Malpractice Claim Fears and the Costs of Treating Medicare Patients: A New Approach to Estimating the Costs of Defensive Medicine.

OBJECTIVE: To estimate the cost of defensive medicine among elderly Medicare patients. DATA SOURCES: We use a 2008 national physician survey linked to respondents' elderly Medicare patients' claims data. STUDY DESIGN: Using a sample of survey respondent/beneficiary dyads stratified by physician specialty, we estimated cross-sectional regressions of annual costs on patient covariates and a medical malpractice fear index formed from five validated physician survey questions. Defensive medicine costs were calculated as the difference between observed patient costs and those under hypothetical alternative levels of malpractice concern, and then aggregated to estimate average defensive medicine costs per beneficiary. DATA COLLECTION METHODS: The physician survey was conducted by mail. Patient claims were linked to survey respondents and reweighted to approximate the elderly Medicare beneficiary population. PRINCIPAL FINDINGS: Higher levels of the malpractice fear index were associated with higher patient spending. Based on the measured associations, we estimated that defensive medicine accounted for 8 to 20 percent of total costs under alternative scenarios. The highest estimate is associated with a counterfactual of no malpractice concerns, which is unlikely to be socially optimal as some extrinsic incentives to avoid medical errors are desirable. Among specialty groups, primary care physicians contributed the most to defensive medicine spending. Higher costs resulted mostly from more hospital admissions and greater postacute care. CONCLUSIONS: Although results are based on measured associations between malpractice fears and spending, and may not reflect the true causal effects, they suggest defensive medicine likely contributes substantial additional costs to Medicare.

Following the money: factors associated with the cost of treating high-cost Medicare beneficiaries.

OBJECTIVE: To identify factors associated with the cost of treating high-cost Medicare beneficiaries. DATA SOURCES: A national sample of 1.6 million elderly, Medicare beneficiaries linked to 2004-2005 Community Tracking Study Physician Survey respondents and local market data from secondary sources. STUDY DESIGN: Using 12 months of claims data from 2005 to 2006, the sample was divided into predicted high-cost (top quartile) and lower cost beneficiaries using a risk-adjustment model. For each group, total annual standardized costs of care were regressed on beneficiary, usual source of care physician, practice, and market characteristics. PRINCIPAL FINDINGS: Among high-cost beneficiaries, health was the predominant predictor of costs, with most physician and practice and many market factors (including provider supply) insignificant or weakly related to cost. Beneficiaries whose usual physician was a medical specialist or reported inadequate office visit time, medical specialist supply, provider for-profit status, care fragmentation, and Medicare fees were associated with higher costs. CONCLUSIONS: Health reform policies currently envisioned to improve care and lower costs may have small effects on high-cost patients who consume most resources. Instead, developing interventions tailored to improve care and lowering cost for specific types of complex and costly patients may hold greater potential for "bending the cost curve."