Medical malpractice reform in exchange for paying doctors less

The bipartisan debt commission appointed by President Obama recently released its recommendations on how to pare the country’s debt.

Of interest to doctors is the suggestion to change the way doctors are paid.  Physician lobbies have been advocating for removal of the Sustainable Growth Rate formula — the flawed method by which Medicare, and subsequently private insurers, pays doctors.

According to this method, physicians are due for a pay cut of more than 20% next month.

According to the commission,

the plan proposes eliminating the SGR in 2015 and replacing it with a “modest reduction” for physicians and other providers. The plan doesn’t elaborate on what constitutes a “modest reduction” in Medicare reimbursement.

Meanwhile, the Centers for Medicare and Medicaid Services (CMS) should establish a new payment system — one that rewards doctors for quality, and includes accountable care organizations and bundling payments by episodes of care, the report said.

The commission also said in order to pay for the SGR reform, medical malpractice lawyers should be paid less, there should be a cap on noneconomic damages in medical malpractice cases, and that comprehensive tort reform should be adopted.

There’s little question that associating physician reimbursements with the number of tests and treatments ordered is a major driver of health costs. Removing that incentive, and better valuing the time doctors spend with patients, is a positive step in the right direction.

Also note the commission’s strong support for malpractice reform, specifically mentioning caps on non-economic damages.

Earlier this year, surgeon Jeffrey Parks raised the question of whether doctors would take less pay in exchange for strong medical malpractice reform:

You can’t ask doctors of the future to earn less and work more without subsidizing the training and schooling, without addressing the medical malpractice crisis. I’m willing to sit down at the bargaining table.

Now, reform doesn’t specifically have to involve caps — which admittedly would be unfriendly to legitimately injured patients. Immunity for doctors following clinical guidelines — advocated by progressive policy expert Peter Orszag — health courts, or no-fault malpractice are all acceptable alternatives.

A piece of advice to progressives who, in general, want to pay doctors less: offer something in return.

There’s no bigger bargaining chip than legitimate medical malpractice reform. You’ll be surprised at how many doctors are willing to accept that deal.

 is an internal medicine physician and on the Board of Contributors at USA Today.  He is founder and editor of KevinMD.com, also on FacebookTwitterGoogle+, and LinkedIn.

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  • Matt

    You guys are crazy if you trade your salaries for a benefit for your liability insurers. If you needed further evidence that you’re being left out of the healthcare reform debate, look no further. After all, if somebody were going to have to take a trade for malpractice caps, shouldn’t it be the insurers’ PREMIUMS that should be reduced?

    And remember, the feds can’t impose caps on state law civil actions. So for them to do so would only further increase the federalization of medicine.

    • Brian

      But it’s not a benefit to liability insurers. From what I can tell, the most substantive caps will be on non-economic and punitive damages. Punitive damages are paid by the physician him- or herself.

      • Matt

        Punitive damages are ridiculously rare in med mal cases. We’re talking drunk or high physicians, or recommending surgery not medically indicated merely to gin up fees.

        Surely these people don’t need additional protection.

  • http://www.MDWhistleblower.blogspot.com Michael Kirsch, M.D.

    The bipartisan debt commission also advocates reducing Medicare reimbursement to physicians. Every one of the commission’s recommendation will be attacked by the consitutency who is targeted. Nancy Pelosi has already attacked it, as has many on the political left. The political right has held it’s fire, for the time being. I do think that they have done a good job in attacking the debt problem and advocating shared sacrifice. However, I don’t foresee how the plan can survive in tact once it is processed through the political wood chipper.

  • luke54

    This is no bargain. You want to lower costs? Then give docs the tort reform that is so badly needed, so we don’t have to order excess expensive tests that are done just to (hopefully) prevent lawsuits. The Fed will save billions of dollars, and even more if you can somehow control end of life costs spent in futile care. But don’t try to lower my already diminishing salary. Anyway, the lawyers in Congress will never allow it.

    • Matt

      Well, we’ve done that in the past, and indeed have had your requested reform for decades in some states, and it’s not shown to have much, if any, reduction in costs. Are you thinking of another proposed tort reform?

      As to the “lawyers in Congress”, your assumption that anyone with a law degree has the same political outlook is foolish.

      End of life costs are a different discussion, though.

      • johnwilliams

        where do you come up with these baseless assertions?

        Or do you just throw out stuff and hope something sticks?

        The tort reform you refer to in some states is a joke. They only place a cap for certain situations and even then…the cost and burden to physician is there. Most malpractice cases are dismissed, but some stick. These are the cases that hurt physicians even when they are not legitimate. But here’s the real kicker-insurance companies and the hospitals encourage settlement instead of going to court even when the case is airtight in favor of the physician. The reason? The payout is usually cheaper and guaranteed that the physician will not be levied a high fine due to unpredictable juries. That has to be reformed. These so called caps of 200k? They’re nothing. Most settlements are less than that. Its only the sensational ones that you hear about.

        Quit using “we” as if you’re a serious stakeholder.

        • Matt

          “They only place a cap for certain situations”

          What states are you talking about? I’m talking about California, for one, which has one of the most draconian versions. And no, healthcare isn’t dramatically cheaper, nor does it appear to be that great a place to practice if physician blogs are to be believed.

          “. But here’s the real kicker-insurance companies and the hospitals encourage settlement instead of going to court even when the case is airtight in favor of the physician.”

          I’m curious – how many cases have you settled with a malpractice carrier. I’m guessing not many. Please, tell me which insurer throws out settlement offers on winning cases?

          “Quit using “we” as if you’re a serious stakeholder.”

          We’re all serious stakeholders. But do you really think alienating ANYONE if you’re trying to get support for your cause is a good idea?

  • Muddy Waters

    Take LESS money just to have malpractice reform? If you actually think most doctors would accept that, you must be delusional. As I’ve said before, doctors already take far less money than they deserve, all the while the insurance companies post record quarterly profit margins. The money in healthcare does not go to the doctors, and therefore all solutions to reduce healthcare expenditures should start with the true culprits. Additionally, completely subsidizing my medical education (approx $150,000) as a trade-off for sacrificing 12 years of my life in school and a lifetime of reduced reimbursements is insulting.

  • Vox Rusticus

    (I never thought I would see the day.) I actually agree with Matt.

    This is a terrible trade. Malpractice award caps should stand on their own; I shouldn’t have to “pay” for them with a cut in my payments.

  • Jane

    Well Kevin, I guess you don’t have many takers. Why would you even discuss lowering doctors salaries—they don’t earn enough as it is.

  • docguy

    did the ama negotiate to support the health care bill to stop the SGR and it got them nowhere, so I would not trust anyone in this administration unless they did the malpractice reform first.

  • everyman

    seriously kevin?? what is with you and wanting decreasing physician reimbursement.. my current practice runs on paper thin profit margins, what about pure geriatrics practices, you can expect all of those to go down the toilet think about it, 100% medicare and 50-60% overhead so when you decrease reimbursement 20% your total loss of income is 40% which is ridiculous. . we don’t even want a raise for god sake we have accepted that our salary will not keep up with inflation, tort reform is the least of our worries if we cannot stay in business and we have fire valuable employees who already live paycheck to paycheck. Any physician who is agreeable to this lunacy needs to have their head examined.

  • Kevin

    Folks,
    Of course, nobody wants decreased physician reimbursements, least of all me.

    Realistically speaking, however, they’ve already happened and will continue whether doctors like it or not.

    Witness the cuts in inpatient consultant codes and in procedure reimbursements.

    My point is that doctors should try to negotiate malpractice reform to get something back from payment cuts that will happen regardless.

    Kevin

    • Matt

      Why in the world should physicians negotiate for something that helps them so little and their insurers so much?

      Surely you want something more than to give your liability carriers a few more dollars, right?

      • everyman

        be more optimistic kevin, I believe congress will fix this thing, tort reform is a major issue but in the end is definitely not as high on the priority scale as this, once medicare decreases their reimbursement private insurance will most certainly follow since they base their rates off of medicare, so in high saturated areas for physicians like NY, NJ, chicago and california it will be quite awful. It really doesn’t just affect the elderly patients but all patients.

  • imdoc

    Don’t fall for the ploy. As soon as the deal is made the plaintiff bar (oh, uh I mean ‘consumer protection group’) will get the courts to rule tort reform “unconstitutional” and unenforceable and then the other parts of the bargain won’t get repealed. That happened in Illinois repeatedly.

    • Matt

      The deal doesn’t make sense anyway absent the federalization of healthcare. Damage caps (aka “tort reform”) affect state law actions. The feds don’t have the power to cap them unilaterally unless it’s as part of a federal program.

  • solo dr

    For 2011 I see copays going up to $30, more plans with deductibles, and now am being charged by one health insurer $250 a month just to stay on insurance that pays me $55 for a level 3 visit. The insurance companies are whittling away at profits to the point that practicing medicine will become a chairty.

    • Vox Rusticus

      Say that again: there is an insurer that requires “pay to play?” Name them, please.

    • gzuckier

      Get ready for some really serious steering of patients towards the lowest cost providers. Not just in area; in-country medical tourism is about to become bigtime, as insurers have figured out that they can not only save money, but get better outcomes by paying to fly patients to centers like the Mayo clinic than relying on the locals. (Canadian provincial plans have been doing this for a while, possibly the origin of the myth of the herds of Canadians fleeing to the US to pay for fancy healthcare out of their hypothetically bottomless pockets)

      The success of this is obviously going to rely heavily on the ability of insurers to inform members that the MRIs at the imaging center across the street cost 1/4 as much as what the hospital is charging, which is a bit trickier than just sticking them with 4 times the copay.

      As I mentioned elsewhere, insurers’ actuaries missed the sudden upswing in costs over the past couple of decades and they’ve had to eat the excess costs, but they’ve got a handle on it now and you ain’t seen nothing yet in terms of cost cutting.

  • Betsy Ross

    What if we subsidized MDs educational costs in exchange for a commitment to work a few years in health care clinics for the poor or elderly? Would any of you have chosen an option like that to reduce your educational expenses?

    • family practitioner

      Yes, but it would not solve the problem of getting doctors to commit to primary care long term. Your suggestion would just encourage young physicians to “do their time” and then do their fellowships.

    • Vox Rusticus

      Those have existed for decades. That is how the military and U.S. Public Health Service gets most of its doctors. Loan buy downs, private subsidies by state and local governments and local hospitals to attract doctors to underserved areas have been around a long time.The problem is that areas that are unable to support a doctor in private practice seem to continuously need this kind of outside funding support. When doctors no longer have the loan or practice subsidy, they leave for better opportunities where the bills can be paid and one can save and live better.Can’t really blame them; it is what anyone in any other occupation would do.

      Being elderly is no special reason to get subsidized care any more than is already the case with Medicare and where eligible, Medicaid. Most elderly are adequately well off. Obviously some are not, but Medicare Part B is a true bargain compared to commercial insurance and it covers a lot.I would not vote for any more subsidies for the elderly than exist presently.

      Government-subsidized outpatient clinics are generally established where the prevailing economic conditions make private practices non-viable as business enterprises. Driving down Medicare payments to the point where it no longer allows practices with a large Medicare census to continue in business, then replacing them with government-supported clinics with government-subsidized doctors seems to this taxpayer to be an incredibly wasteful, destructive and stupid idea. So I am sure it has some support at large.

    • Bob

      They have that. Its called the national health service corps.

  • PAULMD

    Kevin,
    Unilateral negotiations from a position of weakness is pandering and ultimately inaffective. Docs need to grow a set and confront those that do us professional harm, not try to appease and make friends.

  • Betsy Ross

    Thanks, Vox. I knew the military did it but I thought that commitment forced one to serve overseas. In general, I do agree with the basic premise that whatever the government gets involved in, goes sour pretty quickly.

  • http://www.meyersmedmal.com Jivanmeyers

    tort reform and physician reimbursement are 2 entirely different issues. Hospitals are increasingly taking over physician practices and destroying the independence of physicians. The federal government’s further reduction of reimbursements will make it even more difficult for physicians to obtain fair compensation.

    Placing caps on the recovery of gravely injured patients certainly provides no benefit to physicians. Having the government reduce the amount of attorney fees paid makes no more sense than reducing the amount of money that physicians are paid. Reducing the amount of money attorneys are paid will only be applied to the attorneys representing victims. Increasing the amount of money victims receive as a consequence of a reduction in fair attorney fees which are already paid from their recovery will not change their recovery.

    Insurance companies drug companies and medical device producers fan the fires of disagreement between physicians and attorneys while laughing us all the way to their banks.

    A physical exam and thoughtful analysis and consultation if necessary, should be prioritized. Tests should be performed when they play a logical role in the analysis and not as a substitute for the analysis. The costs that are crippling Medicare and Medicaid are not the charges of physicians.

  • ninguem

    The problem with the bargain is, if the medical associations agree with payment reduction in exchange for tort reform, pull enough individual doctors along with the usual language about “having a seat at the table”, in the end, sure as night follows day, guaranteed, we will have the pay cuts and no tort reform.

  • imdoc

    Perhaps the patient and doctor should be allowed to agree to a discount in services in exchange for limited liability.

    • Matt

      Waivers for one’s negligence are generally invalid as a matter of public policy. And for those covered by insurance, they couldn’t bargain away their insurer’s subrogation interest.

      And since doctors don’t really set the price of their services, I think you have a reimbursement model overhaul needed before you can start bargaining like this.

  • Rob

    I agree with PaulMD. We all doctors need to grow up. We need oppose those who do us professional harm. We need to start looking at our practices as a business otherwise we will not do any good to anybody when we go out of business. Every industry is reducing “middle-man” costs except healthcare where middle man is raising premium to patients and reduces reimbursement to docs. This is an absurd situation. This is what needs to change if we are to see any real change.

  • Alan

    Terrible trade off! Good way to increase the physician shortage and drive everything to mid levels.

  • Jack

    Tort reform needs to be at the Federal level and down to the state level in order to have it’s desired affect. Then once doctors realize that they can’t get sued “just because” then medical school will teach and preach medicine without need to practice defensively.

    Once practicing doctors see the effectiveness of TORT reform then they will stop practicing defensively. You are not going to convince people who may lose their livelihoods by passing some measure with no teeth until you PROVE it to them in court.

  • http://www.meyersmedmal.com Jivanmeyers

    “Then once doctors realize that they can’t get sued “just because” then medical school will teach and preach medicine without need to practice defensively.”

    First, I take issue with your assertion that somehow through federal and state tort reform doctors will no longer be sued “just because”. Every professional is subject to suits including complaints that are unjustified. Truly unjustified claims are rarely successful. Claims motivated purely by malice not only fail, but in most states will subject the claimant countersuit and significant penalties.

    Do you really believe that medical schools teach defensive medicine. If they do, and if presumably physicians practice defensive medicine which they mistakenly believe is the standard of practice, then they have not violated the standard of practice.

    Tort reform advocates aim not at frivolous claims, but all claims, how ever legitimate and irrespective of the magnitude of harm for which compensation is sought.

    It is striking that completely unjustified reduction in Medicare reimbursements which will have devastating consequences, doesn’t distract you from the rather emotional attack you make upon physician accountability. Can’t you see tort reform today at a federal level is no more justified than federal control of physician income?

    • gzuckier

      At risk of repeating myself, I point out that in Canada malpractice suits are indeed rare; they don’t allow suit for pain and suffering or punitive damages, so all you can sue for is actual lost $$; since any medical care stemming from the alleged incident is on the national plan anyway, that leaves only things like lost wages to sue for.