Defensive medicine versus value-based care

The efforts to rid the nation’s  healthcare system of waste and inefficiency faces a formidable foe: defensive medicine.

Doctors who prescribe unnecessary tests and procedures out of fear of being sued waste billions of dollars each year. They also expose patients to a host of complications. As such, the practice of defensive medicine has become a matter of national priority for payers and policymakers alike.  

The cost is tough to pin down due to variables such as defensive medicine’s use in different specialties and the degree to which overtreatment actually helps or harms patients, but it likely amounts to about $46 billion per year, say researchers at Harvard University and the University of Melbourne. A more-widely cited study from 2007 by the National Center for Policy Analysis, a conservative think tank, put the annual estimated cost of defensive medicine much higher, between $100 billion and $178 billion. 

Such waste flies in the face of efforts aimed at payment reform, in which value-based care models, including bundled payments, shared savings and patient-centered medical homes, are fast replacing the fee-for-service model. 

Indeed, as payment models evolve, doctors will increasingly be forced to choose between limiting their utilization of healthcare services to augment income and exposing themselves to legal risk. Self-preservation is likely to win, says Richard Anderson, MD, FACP, chief executive officer of The Doctors Company, a provider of malpractice insurance.

“I feel with virtually absolute certainty that the practice of defensive medicine will not go away unless and until there are major changes to our medical legal system,” he says. “Physicians cannot be expected to risk their career or their financial well-being and that of their family’s every time they have a patient encounter and the way our system works today that is at least metaphorically true.”

MIPS changes the game

Beginning in 2019, for example, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) requires the Centers for Medicare and Medicaid Services to replace Meaningful Use, Physician Quality Reporting System (PQRS), and the Value-Based Payment Modifier system with a single program: the Merit-Based Incentive Payment System, or MIPS.

MIPS will reimburse physicians based on their composite score across four domains: quality, efficiency (controls on total cost of care), meaningful use of electronic health records, and clinical practice improvement activities. Those who score above the threshold will receive a positive payment adjustment, while those who fall below will be penalized. 

MACRA and MIPS, Anderson says, don’t solve the problem. “I’m skeptical that anything short of relieving physicians of the pressure of fruitless litigation is capable of limiting the use of defensive medicine and these programs are not specifically designed to do that,” the oncologist and former professor of medicine at the University of California, San Diego, notes. 

In response, many practices are transitioning to team-based care, revamping workflows and utilizing electronic health records to wring out inefficiency. 

Thus far, however, the savings achieved have largely stemmed from internal operations-not from diagnostic protocols. Indeed, most who follow medical trends say doctors are unlikely to rein in their use of healthcare services despite initiatives by public and private payers to reward for value, because of fear of malpractice litigation.

Incentives too small

Defensive medicine takes many forms. In some cases, doctors give in to patient demands for excessive tests or medications for fear of inciting a negligence claim-think CT scans for a headache. Others overtreat or perform procedures of marginal medical value just to be sure they aren’t missing a diagnosis, however remote the possibility.

Keep in mind, says Anderson, that malpractice cases involving no payment to the patient do not mean they are no cost to the doctor. “The average claim takes nearly four years to close and during that time the physician has to live under the cloud of litigation,” he says. “The allegation may have been splashed on the front page of the local newspaper and they don’t get compensated for the time out of the office, stress or endless hours they spend in depositions.” 

The meager incentives that third-party payers offer to doctors who keep costs down just aren’t enough to offset liability risks, says Brian Hill, MD, a urologist with Urology Specialists of Atlanta. “It’s all about risk management,” he says. ”My liability is great if I get sued, whereas within a value-based care system, my reward is minimal if I make an effort to provide more narrow care.” 

The average physician in an accountable care organization, he says, might suffer only a 1% loss of reimbursement by spending liberally on defensive care. Under the current malpractice system, however, doctors are personally liable and thus at risk financially for every medical decision they make. Jury verdicts that exceed the doctor’s malpractice coverage must be paid for out-of-pocket, though that doesn’t happen often. Far more common are lawsuits that result in no indemnity payment to the patient, but consume endless hours of the physician’s time.

According to The Doctors Company, the nation’s largest physician-owned medical malpractice insurer, the average physician spends an estimated 11% of an assumed 40-year career (51 months) with an unresolved, open malpractice claim. Some specialties, including surgery and OB/GYN, get hit harder than others. The average neurosurgeon, it found, spends 27% of his or her career with an open malpractice claim.  Malpractice claims also create collateral damage, says Hill, noting that doctors with claims against them may be less attractive to future employers. 

The other major reason defensive medicine is unlikely to disappear with the growth of value-based care is that it seems to work. A 2015 study from the University of Southern California, Harvard Medical School and Stanford University found that higher-spending physicians across all specialties face fewer malpractice claims. 

Among internists, researchers found, the probability of experiencing a malpractice charge ranged from 1.5% for those who spent the least, to 0.3% for those with the highest average spending, Researchers also found that the more Cesarean sections an obstetrician performed, the less likely he or she was to face malpractice complaints. 

The analysis of physician spending and claims data raises concern that malpractice risk could be an impediment to successful healthcare reform. “More and more, we are relying on physicians to help eliminate wasteful spending in healthcare,” Seth Seabury, PhD, associate professor of research emergency medicine at the University of Southern California’s Keck School of Medicine, who coauthored the study, said in a statement. “However, if physicians perceive that lowering spending will subject them to greater malpractice risk, it will be that much harder to move the needle on healthcare spending.” 

If spending continues to shield physicians from liability risk, he adds, “then that incentive will still be there.”

Tort reform efforts

Medical malpractice laws, which determine whether a doctor is negligent in treating (or failing to treat) a patient based on the standard of care, vary from state to state. 

To protect physicians from “jackpot justice” several states, including Texas and California, have passed tort reform legislation, including caps for non-economic damages that limit how much injured patients may receive for pain and suffering.

Physician advocates, however, say that doesn’t go far enough, and that such half-measures have done little to curb the practice of defensive medicine. A 2014 RAND Corp. study found that tort law reforms in Texas, Georgia and South Carolina that raised the threshold for negligence in emergency department settings did not reduce the use of costly and unnecessary defensive procedures, specifically advanced imaging tests (CT and MRI scans.)

The study measured imaging rates, average charges and hospital admissions for fee-for-service Medicare patients. A decade after adoption of tort reform in those states, the report found no reduction in the intensity of care provided. 

“I think it unlikely that I will be altering how I practice medicine very much once insurance companies move to value-based care,” says Dale Gray, MD, an internist with AccessDirectCare in Rockford, Illinois. “In the final analysis, if I miss something and get sued, you can be sure that the insurance company won’t be by my side arguing in my defense. It will be just me and the plaintiff; not a good feeling at all. So if I take a financial hit because I order too many tests, which I don’t think I do anyway, then so be it.”

Possible solutions

So what’s the solution? Some policy experts, including some from the Center for American Progress, have proposed “safe harbor” rules to protect physicians who adhere to evidence-based clinical practice guidelines as published by a medical association. The development of those guidelines could present challenges of their own, says Richard Roberts, MD, JD, a family physician, former attorney, and professor at the University of Wisconsin School of Medicine and Public Health. But at least one has already proven effective.

Roberts says that the widely-used Ottawa ankle, knee and foot rules, which are validated clinical decision rules for determining whether an X-ray is appropriate, have been very accurate in identifying patients with fractures and could help lower costs in the primary care setting. “If the physical findings do not fit certain criteria in the guidelines, then the probability that they have a fracture is virtually zero using these rules,” says Roberts. “An X-ray would only waste time and expose the patient to radiation.” 

Similarly, the nonprofit organization Patients for Fair Compensation (PFC) proposes a no-blame compensation system as an alternative to traditional medical malpractice litigation. Modeled on the workers’ compensation system, its goal is to ensure that patients receive fair, timely compensation through an administrative process that costs less and yields compensation quicker and more often than today’s litigation- based system. 

Fewer than 20% of injured patients today receive compensation, PFC reports. “So long as there’s a litigation threat, doctors are going to do what they believe is necessary to protect themselves, and that’s historically been in the form of defensive medicine,” says Wayne Oliver, executive director of PFC. 

The compensation system PFC proposes, he says, also would improve the quality of patient care by encouraging reporting of medical errors and providing data-driven resources so the medical community could learn from avoidable errors in a safe, confidential environment.

“Everyone is afraid to talk about medical errors which leads to discovery and that leads to lawsuits,” says Oliver. “We can’t have an honest discussion, because we’re fearful of litigation.” 

So far, however, none of the leading proposals to revamp medical malpractice have made much headway on Capitol Hill. Until such time, primary care doctors may have more success at eliminating non-value-adding practices than any financial incentives the payer community can dream up, says John Meigs, MD, FAAFP, president-elect of the American Academy of Family Physicians. 

By practicing patient-centered medicine, he adds, family physicians are better positioned to inject reason into the diagnostic process without subjecting themselves to liability risk. “The patient and the physician are far better off when they know each other and they develop a trust relationship,” says Meigs. “When I know my patients, I can talk to them and explain things a little better. You can tell them, ‘Well, let’s try this and if it doesn’t work you can come back and we’ll try something else.’ You don’t waste as many resources.” 

Meigs cites one of his patients with chronic back pain who demands an MRI each time he comes in: “I tell him, ‘No, you don’t. You need to quit picking up heavy things.’ I know him well enough to tell him that.” 

Indeed, patients who trust their doctors are more likely to disclose relevant, personal information in the exam room, which reduces the need for diagnostic testing. They also adhere better to treatment plans, which reduces costly hospital admissions and results in better outcomes, because patients who get better rarely sue. Thus, the move to value-based care, which encourages doctors to engage patients as partners, may  make a dent in the practice of defensive medicine. 

Roberts agrees. “Knowledge of the patient is always way more important than knowledge of the disease,” he says, noting a large percentage of malpractice suits could have been avoided by having a better relationship with the patient. “We have to be partners with our patients. As doctors, we need to know the science as best we can, but we also have to get to know our patients and trust each other.”   

Three out of four patients who present with a health issue in the primary care setting, adds Roberts, get better on their own.  “It’s mom, chicken soup and time that usually helps them,” he says. “The physician’s job is to not do something to hurt them.” 

Roberts notes, too, that defensive medicine often only protects doctors against a perceived risk. Their best protection comes from practicing good medicine. “The mistake we’re making as doctors is that we are so enraptured with the latest technology that we think these tools give us the answer,” he says. “What they really do is confirm or refute our diagnostic impression. If you have the wrong impression to begin with because you haven’t taken a careful medical history, you can do a million tests and you won’t come up with the right answer.” 

For patients who demand more healthcare services, says Meigs, physicians should communicate more effectively the risks inherent in overuse of antibiotics, unnecessary diagnostic tests and invasive procedures. All involve an element of risk. 

Some patients, for example, experience allergic reactions to the dyes used for CT scans. Also, excessive testing opens the door to more invasive surgical procedures. 

Often, says Meigs, patients who undergo  imaging tests rule out a lesser diagnosis, but discover a new complication that requires further testing. “Sometimes someone gets a CT scan of their abdomen and they find they have simple cysts on their kidney, which are almost always benign, but now the patient wants a biopsy,” he says. “Now you’re going down a path of excessive cost and risk and you didn’t need to go there.”  

With medical malpractice laws still stacked against them, doctors are unlikely to reduce the costly practice of defensive medicine any time soon, despite payer incentives that increasingly reward for value. 

By cultivating patients as partners, however, and communicating the pros and cons of medical intervention more effectively, physicians may be better equipped to develop evidence-based treatment plans that meet the growing demand for quality, cost-effective care, says Roberts.   

“You don’t have to be afraid of your patients,” he says. “If you’re trying to practice medicine by looking over your shoulder all the time, you’re going to hit the wall ahead of you.”