of higher fees. However, total direct costs of the medical malpractice system represent less than 1 percent of overall health care costs in the United States. The medical malpractice system may also increase costs indirectly by encouraging physicians to practice defensive medicine. In this assessment, the Office of Technology Assessment first examines the nature of defensive medicine, adopting a working definition of defensive medicine that embraces the complexity of the problem from both the physician and broader public policy perspectives. It then presents and critically examines existing as well as new evidence on the extent of defensive medicine. Finally, it comments on the potential impact of a variety of medical malpractice reforms on the practice of defensive medicine. This assessment was prepared in response to a request by the House Committee on Ways and Means and the Senate Committee on Labor and Human Resources. The report was prepared by OTA staff, but OTA gratefully acknowledges the contributions of the assessment advisory panel, numerous researchers who did work under contract to OTA, and many other individuals who provided valuable information and reviewed preliminary drafts. As with all OTA documents, the final responsibility for the content of the assessment rests with OTA. SUMMARY OF FINDINGS . Defensive medicine occurs when doctors order tests, procedures, or visits, or avoid certain high-risk patients or procedures, primarily (but not necessarily solely) because of concern about malpractice liability. ● Most defensive medicine is not of zero benefit. Instead, fear of liability pushes physicians’ tolerance for medical uncertainty to low levels, where the expected benefits are very small and the costs are high. ● Many physicians say they would order aggressive diagnostic procedures in cases where conservative management is considered medically acceptable by professional expert panels. Most physicians who practice in this manner would do so primarily because they believe such procedures are medically indicated, not primarily because of concerns about liability. ■ It is impossible to accurately measure the overall level and national cost of defensive medicine. The best that can be done is to develop a rough estimate of the upper limits of the extent of certain components of defensive medicine. Overall, a small percentage of diagnostic procedures--certainly less than 8 percent—is likely to be caused primarily by conscious concern about malpractice liability. This estimate is based on physicians’ responses to hypothetical clinical scenarios that were designed to be malpractice-sensitive; hence, it overestimates the rate at which defensive medicine is consciously practiced in diagnostic situations. 2 | Defensive Medicine and Medical Malpractice ■ Physicians are very conscious of the risk of being sued and tend to overestimate that risk. A large number of physicians believe that being sued will adversely affect their professional, financial. and emotional status. ■ The role of the malpractice system as a deterrent against too little or poor-quality care--one of its intended purposes—has not been carefully studied. ■ One malpractice reform that directly targets wasteful and low-benefit defensive medicine is to enhance the evidentiary status in malpractice court cases of selected clinical practice guidelines that address situations in which defensive medicine is a major problem. The overall effects of this reform on health care costs would probably be small, however, because only a few clinical situat ions represent clear cases of wasteful or lowbenefit defensive medicine. ■ The fee-for-service system both empowers and encourages physicians to practice very lowrisk medicine. Health care reform may change financial incentives toward doing fewer rather than more tests and procedures. If that happens, concerns about malpractice liability may act to check potential tendencies to provide too few services. INTRODUCTION For more than two decades many physicians. researchers, and government officials have claimed that the most damaging and costly result of the medical malpractice system as it has evolved in the United States is the practice of defensive medicine: the ordering of tests, procedures, and visits, or avoidance of certain procedures or patients, due to concern about malpractice liability risk. Calls for reform of the medical malpractice system have rested partly on arguments that such reforms would save health care costs by reducing doctors’ incentives to practice defensively. Such an argument even found its way into the 1992 presidential debates, when President Bush contended that “the malpractice ...trial lawyers’ lawsuits ...are running the costs of medical care up $25 to $50 billion.’” (35) Such claims notwithstanding, the extent of defensive medicine and its impact on health care costs remain a matter of controversy. Some critics claim that defensive medicine is nothing more than a convenient explanation for practices that physicians would engage in even if there were no malpractice law or malpractice lawyers. This Office of Technology Assessment (OTA) study of defensive medicine grew out of congressional interest in understanding the extent to which defensive medicine does. indeed, influence medical practice and how various approaches to reforming the malpractice