The Impact of Exempting Medical Providers from Malpractice Protection

Among the most controversial aspects of the U.S. health care system are the impacts of the malpractice system on patient treatments and health care costs. The structure of malpractice protections under the Military Health System (MHS) provides a novel opportunity to understand how the presence of malpractice pressure leads to “defensive medicine.” The MHS provides what is missing in previous studies: a true “treatment group” of patients whose physicians face no malpractice pressure. Under federal law, active duty physicians who treat active duty military patients at military facilities cannot be sued for malpractice. However, malpractice laws do apply to their treatment of dependents and retirees treated at these same facilities. Similarly, malpractice laws apply to physicians treating active duty military patients outside military facilities. By comparing patients whose physicians are not subject to “defensive medicine” pressure to other comparable patients (perhaps even treated by the same physician) whose physicians are subject to such pressure, we can identify the impact of defensive medicine pressure on practice patterns, medical costs, and patient outcomes. Central to our research aims is the availability of perhaps the richest data ever used to address these issues.

The MHS has provided us with a complete set of records on medical treatment and outcomes for the entire universe of active duty personnel, dependents, and retirees, over a number of years. This enormous set of data includes usual claims-based measures of utilization data, as well as measures such as patient wait times, patient satisfaction, mortality, and biometric outcomes. We use these data to address four aims: • What is the impact of the MHS malpractice exemption on treatment during “malpractice sensitive” episodes of treatment such as cardiac care or obstetrics? • How does the malpractice exemption impact total medical spending? • How does the malpractice exemption impact the quality of care delivered? • Are there spillovers across protected and unprotected patients through physician styles? We will address these aims both through “difference-in-differences” comparisons of comparable patients with differential protection from malpractice laws, and through causal regression models that exploit features such as distance-based rules on who must be treated at military facilities and changes in malpractice protection across physicians and patients.