Washington DC Injury Attorney Blog

Articles Posted in Health Care Reform

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Medical malpractice payments do not really drive up healthcare costs, says a study conducted by Johns Hopkins. The study released by Johns Hopkins in early May 2013, shows that health care costs only rise about 1% when payouts are made in substantial medical malpractice claims, in the United States.

The study was published in the Journal for Healthcare Quality and it examined payments made in what they describe as “catastrophic medical malpractice claims”. These catastrophic medical malpractice claims involve payments of more than $1 million, which involve patient deaths, birth injuries, and/or other claims for problems that result in the need for lifelong medical care as a result of a medical mistake.

The Johns Hopkins study examined data from 2004 to 2010 and found that catastrophic medical malpractice claim payments totaled $1.4 billion, and it is estimated that the United States healthcare costs are around $2.8 trillion annually, therefore medical malpractice payments don’t really have as high an effect on healthcare costs as is reported by health insurance companies, doctors and other members of the medical field.

Medical malpractice payouts are much lower than is portrayed by tort reform advocates. These people advocate that the high cost of healthcare in the United States can be blamed on medical malpractice lawsuit payouts and the fact that state legislatures have the power to arbitrarily override jury decisions and cap awards, but the Johns Hopkins study shows that it really does not have as high an effect as these advocates make it out to be.

On the contrary, the Johns Hopkins study shows that the cost of actual claims pales in comparison to the cost of defensive medicine, which is unnecessary medical procedures and tests doctors conduct on patients in order to avoid lawsuits in the first place. That cost totaled about $60 billion annually, or about 40 times the cost of actual medical malpractice payouts.

In the date used from 2004 to 2010 for this study, there were a total of 77,621 medical malpractice claims paid. 6,130 of those claims were considered “catastrophic” payouts, therefore; tort reform advocates are wrong when they make the assumption that medical malpractice claims payouts result in $100 million payouts.

The New England Medical Journal, in 2011, published a study that found that only 7.4% of physicians face the risk of medical malpractice claims each year. That means that only one out of every five claims result in a settlement or payout.

Therefore; it is fare to say that far too many tests and procedures are performed annually in the name of defensive medicine, as many physicians dear they could be sued if they don’t order them. It is not the payouts that are bankrupting the system… it’s the fear of them that are.

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The National Health Care Anti-Fraud Association (NHCAA) defines health care fraud as an intentional deception or misrepresentation that the individual or entity makes knowing that the misrepresentation could result in some unauthorized benefit to the individual, or the entity or to some other party.

In the United States, it is estimated that almost $226 billion a year are spent on health care fraud. That is 10% of the nation’s health care expenditure. Therefore; consumers have higher premiums and out-of-pocket expenses, also reduced benefits and coverage. As for employers, they have increases in the cost of providing insurance benefits to their employees, as well as increasing the overall cost of doing business.

The Coalition Against Insurance Fraud claims that two out of five Americans want little or no punishment for insurance cheats. Consumers blame the insurance industry for its fraud problems because they believe insurers are unfair.
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The Journal of the American Medical Association, claims that almost one-third of doctors exaggerate the severity of a patient’s illness to help the patient avoid early discharges from a hospital.

Categories of Fraud:
– Hard Fraud – this occurs when someone purposely plans or invents a loss. For example: staged automobile accidents. The “victim” obtains an attorney, who in turn refers the victim to a physician. The physician then submits charges to the insurance carrier and refers the victim for additional physical therapy. The physical therapy physician then also submits charges to the insurance carrier.
– Soft Fraud – this occurs when policy holders exaggerate a legitimate claim. For example: receiving treatment for a slip and fall accident on 2/1 and submitting that claim to insurance carrier and then changing that same service charge to 2/4 and resubmitting the claim.

The most common fraudulent acts are:
– The billing of late charges by a hospital – False durable medical equipment claims (DME)
– Behavioral health fraud
– Medical identity theft – Billing for services, procedures and/or supplies that were never provided or performed – The condition treated or the diagnosis made – The charges for services, procedures and/or supplies provided or performed – The deliberate performance of medically unnecessary services for the purpose of financial gain
The cost of insurance fraud is factored in to the premiums we all pay. In order to lower these premiums, the laws against health care fraud must be tougher. Penalties must be instituted by both federal and state governments. As of the year 2010, only 40 state fraud bureaus exist. In order for health care fraud to be less common and less costly for each citizen in general, each state should have a fraud bureau. It is easier to prevent fraud than to recover payments once they have been made.

We, as consumers, can also do our part to lower health care fraud. We must never sign a blank insurance form. We must comprehend all claim forms we complete. We must request detail bills, or HICFA/UB 92 billing statements and we must always keep our insurance information confidential.

If you need to report health care fraud, please call your insurance company immediately. Also, contact your state insurance fraud bureau and file a complaint with the State Medical board.

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Physician Pic.jpgPhyshield Insurance Exchange, a risk retention group (RRG), has been approved in Maryland, to write medical professional liability insurance policies. Physhield now has the authority to operate as a liability insurer in Maryland, as well as other states, such as Florida, Texas and Nevada. According to Robert Trinka, Chief Executive of Phyhealth (an affiliate of Physhield) says that Physhield can also write policies in Washington, D.C.

This RRG will insure large, single speciality or multispeciality doctors groups that have more than $500,000 a year in premiums. The insurance will be sold through the sales force and Internet site of Maryland-based Palumbo Insurance Associates, a full service commercial insurance agency in Maryland.

Physhield‘s business model is to bring together groups of local physicians who will form a delivery network, and be the primary owners of the groups HMO license. They will develop and market HMO products for their community of patients. This is the doctors that Physhield will offer medical professional liability insurance to. It is these physicians that have the financial responsibility over the care that is delivered, and therefore, have a great deal of control over their own liability insurance situation.

Putting physicians in control of the care and the liability, results in more effective medicine practices. With more control come greater responsibilities, and these Physicians are held liable for the treatment and services they render.