MD will charge her $50 to rewrite the Rx. He's definitely not sensitive to cost issues that directly affect his patient's health.

(03-09-2010 05:32 AM)Old Sammy Wrote:  I agree. Two issues here.
#1 - has tort reform saved money in Texas and California? While I don't recall any specifics, my deteriorating memory says yes. We've probably seen and heard some of the same sources.
#2 - are those savings significant in the health cost equation? My gut says no. Anyone have any information on this?
It gets even more nebulous if you get outside of malpractice insurance rates. I've heard it argued that reduced malpractice risk should translate into less defensive medicine being practiced, and that's not fully appreciated in the analysis [straw man alert!]. I doubt that. My perception is that MDs aren't sensitive enough to cost issues. Tests are ordered with little regard for cost, so long as insurance is paying.
There was an NPR piece on drug costs a while back. It gave examples where drug companies rebate copays for proprietary drugs where the insurance cost of the proprietary is 2X or more than the equivalent generic or alternative. MDs happily give out the rebate coupons. I have an uninsured low income client with medical issues. She qualifies for a particular drug free from AstraZenica if it's done direct by mail from A-Z. The MD wrote the prescription on the same form with a couple of non A-Z drugs - she needs the A-Z drug on its own form. The MD will charge her $50 to rewrite the Rx. He's definitely not sensitive to cost issues that directly affect his patient's health.

The docs I know say your gut is wrong, that the effect is massive, but they do have a dog in the hunt.

The studies I've seen are all over the map, from 1% to 40%. The ones at the extremes are obviously biased--the 1% included no defensive medicine costs and I'm guessing the 40% defined defensive medicine very inclusively. The closer the real number is to 1%, the closer your gut is to right; the closer the real number is to 40%, the more wrong your gut is. If the real number is somewhere near the midpoint, which seems as good a guess as any, then I'd say your gut is wrong.

One thing that is overlooked when comparing health care costs with other countries is that continental Europe (France, Germany, Sweden, et al) has a civil law system where malpractice claims do not get jury trials. Even the other common law jurisdictions (basically UK and former Brit colonies) operate under rules of court where the kinds of jackpot damages awards that we see here just don't happen. The Swedish "no fault" malpractice model that I like arises out of a civil law system.

It is well documented that US doctors order more tests than their foreign counterparts, and this clearly drives costs higher. How much is due to defensive medicine, and how much to gaming the system as in your anecdotal example, is the part that's hard to get a handle on. Even harder to determine is how much system gaming arises because of a "get all you can before they try to sue and take it all away" attitude. Malpractice reform would seek to get rid of the unnecessary defensive medicine part; I see no reason to believe that any part of Obamacare would eliminate or even reduce the kind of system gaming your describe anecdotally. Like any other government program, it will operate under written rules and procedures that will be easily gamed. The more the efforts to control costs focus on low-balling docs, like Medicare and Medicaid, the more incentive there will be to game the system.

One other point is that I believe most malpractice "reform" efforts are barking up the wrong tree. Capping awards for actual damages, including pain and suffering, may deprive people who have been truly harmed of an adequate remedy. Where I'd like to see a change is punitive damages. Under the present scheme, those mainly serve to enrich the legal profession and a few jackpot plaintiffs, at the expense of the general population, without necessarily getting the bad docs off the street. Instead of monetary punitive awards, Sweden focuses punitive damages on pulling bad docs' tickets. That's a much better result, on several levels, as far as I am concerned. Of course, Obama's trial lawyer masters will never go for that; not so obviously, the defense bar makes plenty of money fighting junk lawsuits, too, so they aren't exactly onboard with real tort reform, either.

(03-07-2010 07:01 PM)Old Sammy Wrote:  

(03-05-2010 05:36 PM)OptimisticOwl Wrote:  I guess I could have clearer - without knowing what premiums were expected to do before tort reform, it cannot be determined if the actual results reflected a positive, negative, or no result.

Why couldn't you? Texas passed tort reform, other states didn't. Compare the results. [n.b. - I don't know if anyone has actually done this or what their results were if they did.]

btw, allowing insurance sales across state lines makes this kind of comparison almost impossible. There won't be a Healthy Indiana plan to compare with Massachusetts, etc.

FWIW, the Indiana plan was presented to me as an example of the type of healthcare reform that Republicans would champion and endorse, while Mass was equated with Obamacare.

(03-09-2010 08:39 AM)Owl 69/70/75 Wrote:  One other point is that I believe most malpractice "reform" efforts are barking up the wrong tree. Capping awards for actual damages, including pain and suffering, may deprive people who have been truly harmed of an adequate remedy. Where I'd like to see a change is punitive damages. Under the present scheme, those mainly serve to enrich the legal profession and a few jackpot plaintiffs, at the expense of the general population, without necessarily getting the bad docs off the street. Instead of monetary punitive awards, Sweden focuses punitive damages on pulling bad docs' tickets. That's a much better result, on several levels, as far as I am concerned. Of course, Obama's trial lawyer masters will never go for that; not so obviously, the defense bar makes plenty of money fighting junk lawsuits, too, so they aren't exactly onboard with real tort reform, either.

I think the $250K cap in Texas was misguided. There are a lot of legitimate claims that can't be made under that limit. I agree on punitive damages - they should be controlled and the "jackpot" shouldn't go to the one lucky plaintiff and his lawyer. The other thing it doesn't do is suppress frivolous lawsuits.

(03-09-2010 05:32 AM)Old Sammy Wrote:  I agree. Two issues here.
#1 - has tort reform saved money in Texas and California? While I don't recall any specifics, my deteriorating memory says yes. We've probably seen and heard some of the same sources.

Yes, it has. On malpractice premiums.

(03-09-2010 05:32 AM)Old Sammy Wrote:  #2 - are those savings significant in the health cost equation? My gut says no. Anyone have any information on this?

No they are not. Fee schedules -- almost ALL fee schedules except for cash patients -- are set by Medicare. When a private insurer enters negotiations with a provider it goes like this: We'll pay you X% of the Medicare Fee Schedule for E&M/Office Visit codes, Y% for Surgical Codes, and Z% for diagnostic testing codes. If the provider says no, the insurer doesn't care because they're sitting on 25-50% of the private pay market in the area and they'll go to the next provider down the road who will take it. So the provider sucks it up and takes it. BTW, depending on how many other providers of your specialty there are in the area, the take it or leave it numbers for X, Y, and Z vary from 80-150% for the most part.

Medicare DOES account for malpractice expenses, but to a limited extent. Basically, the feds treat Medicare (Part B) expenses as a pie of set size. Savings are redistributed, as are additional expenses. Thus a reduction in one area's GPCI (Geographic Practice Cost Index) as a result of malpractice reform in Texas a net reduction of say 5% in total practice expenses (these are adjusted by specialty as well as geography) due to malpractice reform -- taking a mid-level established patient exam from 56.13 to 53.82 in rural Texas -- would be absorbed by the rest of the country's providers in the form of a ~0.5% bump in fee schedule -- taking the same exam from about 58 to about $58.30.

The realized result of Medicare's pie concept, however, is that as utilization goes up due to patients living longer with multiple chronic illnesses, more expectations on healthcare, and more availability of diagnostic testing, the slices of the pie get smaller and smaller. This would have meant cuts in fees of about 3-5% across the board each of the last 8 years, except that congress has stepped in each year to stave it off. Now, those abatements have come to their expiration and there's a looming 21% cut to the medicare fee schedule that will take effect at the end of March without legislative intervention.

(03-09-2010 05:32 AM)Old Sammy Wrote:  It gets even more nebulous if you get outside of malpractice insurance rates. I've heard it argued that reduced malpractice risk should translate into less defensive medicine being practiced, and that's not fully appreciated in the analysis [straw man alert!]. I doubt that. My perception is that MDs aren't sensitive enough to cost issues. Tests are ordered with little regard for cost, so long as insurance is paying.

That's mostly fair. That said, there are a lot of things that insurance will bundle together and only pay for one of... such as tests that they feel are duplicative or not applicable for the diagnosis at hand. This is the way they start (because it's the best way to keep their money rather than spend it), and they only reverse course once there is an overwhelming amount of peer-reviewed studies saying that the test is more effective for the new application than the current standard of care -- or often, that the two tests combined provide far more valuable information than either test on its own.

And these policies vary from payer to payer. Many docs will order both and then end up getting stiffed by the payers who only pay for one (btw, if you perform two bundled services and you bill for both, you will only get paid for the CHEAPER one). And if it's truly bundled, there's nothing you can do about that. If it's just an uncovered service, though (not bundled but not covered), and you know it's uncovered, you can tell the patient ahead of time, let him/her decide if they need it, have the patient sign a waiver stating that they realize the service will not be covered by insurance/medicare, and then bill the patient.

Some of the better physicians are aware of costs. Physicians are actually ranked and scored on cost effective medicine. There are databases on evidence based medicine and best care practices. Physicians must meet certain best care elements while doing so in a cost effective manner. Basically, based on the diagnosis coded, certain medications and therapeutic modalities must be ordered and implemented to maximize positive outcomes while utilization is monitored and cost per encounter is compared to expected cost of care for that diagnosis with a peer reference group. Physicians get dinged if quality scores are substandard or if utilization costs are excessive. Commen elements are length of stay, readmission rates, medication costs, and ancillary tests ordered. Hospital scores are already available online and physician scores are becoming more available online as well and in the next couple of years will widely viewable. Defensive medicine is most commonly encountered in the ER. Most ERs will shotgun tests based on presenting symptoms to expedite throughput as they are overwhelmed with volume. In doing so, it is easier for an ER physician to check a test result to exclude a serious event than to sit down and talk to a patient to elicit the information by history then order fewer and more symptom specific tests. By the way, it is not the cheaper bundle that gets paid but the first to get processed within the system.