Evaluating the impact of 2011 tort reform limiting noneconomic damages in North Carolina and Tennessee on testing, imaging, and procedure utilization.

Objective: To evaluate the impact of tort reform laws passed in 2011 capping noneconomic damages in North Carolina and Tennessee on rates and adjusted per user costs of tests, imaging, and procedures in the Medicare fee-for-service population.

Study setting and design: State-level synthetic difference-in-differences, adjusting for the percent of FFS Medicare beneficiaries in the state who were female, had ever been on Medicare Advantage, were eligible for Medicaid for at least 1 month of the year, and total state risk-adjusted, standardized per-capita costs. Analyses of North Carolina and Tennessee were performed separately. We measured the average treatment effect on the treated.

Data sources and analytic sample: Centers for Medicare and Medicaid Services Geographic Variation Public Use File, 2007-2019.

Principal findings: Our analysis showed no economically significant impact of these laws in either state, though we found a small but statistically significant increase (average treatment effect on the treated: $46, 95% confidence interval: $6-$87) in adjusted per user cost of procedures in Tennessee.

Conclusions: Our findings suggest that caps on noneconomic damages alone may be insufficient to modify physician practice habits and impact utilization. Future work should attempt to better understand the economic and noneconomic incentives that shape physician ordering decisions.