It's Time to Call Their Bluff: "Defensive Medicine" Is a Fraud

Even when you remove litigation as a factor, the extent of tests and procedures that are ordered do not change. Enacting "tort reform" will continue to fail as a solution to this country's health care problems.
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This week, our brand new U.S. House Judiciary Committee Chairman Lamar Smith (R-Texas) announced that he'll be convening hearings soon "to examine the constitutional concerns surrounding ObamaCare and the role medical malpractice reform can play in reducing health care costs." In other words, we once again have to hear about the Republicans' one big health care idea -- taking away injured patients' legal rights.

As usual, Chairman Smith grumbled about what he called the "widespread practice of 'defensive medicine' that drives up the cost of health care." Ah, here we go again.

We presume Chairman Smith was referring to surveys like the one which appeared in the June 28, 2010, Archives of Internal Medicine, another in a long line of anonymous doctor "surveys" conceived by organized medicine, seeking responses to questions about these very hot button political topics: "defensive medicine" and medical malpractice lawsuits. Like all such surveys, its purpose was to give the impression of a scientifically conducted poll so the results could be trotted out before lawmakers to demonstrate support for the pollsters' pre-defined legislative agenda -- i.e., restrictions on patients' legal rights.

While anonymous doctor surveys provide the principal foundation for the argument that widespread "defensive medicine" exists, credible organizations who have looked into the issue have had a very hard time identifying pervasive "defensive medicine," especially when managed care companies are paying the bill. For example, the Congressional Budget Office found tiny health care savings -- "0.3 percent from slightly less utilization of health care services" -- if severe tort reform were passed nationally. According to the CBO, if there is any problem at all, it's with Medicare, specifically its emphasis on "fee-for-service" spending, whereas private managed care "limit[s] the use of services that have marginal or no benefit to patients (some of which might otherwise be provided as 'defensive medicine')."

But there is another issue. In these anonymous surveys, doctors never actually identify specific tests or procedures they have conducted for the primary purpose of avoiding a lawsuit, let alone a service they would no longer perform if severe "tort reform" were enacted. There is no better illustration of this than the June 1, 2009, New Yorker magazine article called "The Cost Conundrum; What a Texas town can teach us about health care," by Dr. Atul Gawande. This widely-circulated article explored why the town of McAllen, Texas "was the country's most expensive place for health care." The following exchange took place with a group of doctors and Dr. Gawande:

"It's malpractice," a family physician who had practiced here for thirty-three years said. "McAllen is legal hell," the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.

That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars.

Didn't lawsuits go down? "Practically to zero," the cardiologist admitted. "Come on,' the general surgeon finally said. "We all know these arguments are bullshit. There is overutilization here, pure and simple." Doctors, he said, were racking up charges with extra tests, services, and procedures.

In other words, while doctors may tell pollsters that tests are done to avoid lawsuits, digging further usually reveals that there are other factors at work. What's more, in 2003 the General Accountability Office condemned anonymous "defensive medicine" doctor surveys, noting everything from low response rates (10 and 15 percent) to the general failure of surveys to indicate whether physicians engaged in "defensive behaviors on a daily basis or only rarely, or whether they practice them with every patient or only with certain types of patients." The GAO also noted that those who produced and cited such surveys "could not provide additional data demonstrating the extent and costs associated with defensive medicine."

In fact, there is even more reason to be skeptical. That is because if these doctor surveys are to be believed, they would suggest that nearly every doctor in America is violating the law. And we know that is not correct.

A doctor who bills Medicare or Medicaid for tests and procedures done for a personal purpose -- e.g., lawsuit protection -- as opposed to what is medically necessary for a patient, is committing fraud under federal and state Medicare/Medicaid programs.

The Medicare law states:

It shall be the obligation of any health care practitioner and any other person . . . who provides health care services for which payment may be made (in whole or in part) under this Act, to assure, to the extent of his authority that services or items ordered or provided by such practitioner or person to beneficiaries and recipients under this Act . . . will be provided economically and only when, and to the extent, medically necessary." 42 U.S.C. § 1320c-5(a)(1).

"[N]o payment may be made under part A or part B for any expenses incurred for items or services . . . which . . . are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." 42 U.S.C. § 1395y(a)(1)(A).

Providers cannot be paid and/or participate in the Medicare program unless they comply with these provisions, and they impliedly certify compliance with these provisions when they file claims. Thus, if they are not in compliance, the certifications and the claims are false. Providers who do not comply and/or file false claims can be excluded from the Medicare program.

Perhaps more importantly, the Medicare claim form (Form 1500) requires providers to expressly certify that "the services shown on the form were medically indicated and necessary for the health of the patient." If the services are, to the doctor's knowledge, medically unnecessary, the claim is false.

We do not believe that most physicians in the country are submitting false claims to Medicare and Medicaid. We believe most physicians are good doctors who order tests and procedures for the very reasons that they certify to Medicare and Medicaid -- because they are medically indicated and necessary for the health of the patient. Perhaps some doctors do commit fraud, and clearly "fee-for-service" medicine creates a perverse incentive for providers to do too many tests. But litigation is not the problem here. It is the lesson of history that even when you completely remove litigation as a factor, the extent of tests and procedures that are ordered do not change. Enacting so-called "tort reform" will continue to fail as a solution to this country's health care problems.

(Thanks much to Lesley Ann Skillen for her assistance.)

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