Pending Tennessee legislation on medical malpractice could potentially drastically impact the state’s health care costs, some believe. Although action on HB0546/SB0507 was deferred last spring, the Patient Compensation System (PCS) is on the legislature’s agenda as the 109th Tennessee General Assembly is underway.
The high number of malpractice suits, resulting in high malpractice insurance costs, has long been a concern for the medical community. Even the Government Accountability Office (GAO) got involved in 2003, presenting a report to Congress indicating that insurance premium rates had risen primarily due to claim losses. These losses, combined with investment income decreases and low premium prices offered during times of intense competition, resulted in some insurers leaving the market or becoming insolvent. This resulted in fewer options and less competition. Nearly a decade later, in 2012, $3.6 billion was paid out in 12,142 medical malpractice claims, with 93 percent coming from settlements.
In an attempt to avoid malpractice suits altogether, doctors practice what is known as defensive medicine. Even if they are comfortable with a diagnosis, they may order additional tests to cover their bases, just in case. Surveys have revealed that as many as 75 percent of doctors order these extra unnecessary tests, which could add up to about $650 billion each year, or one in four health care dollars. This expensive idea has at least some merit: Florida data from 2000 to 2009 showed that when hospitals billed more for a patient’s case, the doctor was less likely to be sued. Even when tort reform resulted in caps on damages or early offers of compensation prior to litigation, doctors did not feel comfortable abandoning defensive medicine practices. The PCS system, however, prevents doctors from being sued altogether. In theory, it could completely eliminate the practice of defensive medicine.
Patient Compensation System
The PCS creates a no-fault administrative system comprised of medical experts that review claims. This alternate system would ease the burden on the courts, and would be funded through liability premiums. Evidence shows that medical malpractice attorneys are reluctant to take cases that are likely to have a low payout, but the administrative system would allow those who have been less seriously harmed to recover for their injuries. The Patients for Fair Compensation organization has been fighting for this type of reform, emphasizing the lack of fairness in the current system and its contribution to rising health care costs through the practice of defensive medicine. The organization argues for the likelihood of cost saving through eliminating costs of litigation and the increased predictability of patient awards.
In 2015, the bill’s sponsors, Representative Glen Casada and Senator Jack Johnson attempted to garner support for the PCS through a Tennessean article, emphasizing how much of the out-of-pocket burden consumers are bearing due to soaring health costs. They argued that the current tort system is broken, and that Tennessee residents spend $13 billion annually on defensive medicine with employers coughing up $4.6 billion of the amount. They projected that the PCS would save employers between $25 and $30 billion over ten years. Recently, another Tennessean article written by a hospital administrator of 40 years brought up the topic again. He stated that hospital administrators are not able to prevent doctors from practicing defensive medicine, and that the majority of physicians he has known have been sued and many, frivolously. Yet the Tennessee Medical Association (TMA) and the Steve Volunteer Mutual Insurance Company (SVIMC) strongly oppose the PCS model, believing that costs would actually dramatically increase. TMA and SVIMC said that the current system is actually working and the PCS is “an untested system with significant flaws.”