In his State of the Union address in late January, PresidentObama signaled his willingness to consider medical malpracticereform as a way to bring down healthcare costs.

Late last week, the President followed up with a 2012 federal budget proposal that includes $250 million inJustice Department grants to help states rewrite their laws onmedical malpractice. These grants would be awarded in consultationwith the Department of Health and Human Services.

According to the Justice Department, the goal of any reformwould be to fairly compensate patients who are harmed bynegligence; reduce providers' insurance premiums; weed outfrivolous lawsuits; improve the quality of health care; and reducemedical costs associated with “defensive medicine.”

States could propose reforms to their medical malpractice systemthrough various approaches, including:

• Health courts, which would use specially-trained judges andmedical experts to review evidence and determine the causes ofinjuries.
• Safe harbors, which would provide physicians, hospitals, andother providers who adhered to certified clinical practiceguidelines with a presumption that they are adhering to thestandard of care and are therefore non-negligent.
• Early disclosure and offer, which would help establish rulesrequiring physicians, hospitals, and other providers to implement aprotocol after a medical error occurs.

States could also use grants to adopt other legal reforms, suchas modifying the collateral source rule, so that malpractice awardstake into account other compensation, or replacingjoint-and-several liability with a fair-share rule that wouldallocate responsibility for malpractice payments in proportion toresponsibility for damages.

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A concern highlighted by the Justice Department is the impact of“defensive medicine.” Many physicians report that medical liabilityconcerns lead to defensive medicine, which, in some cases, maycontribute to higher costs with no benefit to patients.

This is an interesting point. Just last week a new study on thecosts and frequency of defensive medicine in Pennsylvania waspresented at the annual meeting of the American Academy ofOrthopedic Surgeons (AAOS).

The survey of 72 orthopedic surgeons found that doctors oftenorder medical imaging tests largely to protect themselves from alawsuit.

The study found that 19 percent of the imaging tests orderedwere for defensive purposes and accounted for about 35 percent ofpatients' total imaging charges ($113,369 of $325,309).

MRIs, which cost more than a regular X-ray, were the most commontype of test ordered.

Numerous studies have shown that tort reforms lower health costsand with them medical malpractice premiums. By reducing the threatof lawsuits, doctors would also practice less defensivemedicine.

Check out theInsurance Information Institute (I.I.I.) issues update paper onmedical malpractice.