Adjusting Physician Payment for Malpractice Risk
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In this report the authors define aggregations of Current Procedure Terminology (CPT) codes for the purpose of testing whether the risk of a malpractice claim varies by procedure. Using a data set of claims from one large teaching hospital from the 1985-1990 period, the authors show that malpractice risk differs not only by specialty but also by whether the procedure is invasive. Although the authors’ estimates are necessarily imprecise, they suggest an order-of-magnitude difference in the risk of a claim according to the invasiveness of the procedure within specialty. Medicare reimbursement policy only recognizes between-specialty variance in malpractice risk but not within-specialty variance according to invasiveness. The authors suggest it should.
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