Case closed? Catastrophic claims take small bite out of health costs

Malpractice payouts of $1 million or more—so-called catastrophic claims—collectively make up $1.4 billion a year, less than one-tenth of one percent of the total national medical expenditures in the U.S., according to a study published online April 29 in the Journal for Healthcare Quality.

“Our findings support the contentions of others that, though malpractice reform is an important national priority, the financial savings from this reform may be minimal compared to other drivers of healthcare costs,” wrote Marty Makary, MD, MPH, of Johns Hopkins University School of Medicine in Baltimore, and colleagues. “If malpractice reform is not sufficient for healthcare cost reduction, then other incentives emphasizing high-quality healthcare at low-cost may be necessary.”

The authors reviewed all paid U.S. malpractice claims from 2004 through 2010 using the National Practitioner Data Bank, and identified risk factors for catastrophic and increased overall payouts.

Catastrophic payouts represented 7.9 percent of the total 77,621 paid claims, reported Makary and colleagues. Claims with million dollar or more payouts were most associated with a patient age of less than one year; injuries resulting in quadriplegia, brain damage or lifelong care; and anesthesia.

Data showed that settlements, compared with court judgments, decreased odds of catastrophic payouts and lowered estimated average payouts.

A physician’s years in practice and previous paid claims history had no effect on the odds of catastrophic payout, though the authors noted that across all payouts, regardless of size, payouts for doctors with previous paid claims were 5 percent greater. Combined with previous research that has shown physicians with previous claims face higher risk for additional claims, Makary and colleagues suggested this subset of physicians could be a prime target for risk management strategies.

They also noted that only 0.1 percent of catastrophic payouts resulted from insignificant injuries, and even those with permanent but minor injury were 95 percent less likely to receive a catastrophic payout.

"The notion that frivolous claims are routinely resulting in $100 million payouts is not true," Makary said in a press release. "The real problem is that far too many tests and procedures are being performed in the name of defensive medicine, as physicians fear they could be sued if they don't order them. That costs upwards of $60 billion a year. It is not the payouts that are bankrupting the system—it's the fear of them."