[Congressional Record (Bound Edition), Volume 148 (2002), Part 12]
[Senate]
[Pages 16312-16314]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    STOPPING THE LITIGATION LOTTERY

  Mr. FRIST. Madam President, the only level one trauma center in Las 
Vegas shuts its doors. Twelve orthopedic surgeons at facilities near 
Philadelphia resign their practice. Two-thirds of doctors in a small 
Mississippi city consider leaving for Louisiana. What is forcing our 
medical community to take such drastic measures? The ``litigation 
lottery,'' trial lawyers filing too many lawsuits with the hope of 
winning excessive awards.
  Medical malpractice litigation, when an injured patient sues a doctor 
over a medical error, has exploded in the United States. Between 1995 
and 2000, the average amount a jury awards a patient rose more than 70 
percent to $3.5 million per claim. And more than half of awards now 
exceed $1 million. Trial lawyers, who are fueling this surge by hand-
picking patients whom they believe will win large awards, typically 
take 30 to 40 percent of the proceeds.
  Doctors purchase insurance to protect themselves from malpractice 
lawsuits, but excessive awards have pushed the cost of insurance to 
unaffordable levels. In 2001, insurance premiums rose 30 percent or 
more in some States. And for doctors who perform high-risk procedures 
or practice where trial lawyers have won excessive awards, premiums 
have risen by as much as 300 percent per year. Many doctors can no 
longer afford to do the jobs they love.
  But even more disturbing to doctors, because we swear a sacred and 
ancient oath to do no harm, is the impact of excessive awards on 
patient care. High insurance premiums are forcing doctors to move their 
practices to other States, adjust how they practice medicine, or quit 
practicing medicine altogether. Trial lawyers may be winning

[[Page 16313]]

the litigation lottery, but patients are suffering a health care 
crisis.
  First, excessive malpractice awards hurt access to health care. When 
a trauma center closes or specialists resign from a hospital or rural 
doctors can't deliver babies, patients must travel longer distances to 
get the care they need. They must also select from a smaller pool of 
physicians. When minutes, and a doctor's experience, can mean the 
difference between life and death, access to health care matters.
  Second, excessive malpractice awards increase the cost of health 
care. Many doctors are forced to practice defensive medicine. They must 
order more tests, write more prescriptions, and refer more patients to 
specialists to protect themselves against lawsuits. A recent Federal 
report found evidence that reasonable limits on malpractice awards 
would reduce health care costs by as much as 5 to 9 percent per year.
  Third, excessive malpractice awards are the single largest barrier to 
improving patient safety in our country. Doctors and hospitals want 
desperately to improve patient safety by sharing, analyzing, and 
learning from medical errors. I have proposed a bill that would let 
them do that without the fear of being sued for trying to improve 
patient care. But even the most limited restrictions on lawsuits are 
unacceptable to some of my Democrat colleagues. They believe trial 
lawyers should have open access to any medical error reporting system, 
which would render such a system useless because few doctors or 
hospitals would participate.
  We can turn back this growing health care crisis by reforming medical 
malpractice litigation. Some States have already taken the responsible 
step of capping awards for noneconomic damages, which are highly 
subjective, intangible and the major source of mischief for trial 
lawyers. Rightfully, these States have also preserved awards for 
economic damages, such as lost wages and medical costs.
  But most States have done nothing or not enough to fix the problem. 
The American Medical Association lists 12 States that are now in a 
health care crisis because of excessive malpractice awards. And 30 more 
States are nearing crisis, including Tennessee. This is a national 
problem that will worsen without a national solution.
  Just prior to the August recess, the Senate debated medical 
malpractice litigation reform that would have capped trial lawyers' 
fees. Though I support bolder action that includes limiting awards for 
noneconomic damages, this bill would have been a good first step. It 
would have allowed injured patients to keep a greater share of their 
rightful compensation while reducing the incentive for trial lawyers to 
pursue excessive awards. Unfortunately, all of my Democrat colleagues 
voted against this patient-friendly bill, keeping the litigation 
lottery alive and well.
  Injured patients have the right to sue for medical malpractice, but 
trial lawyers do not have the right to force innocent doctors from 
their livelihoods and throw our health care system into crisis. With 
millions of uninsured families, increasing health care costs, too many 
deaths from medical errors, and no prescription drug benefit for 
seniors, the Senate must show its commitment to turning back the 
growing health care crisis in our country. Limiting excessive 
malpractice awards is one solution that concerned public servants, 
providers, and, most importantly, patients can and should support.
  Mr. DURBIN. Madam President, I rise today to discuss an issue that 
affects a broad coalition of health care providers and the Medicare 
beneficiaries they serve. I have become increasingly concerned that the 
current method for updating Medicare payments to physicians and other 
health care providers does not accurately reflect the costs associated 
with delivering high-quality patient care. Reimbursement levels for 
providers participating the Medicare Program this year will decline by 
5.4 percent. There is little to suggest that the cost of providing care 
has declined. In fact, costs to various providers have actually 
increased over the past year.
  These payment reductions could have strong repercussions on access to 
essential health services. A flawed payment update system potentially 
jeopardizes access to medically necessary services for millions of 
seniors and disabled Americans who rely on Medicare for their health 
care. In addition, a flawed payment system makes practicing medicine, 
particularly in underserved areas, all the more difficult, if not 
impossible for providers participating in the Medicare Program.
  Reductions in Medicare physician reimbursement forced Ronald Johnson, 
M.D., an Illinois physician, to borrow money to keep his practice 
operating. All told, the loan necessary to sustain his practice for an 
additional year was equivalent to two-thirds the value of his family 
farm.
  I share the view of many health care analysts, including MedPAC, that 
the methodology used to update physicians payments is flawed. Although 
this system was designed to accurately compensate providers for the 
care they provide while controlling overall program spending on 
physician and other providers services, it has become apparent that the 
current system struggles to meet each of these goals. The volatility of 
physician payments is also a persistent problem for those providers 
attempting to gauge expected revenue from one year to the next.
  Until 1989, Medicare physician payments were based on a reasonable 
charge payment system. This system was thought to be responsible for 
escalating program costs, and the Medicare physician fee schedule was 
adopted in response to these concerns.
  The current method for updating Medicare physician payments is unique 
because the annual increase or decrease in physician payments does not 
simply reflect changes in the cost of medical goods and services. 
Unlike other payment systems, an expenditure target for physician 
services, know, as the sustainable growth rate, (SGR), is calculated 
each year. Annual payment updates for physician services, that reflect 
the changes in the costs of medical goods and services, are then 
increased or reduced to meet targeted expenditures for the program. In 
other words, physician payment updates only reflect actual changes in 
the cost of medical goods and services when actual costs equal the 
target growth rate in physician payments.
  Setting target expenditures, or the SGR, for physician payments that 
do not depart from the actual costs associated with delivering patient 
care has proven difficult. Methods for calculating the SGR have 
contributed to this divergence. The SGR is calculated using estimated 
changes in spending due to fee increases, changes in Medicare fee-for-
service enrollent, gross domestic product GDP per capita and the cost 
of new laws and regulations. Moreover, many of the factors that 
strongly influence the overall cost of services are difficult to 
measure including patient preference, technological advances, and 
changing demographics.
  In particular, the inclusion of the GDP in SGR calculations is 
problematic. Economic downturn may lead to sharp reductions in GDP that 
are far more dramatic than changes in Medicare beneficiary need. This 
volatility can have devastating effects on the program and threaten 
beneficiary access to critical health care services. At a time when 
beneficiary need is growing due to an aging U.S. population, providing 
physicians and other health care professionals with adequate 
reimbursement levels is an the more important.
  Also, erroneous CMS enrollment and spending data collected in 
previous years has exacerbated and already difficult financial 
situation. Although the necessary corrections were made, the changes 
have a disproportionately negative financial impact over the coming 
year.
  Efforts to control Medicare spending should not jeopardize the 
integrity of the health care system. Designing a physician 
reimbursement system that is less volatile and reflects the actual cost 
of delivering high-quality patient care is absolutely necessary. Now is 
the time to take a closer look at the way Medicare payments affect 
those serving some of our Nation's most vulnerable citizens. Further 
delay could

[[Page 16314]]

make it financially untenable for doctors such as Ronald Johnson to 
practice in areas like Pittsfield, IL.
  I ask that the article from FPReport be printed in the Record.

                       [From FPReport, May 2002]

  Lower Payments Force FPs To Risk Personal Loss for Their Patients, 
                               Practices

                            (By Jody Gloor)

       For a growing number of family physicians, Medicare payment 
     cuts ultimately could break up the ``families'' dependent on 
     them--families composed of patients, employees and entire 
     communities.
       While some FPs have stopped accepting new Medicare 
     patients, others are putting personal loss on the line to 
     keep their ``families'' intact.
       One rural doctor in Illinois who borrowed money to meet his 
     payroll is now borrowing against his dream farm to repay 
     those loans and protect his practice from financial failure.
       Medicare patients make up one-third of the Pittsfield 
     practice of Ronald Johnson, M.D., and the area's only 
     hospital claims nearly 80 percent of its patients use 
     Medicare. With an average age of 58 in the two counties 
     Johnson serves, ``we don't have the choice of not taking 
     Medicare patients. That's our life here,'' he said in a 
     recent telephone interview. ``They are our neighbors; they 
     are our friends. We have to take care of each other.''
       When he added the losses from Medicare reimbursements and 
     accounts receivables that have doubled in the past six 
     months, Johnson realized he needed to borrow an amount that 
     nearly equaled the value of his farm.
       ``I got lucky,'' he said, ``because the farm has been 
     taking care of itself financially. Now, it's going to take 
     care of us and our patients.''
       Johnson is finalizing a loan for two-thirds of his farm's 
     value. It's an amount that realistically, he said, can 
     sustain his practice for another year--two at the most--
     depending on factors including future Medicare reimbursement 
     rates, the local economy and land values.
       ``I'd never thought I would spend this much of my time 
     being a businessman,'' he said. ``It's such a joy to sit down 
     and see a patient. I thought that was what I was training 
     for.''
       AAFP Director Arlene Brown, M.D., of Ruidoso, NM., said she 
     and her staff ``saw the writing on the wall'' when Medicare 
     physician payments dropped and accounts receivables 
     increased. Something had to happen to keep her ``frontier 
     medicine'' practice open.
       Brown serves 8,000 patients, some of whom must drive 50 
     miles on a dirt road to reach a paved road--then must drive 
     another 100 miles to her office. At least 30 percent rely on 
     Medicare, she said, ``and we can't stop accepting these 
     patients.''
       So Brown took a pay cut and turned to her staff for help. 
     The employees--a close-knit ``family''--didn't want to see 
     anyone lose his or her job, she said. Instead of eliminating 
     a position and/or cutting patient services, all staff members 
     agreed to cut their hours and pay by 15 to 18 percent.
       ``We must stay open,'' Brown said. ``We know if my patients 
     have to get their primary care 200 miles away from home, they 
     won't go get it. They depend on me, and on us.''
       How long can her practice hold out for a permanent 
     financial solution? Not long, Brown said. She's hoping 
     efforts to get the federal government to rethink Medicare and 
     correct the physician payment formula will succeed soon.
       ``If not, we'll be cutting some services we don't have to 
     provide,'' she said. ``The first to go will be flu shots.'' 
     Next to go will be the free assistance older and low-income 
     patients get when they need help to buy prescription drugs.
       ``It all makes for bad medicine,'' Brown said, ``but it 
     could help keep our doors open.''
       If her practice closes, the entire community--her 
     community--could collapse, she said. ``A majority of 
     Americans eat, live, sleep and die in small communities. If 
     we shut down the very things that help small communities 
     survive, like medicine, then those communities will die.''

  (At the request of Mr. DASCHLE, the following statement was ordered 
to be printed in the Record.)

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