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4 The Impact of Medical Professional Liability on the Provision of Obstetrical Care to Poor Women and Women Served by Medicaid r or low-income patients, who al- ready confront more barriers to health care than other Americans, the impact of professional liability concerns on obstetrical care is partic- ularly acute. In a 1986 study the Robert Wood Johnson Foundation found that access to medical care among the nation's poor, minority, and uninsured citizens has deteriorated (Robert Wood Johnson Foundation, 19871. Moreover, the study concluded that the improvements it had noted in its 1982 survey have been reversed, despite a nationwide expansion in the number of medical care providers. Inadequate financing has always been one of the most significant barriers to obstetrical care for low-income women in the United States. Expansions of Medicaid eligibility enacted in 1986 under the Omnibus Budget Reconciliation Act should improve financial access. As of April 1988,32 states had taken advantage of them (Lewis-~dema, 19881. The committee notes, however, that there will always be some physicians who are unwilling to care for poor patients, regardless of the level of reimbursement. The apparent changes in obstetrical practice due to professional lia- bility issues have led to increasing concern that the potential of the new Medicaid coverage options will not tee fully realized. If physicians reduce participation in Medicaid and other publicly funded program~or stop providing obstetrical services altogether access to care for the popula- tion most in need will be jeopardized. 54

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IMPACT ON POOR WOMEN AND WOMEN SERVED BY MEDICAID 55 PROFESSIONAL LIABILITY AND OBSTETRICAL CARE UNDER MEDICAID As part of its fact-finding activities, the committee examined the relationship of professional liability issues, physician participation in Medicaid, and low-income women's access to care. It attempted to deter- mine whether the concerns of many persons who have examined the relationship are well founded and, if so, how the problems it poses might be addressed. The committee recognizes that professional liability is- sues are only one of many factors affecting access to obstetrical services for low-income women. Moreover, although the committee focused on professional liability issues, it urges that efforts to address the declining availability to obstetrical care should not be limited to improving the professional liability system. Studies directly addressing the question of whether professional lia- bility concerns are inhibiting physician participation in Medicaid are extremely limited. The literature on professional liability has centered on insurance costs and the effectiveness of various tort reforms. Most of the studies on Medicaid participation were published prior to the cur- rent medical professional liability insurance crisis. Examining the rela- tionship between professional liability concerns and access to obstetrical care for Medicaid recipients, therefore, is much like assembling a mo- saic. In its effort to put together a picture of the situation, the committee examined 30 state studies and 9 national ones conducted principally by state and national medical associations (see Appendixes A and D). It also included consultant studies, research conducted for the National Governors' Association, and university-based research. Below are the committee's findings. BACKGROUND: THE ROLE OF MEDICAID IN THE DELIVERY OF OBSTETRICAL CARE Medicaid is a federal-state program under which the federal govern- ment sets basic standards and provides matching funds and the states establish eligibility, benefits, and reimbursement. Since its enactment in 1965, the program has played a critical role in providing financial access to obstetrical services for low-income women. Between 1979 and 1982, Medicaid paid for an estimated 10 percent of all births in the United States (AG1, 19871. In 1984-1985, Medicaid recipients ac- counted for almost 15 percent of all births in the United States, from 3.8 percent of births in South Dakota to 25 percent in Michigan. During this period, the program spent $1.2 billion on these services, an average of $2,200 per birth (AG1, 19871.

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56 MEDICO PROFESSIONAL CITY: VOLUME ~ Because each state establishes its own program rules (within federal guidelines), the role of Medicaid varies considerably. Prior to 1986, eligibility for Medicaid coverage for most beneficiaries was tied to eligi- bility for the Aid to Families with Dependent Children (AFDC) pro- gram. A series of reforms since 1986 has severed this link to AFDC and extended Medicaid coverage to many individuals who are not "cate- gorically needy," as traditionally defined by Medicaid. As of October 1988, 43 states had programs to provide Medicaid coverage to children and pregnant women with incomes below 100 percent of the federal poverty level. The Medicare catastrophic insurance law, enacted in 1988, mandates that by fiscal year 1990 all states extend coverage to infants and pregnant women with family incomes below 100 percent of the federal poverty level, regardless of AFDC eligibility. Benefits are determined by both state and federal governments. Fed- eral law mandates coverage of certain services, including inpatient hospital care, physician services, and early and periodic screening, diagnosis, and testing for children. There is a wide range of optional services, from pharmacy to physical therapy, that states may include in their programs if they wish. Reimbursement policy is determined by the state. Since the enact- ment of Medicare prospective hospital payment in 1983, a number of states have changed their hospital payment systems to one based on diagnosis-related groups or some other prospective method. Physician reimbursement is on a fee-for-service basis, set according to the prevail- ing charge method, fee schedules, relative value scales, and similar methodologies. The increase in births paid for by Medicaid since 1984 is due largely to the major expansion of Medicaid eligibility that has occurred over the past several years. Beginning in 1984, Congress enacted staged expan- sions of coverage for low-income women and children. The 1986 Om- nibus Budget Reconciliation Act allows states to provide coverage to children and pregnant women with incomes up to the federal poverty level. The 1987 act authorized incomes up to 185 percent of the poverty level. As of April 1988,32 states had adopted the new option for eligibility and 22 had begun implementation. All but two states have established eligibility at 100 percent of the federal poverty level: Rhode Island and Massachusetts recently increased eligibility to 185 percent. The law also allows states to simplify and improve the process of establishing eligibility for Medicaid. States may waive the usual asset test, an option adopted by 23 states. They may provide for continuous eligibility, whereby a pregnant woman, once eligible, would not lose Medicaid during her pregnancy because of fluctuations in income (25

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IMPACT ON POOR WOMEN AND WOMEN SERVED BY MEDICAID 57 states). The presumptive eligibility option allows providers to assume that a patient is eligible, based on her statement of income, and to render services for a specified period of time while the Medicaid applica- tion is being processed (15 states). In addition to expanding existing coverage, several states have developed new programs to reduce infant mortality and high-risk births, using Medicaid and Maternal and Child Health (MCH) agencies as vehicles for financing and delivering ser- vices. Physician Participation in Medicaid Traditionally, a minority of physicians has provided the bulk of ser- vices to Medicaid patients. In 1976, 5.5 percent of all physicians served almost one-third of all Medicaid patients (Mitchell and Cromwell, 19801. Participation among obstetrician-gynecologists has always been low 63.2 percent served Medicaid patients in 1976, compared with 77.4 percent for all physicians (Mitchell and Schurman, 1984~. Only three identified specialists (allergists, cardiologists, and psychiatrists) had lower participation rates. Obstetrician-gynecologists who participated in Medicaid also tended to have lighter caseloads-8.3 percent of pa- tients were Medicaid recipients, compared with 13.3 percent for other primary care physicians. Although national data on physician participation since the mid-1970s are limited, the situation does not appear to have improved significantly. The Alan Guttmacher Institute reported that in 1986 40 percent of obstetrician-gynecologists did not serve Medicaidpatients- a participation rate virtually identical to that 10 years earlier, despite an overall worsening of the malpractice problem (AG1, 19871. The primary sources of data on physician participation are the state Medicaid claims payment systems. These systems are structured to manage day-to-day claims processing, but for a variety of reasons they do not provide reliable information for analyzing changes in physician participation. In most states, for example, physicians are not required to use unique provider numbers; some have a different number for each practice location, and in other cases a group of physicians may bill under a single number. Analysis of responses to a recent National Governors' Association survey, which attempted to collect data on changes in par- ticipation, indicates that the combined effect of these problems is to overstate the number of participating physicians (NGA, 19881. The reasons for physician nonparticipation are many. Several studies done in the mid-1970s found that low reimbursement and delays in paying bills were significant factors reducing participation. In consider- ing the relationship of professional liability concerns to access to obstet

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58 MEDICAL PROFESSIONAL LIABILITY: VOLUME I rical services under Medicaid, two aspects of this literature are signifi- cant. First, the studies found that the differential between Medicaid and private reimbursement was more important than the absolute Medicaid payment and that reducing the differential increases participation in Medicaid. Medicaid reimbursements have always tended to be below the average private charge. In 1986 Medicaid fees were an estimated 44 percent of the average nationwide community charge for obstetrical care. Over the past couple of years, numerous states have been increas- ing Medicaid payment rates for obstetrical services-some by as much as 100 percent. The effect of these increases on physician participation remains to be seen; however, since private charges have also been rising, increases in Medicaid reimbursement may have less than the hoped-for effect in improving participation (Jones and Hamburger, 19761. Second, an important reimbursement factor that is frequently over- looked is the practice among obstetrical providers of requiring payment for services in advance of delivery. Since Medicaid can pay only for "services rendered," many states have interpreted this provision to prohibit payment except after delivery. This situation exacerbates the effects of Tow reimbursement rates. Reduced Obstetrical Care for the Poor Nine of the state studies specifically sought information on the provi- sion of services to Medicaid and low-income women. Although the ques- tions were different in each study examined, all of them show a sizable number of physicians reporting that they have reduced, or will reduce, services to this population because of concerns about potential profes- sional liability (Appendixes A and B). For example: Fifty-five percent of Kentucky physicians do not serve Medicaid obstetrical patients. The proportion citing professional liability con- cerns as a reason for not participating was high: three-quarters of physicians who had reduced their volume of obstetrical care and one- third of those who had not changed their practice cited professional liability concerns as a reason for nonparticipation. Only one-third of Maryland obstetrician-gynecologists accept Med . . calcl. In Texas low-income patients average 10 percent of the obstetrics caseload. Approximately one-third of obstetrician-gynecologists report that they are limiting care of indigents "a great deal"; another one-third are not limiting care. In Washington 62 percent of obstetrician-gynecologists limit the number of Medicaid patients they serve.

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IMPACT ON POOR WOMEN ~ WOMEN SERVED BY MEDICAID 59 More than half the obstetrician-gynecologists in North Carolina were providing services in local health departments. Almost 30 percent reported stopping because of professional liability concerns. The data reviewed by the committee suggest that there is an increas- ing trend among obstetricians toward reduction of care for high-risk patients. Although reduced availability of care for high-risk patients affects the entire population, it particularly affects low-income women, who are disproportionately represented among the high-risk group. These women are more likely to experience higher rates of infant mor- tality and low birthweight infants. The National Governors' Association recently surveyed state Medi- caid and Maternal and Child Health (MCH) agencies regarding pro- vider participation in public perinatal care programs (NGA, 19881. The results, which are summarized in Table 4.1, include at least one re- sponse in every state but not in the District of Columbia. Overall, 60 percent of Medicaid programs and almost 90 percent of MCH programs are experiencing significant problems in provider participation for ma- ternity care. Nine of 10 report that rising malpractice insurance costs have contributed to this problem. The state agencies, which must rely on physicians to render care to their clientele, also report significant problems in recruiting and re TABLE 4.1 Agencies Reporting Selected Changes in Availability of Obstetrical Care Maternal and Medicaid Change Child Health (Jo) (%) All Agencies (%) Providers dropping obstetrics 97.2 89.5 93.2 Ob-gyns General family practitioners 88.9 84.2 86.5 Community Health Centers 11.1 7.9 9.5 Ob-gyns not taking new 80.6 86.8 83.8 patients Physicians reducing 83.3 55.3 68.9 participation Ob-gyns reducing high- 80.6 55.3 67.6 risk care Physicians withdrawing from 77.8 44.7 60.8 public programs Hospitals reducing emergency 11.1 13.2 12.2 delivery NOTE: N = 74 total agencies; 36 MCH and 38 Medicaid. SOURCE: National Governors' Association Center for Policy Research, Health Policy Studies. 1988. Increasing Provider Participation: Strategies for Improving State Perinatal Care Programs. Washington, D.C.

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60 MEDICAL PROFESSIONAL LIABILITY: VOLUME I taining participating physicians. In a number of counties, public pro- gram recipients are experiencing difficulty finding a physician who will treat them. Although reimbursement rates, traditionally the primary deterrent to participation, continue to be significant, a sizable number of physicians cite professional liability issues as a key factor in their decision not to participate in public programs. The general reductions in obstetrical practice among obstetricians, family physicians, and nurse-midwives reported in both state and na- tional survey data also appear to have a disproportionate effect on the availability of care for low-income women. Where attrition from practice has been high, caseloads for the remaining obstetrical providers are likely to increase, as the experience in Washington suggests. This, in turn, could create a vicious cycle, whereby providers continuing to accept Medicaid patients experience greater pressures on their time possibly to the point where they, too, must begin restricting their Medi- caid practice. Administrators report many instances of patients travel- ing long distances-more than 100 mile~for obstetrical care. Many low-income women have very limited access to transportation. High Insurance Premiums, Low Reimbursement Rates The available evidence suggests that physicians' concerns about pro- fessional liability issues can be divided into two categories the cost of malpractice insurance and the risk of being sued. The provider surveys indicate that each is an important factor influencing physicians' deci- sions. The rise in malpractice insurance premiums has intensified physi- cians' traditional concern about low Medicaid reimbursement for ser- vices. That concern is expressed by providers in two ways. One is that payments are too low to cover the costs of malpractice coverage. The other is that, with rising malpractice insurance costs, they must devote more time to private-paying patients to meet expenses. Medicaid programs generally pay providers at rates well below those of private insurers or the average community charge. Table 4.2, pre- pared by Sara Rosenbaum and Dana Hughes of the Children's Defense Fund, compares Medicaid reimbursement rates for uncomplicated vagi- nal deliveries as of September 1987 to the cost of obstetrical premiums, by state. State Medicaid reimbursement rates were lower than malprac- tice premiums alone, not counting other overhead costs, in 8 of the 40 states included in the study. In Illinois, Missouri, and New Jersey, premium costs were more than $240 higher than the Medicaid reim- bursement rate.

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IMPACT ON POOR WOMEN ~ WOMEN SERVED BY MEDICAID 61 TABLE 4.2 Medical Malpractice Premiums by State for Obstetricians and Medicaid Reimbursement Rates for Normal Deliveries State Medicaid Insurance Payment: Normal Premium Per State Delivery ($) Deliverya ($) Alabama 450.00 430.56 Alaska NA NA Arizona NA 625.00 Arkansas 546.25 131.94 California 657.00 736.11 Colorado 510.00 388.89 Connecticut 861.30 NA Delaware 519.00 347.22 District of Columbia 775.00 461.00 Florida 800.00 NA Georgia 800.00 312.50 Hawaii NA NA Idaho 450.00 527.78 Illinois 446.50 708.33 Indiana 533.00 145.83 Iowa 690.00 409.72 Kansas 750.00 201.39 Kentucky 370.00 305.56 Louisiana 445.56 527.78 Maine 500.00 347.22 Maryland 963.00 506.94 Massachusetts 1471.00 NA Michigan 403.02 NA Minnesota 455.00 326.39 Mississippi 623.60 430.56 Missouri 425.00 666.67 Montana 619.00 423.61 Nebraska 478.00 138.89 Nevada 708.57 666.67 New Hampshire 450.00 NA New Jersey 236.00 527.78 New Mexico 354.79 NA New York 550.00 NA North Carolina 409.00 138.89 North Dakota 295.00 319.44 Ohio 386.00 569.44 Oklahoma 750.00 298.61 Oregon 853.24 625.00 Pennsylvania 437.00 222.00 Rhode Island 750.00 NA South Carolina 485.00 152.78 South Dakota 325.00 201.39 Tennessee 725.00 201.39 Texas 686.50 181.00 Utah 518.71 500.00 (continues)

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62 MEDICAL P~FESSiON~ CITY: VOLUME ~ TABLE 4.2 Medical Malpractice Premiums by State for Obstetricians and Medicaid Reimbursement Rates for Normal Deliveries continued State Medicaid Insurance Payment: Normal Premium Per State Delivery ($) Deliverya ($) Vermont 350.00 250.00 Virginia 625.00 205.00 Washington 600.00 513.89 West Virginia 600.00 305.56 Wisconsin 590.22 229.17 Wyoming 787.50 458.33 aThese are St. Paul Fire and Marine Insurance Company estimates of 1987 medical malpractice premiums for obstetricians. The per-delivery premium costs included are based on the company's estimated average obstetrical workload of three deliveries per week and working 48 weeks a year. The validity of these estimates and their gener- alizability are not known. SOURCE: Hughes, D., and S. Rosenbaum. 1988. Children's Defense Fund. Washing- ton, D.C. Additional data from 36 states show that Medicaid payments aver- aged 44 percent of the approximate community charge for prenatal care and routine delivery. The highest state paid 76 percent, the lowest 14.8 percent. In many cases these rates represent major increases over prior years, since at least 20 states increased payments between 1984 and 1986 (NGA, 1988). The problem of low reimbursement rates is complex, reflecting pres- sures on state budgets, competition among provider types for improved coverage and payment, and general state philosophies regarding Medi- caid. Many ofthe stases that are adopting the coverage options under the Omnibus Budget Reconciliation Act of 1986 or otherwise developing targeted programs for children and pregnant women are also examining their reimbursement policies. In addition to fee increases per se, some states are restructuring their payment schedules to encourage provider participation and to provide higher reimbursement for care of high-risk women. However, due to the complexity of the problem and to providers' professional liability concerns, many program administrators believe that increasing reimbursement levels may only help to stabilize physi- cian participation in their programs, not necessarily increase it. The states are likely to continue increasing their reimbursement rates for obstetrical providers. Analysis of changes enacted for 1987-1988 showed that nine states were adopting rate increases that averaged 33 percent and two were more than doubling their fees. Be- cause of the Tow reimbursement rates that preceded these increases,

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IMPACT ON POOR WOMEN ~ WORN SERVED BY ~DiC~D ~ however, some of the states will still be paying providers less than half the approximate community charge. Fear of Suit Although medical malpractice insurance costs have been the focus of policy debate, particularly at the state level, it is the committee's im- pression that subjective evaluations of professional liability risk, or the sheer fear of suit, appear to be an equally strong factor deterring physi- cians from serving low-income women. Given the fact that at least 7 of 10 obstetrician-gynecologists are likely to be sued in the course of their professional lives (ACOG, 1988), the desire to avoid situations perceived as risky is understandable. Most observers believe that physicians' fear of suit may be as great a barrier to obstetrical care for low-income women as the rate of reim- bursement. The committee heard numerous anecdotal reports that phy- sicians perceive reducing care to Medicaid and low-income women as an effective means of reducing their exposure to high-risk patients. Partic- ularly with new patients, where the likelihood of a problem pregnancy may be less clear, physicians may screen out poorer women because of their greater potential to develop high-risk pregnancies. There are no reliable data on this point. Physicians are also concerned about continuity of care and risk man- agement. Many low-income women receive prenatal care at a local health department clinic and deliver at the local hospital. In such cases, physicians may believe themselves to be in greater legal jeopardy if problems develop during the delivery. Moreover, managing high-risk pregnancies requires a commitment to continuity on the part of both patient and physician. If the physician believes the patient will not be committed to the process, the physician may be less willing to initiate care. It may be easier for the physician to simply stop serving Medicaid patients entirely than to attempt to make such judgments (if desired) on an individual basis. It is ironic that the very factors that call for increased access to care can also intensify a physician's sense of risk when caring for low-income patients. The extent to which low-income women receive late or no prenatal care and are therefore at greater risk has been well docu- mented (IOM, 19881. Indeed, such data are at the heart of Medicaid Expansions and are the focus of such groups as the National Commission on the Prevention of Infant Mortality (19881. Yet it is precisely this information that may underlie physicians' sense that care of low-income and Medicaid patients increases their risk of malpractice litigation.

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64 MEDICAL PROFESSIONAL LIABILITY: VOLUME I The committee heard many reports that poor women are believed by physicians to be more likely to sue. A key issue is whether there is evidence to warrant this suspicion. Despite the perception by many physicians that the poor sue more, the committee found that available data do not support this view. To analysts, the statement that the poor sue more seems counter- intuitive. The legal literature suggests that the low-income population generally has less access to the legal system, which would imply less frequent rates of medical malpractice litigation. Moreover, medical mal- practice actions are frequently brought by attorneys on a contingent fee basis. The effects of this incentive system on access to legal services to the poor has not been well documented, but many theorists surmise that because medical malpractice awards are usually based on lost earnings, among other things, attorneys should have less financial incentive to serve poor plaintiffs. The data currently available provide very limited information on the relation of income to medical malpractice suits. The 1973 Commission on Medical Malpractice of the Department of Health, Education, and Welfare found that greater numbers of"negative medical incidents" were associated with higher incomes (the study did not examine claims rates) (USDHEW, 19731. A study in Cook County, Illinois, in the 1970s found that black plaintiffs constituted almost 25 percent of the county's population but accounted for only 11 percent of malpractice suits (Na- tional Health Law Program, 19871. A 1986 study by Weissman and colleagues also found a negative relationship between care of minority patients and a physician's likelihood of being sued (Weisman et al., 19881. Five studies were found that examined Medicaid and malpractice litigation specifically. Studies of closed claims from malpractice insurers done by the General Accounting Office (1987) and in the state of Maryland (1987) showed that Medicaid recipients brought suit in roughly the same pro- portion as their numbers in the population (GAO, 1987; Weisman et al., 19881. The GAO analyzed a sample of all claims: 5.8 percent were brought by Medicaid patients, who accounted for approximately 9 per- cent of the population. In Maryland, Medicaid recipients accounted for about 13 percent of obstetrics-gynecology claims between 1977 and 1985. In 1986, Medicaid recipients constituted about 19 percent of ob- stetrical admissions to Maryland hospitals. The GAO study also found that Medicaid recipients received lower settlements. Average expected payout for a Medicaid plaintiff was about $52,000, and the average for the privately insured was about $250,000.

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IMPACT ON POOR WORN ~ WOMEN SERVED BY ~DIC~D 65 Two surveys of providers did find higher rates of litigation among Medicaid patients. Respondents in the 1986 Washington survey of phy- sicians said that 26 percent of their reported malpractice suits had been initiated by Medicaid recipients, whereas Medicaid patients accounted for only 17.6 percent of their practice (University of Washington, 1986~. ACOG recently reported on a nationwide survey of hospitals' malprac- tice claims in 1982 (ACOG, 19881. The hospitals reported that Medicaid patients represented 17.1 percent of deliveries but initiated 24.8 percent of malpractice claims. (This finding was not statistically significant.) In Danzon's studies on the electiveness of tort reforms no relation- ship was found between the unemployment rate in a state and frequency of malpractice claims (Danzon, 1982, 19861. Neither Danzon nor Sloan found a relationship between medical malpractice claims and state per capita income (Danzon, 1982, 1986; Sloan, 19851. Professional Liability Concerns and the Reduction of Care Every study identified by the committee that examined the relation- ship of professional liability concerns to participation in Medicaid found that physicians report reducing their Medicaid caseloads, at least in part, because of professional liability concerns. Although the committee concluded that the causal relationships between professional liability issues, changes in obstetrical practice, and access to care for low-income women cannot be precisely documented, the mere perception among physicians that Tow-income women pose professional liability problems constitutes a barrier to care. PROFESSIONAL LIABILITY AND OBSTETRICAL CARE IN COMMUNITY AND MIGRANT HEALTH CENTERS Because health centers are a vital source of obstetrical care for low- income women, the committee decided early in its deliberations to commission a survey ofthe effects of medical professional liability on the delivery of care in these centers. A questionnaire was sent to a random sample of 208 Community and Migrant Health Center directors during April and May 1988. The response rate to this survey was low (25 percent) and was unevenly distributed. The methodology of this study and the sampling techniques used, as well as a full report of the results, are presented in detail in the companion volume of this report (Hughes et al., 19891. Despite the relatively low response rate, the results of this survey are revealing. The vast majority of health centers reported that professional liability concerns either directly or indirectly affected the provision of

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66 MEDiC~ PROFESSIONAL I: VOILE ~ maternity care. Sixty-seven percent of the respondents indicated that professional liability concerns affected their ability to furnish obstetri- cal services or the scope of services they could offer. Only 33 percent reported that they were unaffected (Tables 4.3 and 4.41. It should be noted that there appears to be little direct relationship between the rapid escalation of professional liability insurance pre- mium costs and the centers' malpractice claims profiles. Only eight (14 percent) of the centers in the study had ever had a claim filed against _, ~t Respondents (No.) ~Malpractice Malpractice Did Public Health Posed Not Pose Service Region Total Problems Problems I (Me., Vt., N.H., Mass., Conn., R.I.) II (N.Y., N.J.)a III (Pa., Va., W.Va., Md., Del., D.C.) IV (Ky., Tenn., N.C., Miss., Ala., Gal, S.C., Fla.) V (Minn., Wis., Mich., Ill., Ind., Ohio) VI (N.M., Tex., Okla., Ark., La.) VII (Neb., Iowa, Kans., Mo.) 2 VIII (Mont., N.D., S.D., Wyo., Utah, Colo.) IX (Calif., Nev., Ariz., Hawaii)b X (Wash., Ore., Idaho, Alaska) Unknown Total 5 4 1 3 0 3 4 3 1 17 12 5 6 5 9 4 5 6 5 1 2 58 o 2 39 19 aExcludes Puerto Rico and the U.S. Virgin Islands. bExcludes Guam and American Samoa. SOURCE: Hughes, D., S. Rosenbaum, D. Smith, and C. Fader. 1989. In Medical Professional Liability and the Delivery of Obstet- rical Care: Vol. II, An Interdisciplinary Review. Washington, D.C.: National Academy Press.

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IMPACT ON POOR WORN ~ WOMEN SERVED BY MEDICAID 67 TABLE 4.4 Adverse Effects of Malpractice Costs, 988 Respondents (N= 58) Effect No. % Limited number of physicians under contract 19 33 Hampered recruitment and retention of physicians 25 43 Limited number of physicians hired 26 45 Reduced number of maternity patients seen 26 45 - SOURCE: Hughes, D., S. Rosenbaum, D. Smith, and C. Fader. 1989. In Medical Professional Liability and the Delivery of Obstet- rical Care: Vol. II, An Interdisciplinary Review. Washington, D.C.: National Academy Press. them. Although centers with more claims might not have responded to the survey, other studies confirm that physicians practicing in health centers have relatively low (16 percent) claims profiles (National Asso- ciation of Community Health Centers, 19861. The Department of Health and Human Services estimates that in fiscal year 1989 approximately $50 million of the $446 million health center appropriation will be spent on medical professional liability insurance coverage for staff (unpublished data, Provider Profile 1988, Bureau of Community Health, Delivery, and Assistance, USDHHS). Much of this cost will be attributable to obstetrical activities. Thus, the centers' $30 million professional liability insurance expenditure repre- sents 7 percent of their total budget. Professional liability concerns affected health centers in two major ways: (1) by reducing their capacity to furnish or purchase maternity care and (2) by forcing some of them, as a result of certain insurance underwriting practices, to furnish care that might ultimately place them at greater risk of malpractice liability. The net effect was to curtail access to obstetrical care for low-income women and, in some areas, to force centers to make practice decisions based on the requirements of insurance carriers rather than standards of medical practice. Problems Recruiting Providers Particularly conspicuous were the recruitment problems caused by professional liability concerns. The rising cost of medical malpractice insurance has cut deeply into the resources available for compensating providers. Many centers are unable to offer all aspects of perinatal care

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68 MEDICO PROFESSIONS ARTY: VOGUE ~ and are unable to put together a financial package adequate to retain staff once recruited. Twenty-four percent of the 52 centers that furnish maternity care reported that the high cost of medical malpractice insur- ance limited their ability to recruit and retain providers. Some cen- ters stated that the premium rates demanded for obstetrical providers were simply unaffordable. For other centers, high medical profes- sional liability insurance costs cut so deeply into their total compen- sation package that they could not offer competitive salaries and benefits. Problems with Access The most profound effect of professional liability concerns revealed through the survey was the impact on access to maternity care. Forty- three percent of the centers surveyed indicated that they were forced to "turn patients away" because they were understaffed and unable to recruit or contract with enough maternity care providers. Either they could not adore the additional costs associated with treating these patients or they could find no contract providers willing to affiliate with them. Most of these centers were able to serve some of the patients who sought care but were forced to deny care to others (Table 4.51. Centers indicated that patients who could not be served were gener- ally given suggestions about where else they might obtain care. Some TABLE 4.5 Maternity Patients Not Being Served or Referred, 1987 Respondents No. % Center's Action Some prenatal patients turned away All prenatal patients turned away Patients not provided or re- ferred elsewhere for delivery services Able to serve all patients Total 17 3 5 33 58 in 29 5 9 57 100 aIn all, six centers reported furnishing no obstetrical care. In- cluded here are only those centers that provide no obstetrical care and appeared to have no established referral system for patients they could not serve. SOURCE: Hughes, D., S. Rosenbaum, D. Smith, and C. Fader. 1989. In Medical Professional Liability and the Delivery of Obstet- rical Care: Vol. II, An Interdisciplinary Review. Washington, D.C.: National Academy Press.

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IMPACT ON POOR WOMEN ~ WORN SERVED BY MEDICS 69 centers were unable to establish even informal referral arrangements with other providers, however, either because private providers would not take the patients or because there were no alternative providers at all. One center indicated that there were no community doctors in the area who would accept Medicaid reimbursement. Another reported that patients with insurance were sent to the nearest obstetrician, 45 miles away; those without insurance were sent to the university hospital, 65 miles away. Six responding centers were unable to provide care to any pregnant patient because they could neither provide care on site nor contract with other providers. (Three of these centers used informal referral networks to suggest where pregnant patients might go but had no formal contrac- tual system; the remaining three indicated that no such networks existed.) Ofthese six centers, five cited the high cost of providing obstet- rical care, including rising medical malpractice insurance premiums, as the major reason for not offering maternity care. One center put it bluntly: "We are unable to provide on-site or contract off-site prenatal care and delivery services because of the high cost of medical malprac- tice insurance. As a result, the center is offering none ofthese services." Five of the 52 centers furnishing maternity care reported that they were forced to discontinue care of women at the time of delivery because the family doctors or midwives on staff could not perform deliveries and could not identify community physicians to whom they could refer patients, either formally or informally. The patients were virtually on their own in locating delivery care. One center reported that it was forced to send all patients-nearly 700 a year- to the local hospital emergency room for deliveries. Another referred patients to the county hospital for deliveries. Some centers reported that their own providers were prohibited from delivering babies, either because their malpractice insurance policies prohibited it or because local hospitals allowed only obstetricians to perform deliveries. In turn, fear of malpractice suits and the rising costs of insurance were cited as the primary reasons for the community obstetricians' unwillingness to contract with the centers or to accept referrals. One center wrote, "Only one in three obstetricians in the community does obstetrics (at all) because of the high cost of malprac- tice. And family doctors do not do obstetrics because of lack of obstetrical backup." Reduced Quality of Care and Increased Risk of Suit The survey revealed that, although the most important consequence of the high cost of professional liability insurance for obstetrical pro

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70 MEDICO PROFESSIONAL PITY: VOGUE ~ viders was to reduce the availability of services at health centers, it also had the ironic, and certainly unexpected, effect of reducing the quality of care centers furnished and, in some cases, of increasing their potential exposure to malpractice claims. This has occurred in two ways. First, family doctors and nurse-midwives were forced into the medically un- sound practice of discontinuing care for patients at the time of delivery because they were unable to obtain community backup or referral for them. Second, some centers reported that they were forced to replace experi- enced doctors with new graduates because of the escalating malpractice premium costs for experienced physicians. Insurers base this practice on the theory of"accumulated exposure," that is, that the risk of being sued increases over time. Thus, patients in health centers are deprived of the most experienced physicians as a means of avoiding higher malpractice insurance costs. As a matter of economy, most health centers with maternity care providers on staff employ family doctors rasher then obstetricians. One- third of the centers reported that they were staffed with family practi- tioners who furnished prenatal care. However, as indicated above, a number of centers also reported that the vast majority of these physi- cians were not permitted to deliver babies because of insurance or hospital credentialing limitations. Family practice staff delivered babies in only 6 percent of the centers. When family doctors and other providers have strong referral net- works for delivery, this arrangement is not necessarily troublesome. As noted, however, many centers in the survey reported that they were unable to develop backup or referral arrangements, and the family doctors and nurse-midwives were placed in the untenable position of having to choose whether to drop a patient at the time of delivery (and hope that she could make it to the emergency room), deliver a baby without medical malpractice coverage, or cease furnishing prenatal care altogether. Terminating care of a patient at the time of delivery not only places the patient in jeopardy and the physician into an ethical and liability dilemma, it also creates potential liability for the physician who ultimately performs the delivery with no prior knowledge of the patient. Prohibitive Insurance Costs The results of the survey suggest that professional liability concerns have reduced the ability of nearly every center furnishing obstetrical care to provide or purchase necessary health services for pregnant women. Many centers with adequate staff have been forced to curtail or

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IMPACT ON POOR WOMEN ~ WOMEN SERVED BY MEDICAID 71 eliminate services because insurers refuse to provide delivery coverage except at exorbitant costs that clinics cannot adore. Still other health centers have seen their referral arrangements to specialists disinte- grate as more and more obstetricians either leave the practice of obstet- rics altogether or else refuse to treat what they perceive to be high-risk patients. CONCLUSION The committee examined the available data relating to the question of whether medical professional liability concerns are causing physicians to reduce obstetrical care to low-income women, including the commis- sioned survey of Community and Migrant Health Centers. The data are often imperfect, and much of the relevant evidence is indirect. The committee is nonetheless persuaded that the effects of professional liability concerns in obstetrics are being disproportionately experienced by poor women and women whose obstetrical care is financed by Medi- caid or provided by Community and Migrant Health Centers. REFERENCES Alan Guttmacher Institute (AGI). 1987. The Financing of Maternity Care in the United States. New York. American College of Obstetricians and Gynecologists (ACOG). 1988. Hospital Survey on Obstetric Claims Frequency by Patient Payor Category. Washington, D.C. Damon, P. M. 1982. The Frequency and Severity of Medical Malpractice Claims. Santa Monica, Calif.: Rand Corp. Damon, P. M.1986. New Evidence on the Frequency and Severity of Medical Malpractice Claims. Santa Monica, Calif.: Rand Corp. General Accounting Office (GAO), U.S. Congress. 1987. Medical Malpractice: Charac- teristics of Claims Closed in 1984. GAO/HRD-87-55. Gaithersburg, Md. Hughes, D., S. Rosenbaum, D. Smith, and C. Fader.1989. Obstetrical care for low-income women: The effects of medical malpractice on Community Health Centers. In Medical Professional Liability and the Delivery of Obstetrical Care: Vol. II, An Interdisciplinary Review. Washington, D.C.: National Academy Press. Institute of Medicine (IOM). 1988. Prenatal Care: Reaching Mothers, Reaching Infants. Washington, D.C. National Academy Press. Jones, M. W., and B. Hamburger. 1976. Survey of physician participation in and dissat- isfaction with the Medi-Cal program. Western J. Med. 124:75-83. Lewis-Idema, D. 1988. The impact of medical professional liability on access to care for Medicaid recipients. Paper prepared for the Institute of Medicine. Washington, D.C. -Maryland Obstetrical and Gynecology Society.1987. Ob/Gyn Society of Maryland survey. Mitchell, J. B., and J. Cromwell. 1980. Medicaid mills: Fact or fiction. Health Care Financing Rev. 2:37-49. Mitchell, J. B., and R. Schurman. 1984. Access to private obstetrics/gynecology services under Medicaid. Med. Care 22:1026-1037.

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72 MEDiC~ PROFESSIONAL CITY: VOLUME ~ National Association of Community Health Centers. 1986. The Medical Malpractice Claims Experience of Community and Migrant Health Centers. Washington, D.C. National Commission on the Prevention of Infant Mortality. 1988. Death Before Life: The Tragedy of Infant Mortality. Washington, D.C. National Governors' Association (NGA), Center for Policy Research, Health Policy Studies. 1988. Increasing Provider Participation: Strategies for Improving State Perinatal Care Programs. Washington, D.C. National Health Law Program. 1987. Medical Malpractice: A "Crisis" for Poor Women. Clearinghouse Review. Los Angeles. Robert Wood Johnson Foundation. 1987. Access to Health Care in the United States: Results of a 1986 Survey. Princeton, N.J. Sloan, F. 1985. State response to the malpractice insurance "crisis" of the 1970s: An empirical assessment. J. Health Politics, Policy, Law 9:629-646. University of Washington, School of Public Health and Community Medicine, Health Policy Analysis Program.1986. The Effects of Changes in the Medical Liability Market on Washington Obstetricians. Final report to the Washington State Medical Associa- tion. Seattle. U.S. Department of Health, Education, and Welfare (USDHEW). 1973. Report of the Secretary's Commission of Medical Malpractice. DHEW Pub. No. (OS) 73-89. Washing- ton, D.C.: Government Printing Office. Weisman, C., M. Teitelbaum, and L. Morlock.1988. Malpractice claims experience associ- ated with fertility-control services among young obstetrician-gynecologists. Med. Care 26:298-306.