Bad Medicine Physicians Seek Law Changes To Ease The Burden Of Liability Insurance

As legislation to ease the liability insurance burden on Massachusetts doctors moves slowly through the state Legislature, doctors continue to fret over the impact of soaring premiums and malpractice judgments.
“Massachusetts has long been considered one of the finest places in the world to train, to be in clinical practice, or to seek medical care, yet our ability to continue that claim is in jeopardy,” said Dr. Alan C. Woodward, president of the Mass. Medical Society (MMS), in recent testimony in Boston.

Woodward said the physician practice environment in the Bay State is rapidly deteriorating, partly because of constantly rising liability premiums.

Statistics back up that lament. After hikes of 9{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} in 2000, 14{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} in 2001, and 12.5{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} in 2002, average annual premiums for Massachusetts doctors spiked another 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} last summer, while physicians in high-risk specialties such as obstetrics and neurosurgery are often faced with annual premiums of $100,000 or more.

“It’s very difficult for physicians to handle a significant premium increase, sometimes in the range of $20,000 to $40,000 per year,” said James Fanale, chief medical officer for the Sisters of Providence Health System.

“It’s very difficult to make it up in volume,” he continued. “Think about obstetricians specifically. It’s not like they can find eight to 10 new deliveries to make up that 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} difference. There’s only a certain number of women who become pregnant each year.”

The problem, he and others say, is that those women who do get pregnant — and patients who require care in other high-premium specialties, such as orthopedics, radiology, and cardiology — might eventually face an access problem as physicians seek work in other, more financially friendly states. And that’s why physicians are seeking a legislative solution.

Day in Court

That solution, specifically, could be in the form of two bills now in committee in Boston: H1691, which addresses the looming patient-access issue and asks the Legislature to act quickly to relieve the mounting pressure of rising liability insurance premiums; and H2842, which specifically targets broader tort reform.
Among its provisions, H1691 seeks to:

• Reduce the pre-judgment interest rate from its current 12{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} annually to prevailing market rates. At the moment, plaintiffs receive a 12{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} annual rate on the dollar amount of any judgment, going back to the date of the filing of the claim.

• Eliminate ‘joint and several liability.’ All defendants are now equally responsible to satisfy a judgment, no matter who is principally responsible. The change would mean that each of the defendants would not pay any more than their individual share of responsibility.

• Allow payment of judgments over $50,000 to be made over time rather than in one lump sum.

H2842 takes a slightly different tack, including a provision to impose a firm cap of $500,000 on non-economic damages — commonly known as “pain and suffering” — a move that some have estimated will reduce premium costs by another 12{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}.

The impact of such legislation being enacted into law would extend far beyond doctors’ bank accounts, supporters of the bills say. It’s also a matter of worker satisfaction and, more importantly, patient care.

As for the former, the Physician Practice Environment Index conducted by the MMS, a statistical measurement of the environment in which doctors provide care in the state, has declined for nine consecutive years. And unhappy doctors are more likely to seek employment elsewhere, contributing to physician shortages.

Dr. Mario Motta, a cardiologist and chairman of the MMS Committee on Legislation, told lawmakers that physicians are concerned about providing care in a safe environment, and the liability burdens are contributing to the opposite.

Fanale formerly worked in the health insurance industry and has seen the issue from two sides, and claims the increasing premiums definitely place increased pressure on a physician’s ability to stay in practice. It’s a problem, however, that’s exacerbated by the low reimbursement doctors receive from public and private payers in Massachusetts.

Taking A Bite

This chart shows the percentage of Massachusetts physicians reporting that liability insurance premiums account for 15{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} or more of their total operating costs, broken down by specialty. Source: the Mass. Medical Society’s 2003 Physician Workforce Study
Obstetrics / gynecology 70{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}
Neurosurgery 64{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}
General surgery 46{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}
Vascular surgery 39{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}
Anesthesiology 22{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}
Orthopedic surgery 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}
Emergency medicine 18{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}
All other specialties 11{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5}

“Payment rates from managed care are lower than in other parts of the country, so the salaries, or amount of compensation physicians can earn in Massachusetts, are less than in the rest of the country,” he said. “It’s even more troubling because we have surrounding states whose payment rates are higher, so if someone is coming into the region, they have an opportunity to go to those states instead of Massachusetts.”

The Bay State’s liability issue, Fanale suggested, serves as just a bit more fertilizer making the grass even greener in those neighboring states.

Questions of Access

No one is saying a mass migration is under way, but the signs are not encouraging. Dr. Barbara Rockett, a surgeon and past president of the MMS, told lawmakers that 11 ob/gyns in Western Mass. alone have stopped providing obstetrical services during the past few years, partly due to insurance woes. Meanwhile, the number of practicing neurosurgeons in the Commonwealth has been trimmed by two-thirds since 1982.

“That’s what we fear — that patients will have difficulty accessing certain services, like obstetrics or neurosurgery,” Fanale said. “That’s why we see this effort on the part of doctors, hospitals, even insurers to urge some kind of malpractice reform — so patients continue to be able to access the services they want.”

Woodward noted that the MMS’ 2003 Physician Workforce Study, a survey of practicing physicians, medical staff presidents, residents, and fellows, revealed physician shortages in 14 specialties and serious problems in recruitment and retention of doctors throughout Massa-chusetts. The study also warned of the potential loss of 6,000 physicians if the state’s practice environment does not improve — and the organization claims that liability is a major factor in this environment.

The financial impact of the changes would be significant as well, supporters of the bills say. In speaking to legislators, Motta cited a recent study by Milliman USA, a global consulting and actuarial firm that specializes in insurance, health care, and employee benefits. The report estimated that several savings could result from liability reform: 8.2{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} for pre-judgment interest rates, 4.6{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} for periodic payments, and 3.3{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} for elimination of joint and several liability.

“I think this is important stuff, and the more the public hears about it, the better,” Fanale said. “I think we’ll begin to see some traction from patients when they’re not able to see the obstetrician they want, or they have to drive farther to see a neurosurgeon. When it begins to impact patient access, that’s when we’ll see a lot more public concern.”