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Study Finds $1.4 Billion in Annual Medicaid Savings with New Medical Liability System

TALLAHASSEE, Fla., Feb. 19, 2013 /PRNewswire-iReach/ -- With Florida facing skyrocketing Medicaid bills and surmountable deficits, a new study finds replacing the Florida medical liability system with a no-blame, administrative Patients' Compensation System could annually save $1.4 billion for Florida's state share of Medicaid.

(Photo: http://photos.prnewswire.com/prnh/20130219/CG62338)

Defensive medicine occurs when physicians order more tests and procedures than are medically necessary to keep from being sued. The annual cost of defensive medicine in Florida is estimated at $30 billion, with taxpayers picking a $5.2 billion portion of the tab through Medicaid.

The actuarial study, released by the international healthcare economics firm BioScience Valuation, found that doctors would scale back the practice of defensive medicine if the medical tort system was replaced with a no-blame, administrative compensation system.

Without the constant fear of being sued, physicians would choose the best healthcare for their patients, resulting in fewer unnecessary tests and procedures. BioScience estimates doctors would reduce the practice of defensive medicine by 30 to 70 percent under a Patients' Compensation System.

"There is no single effort that could reduce the cost of healthcare as dramatically as eliminating the practice of defensive medicine" Dr. Lee Gross, treasurer of Charlotte County Medical Society. "If Florida lawmakers embrace this model, they will bring enormous healthcare savings to taxpayers and our state budget."

Under a Patients' Compensation System, a patient who was medically injured could file a claim for review by a panel of expert practitioners. If that panel deemed the injury was "avoidable," the claim would be forwarded to a Compensation Department to award compensation.

This would create a predictable model where patients are assured their cases would be heard. Injured patients would have access to justice. And unlike the current tort system, low-value claims would be heard. The system would provide more injured patients compensation. They would receive predictable settlements in much faster time. Doctors would know they wouldn't be hauled into court for frivolous reasons.

Among highlights of the BioScience Valuation report:

  • Annual cost of defensive medicine in Florida is estimated at $30 billion, an estimated 26 percent of total Florida health care costs (based on a survey by Gallup).
  • Annual cost of defensive medicine is almost $7.5 billion for Florida Medicaid.
  • With an effective no-fault, Patients' Compensation System, first year savings for Florida's state share of Medicaid could be $340 million; that number may grow to annual savings of $1.4 billion after five years.
  • Yearly overall savings for Florida Medicaid are each expected to be in the order of $780 million in the first year and more than $3.9 billion annually after five years.
  • Long-term, Florida Medicaid could achieve overall savings exceeding $45 billion over a ten-year period, of which $16.8 billion would be Florida's state share of Medicaid.

To access the full report from BioScience Valuation, visit: 

About Patients for Fair Compensation
Patients for Fair Compensation is a 501(c) 4 organization seeking to replace our broken medical liability system with a no-blame, administrative system. The Patients' Compensation System will lower healthcare costs by eliminating the practice of defensive medicine, saving up to $650 billion per year nationally in unnecessary costs. By assuring access to real justice for injured patients and increasing patient safety, the system is one that works for patients and our economy. Visit http://www.patientsforfaircompensation.org for more information.

Media Contact: Jordan Jacobs Patients for Fair Compensation, 850-224-0174, [email protected]

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SOURCE Patients for Fair Compensation

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