Looking for good news in a bad economy? Medical malpractice rates have not only stabilized but are decreasing.

According to the latest available information, rates in Arkansas are down 1.3 percent since 2006 as a result of malpractice insurance companies paying out less in claims, and they appear likely to remain at low rates.

According to Lars Powell, Ph.D., Whitbeck-Beyer chair of insurance and financial services at the University of Arkansas at Little Rock College of Business, “Every new piece of information we get about claims and loss experience has been less than what we’ve seen before. So it’s possible the rates could go back up. But you would expect to see that precipitated by large losses or an increased frequency of claims, and to my knowledge, we haven’t see either one in Arkansas yet.”

The decrease follows a big run-up in rates during the first part of the 2000s, when the state Insurance Department allowed companies to have double-digit increases several straight years and turned down increase requests of as much as 100 percent.

So why are the rates going down? Primarily it’s the economy. Nationally, the Physician Insurers Association of America says claims frequency is down 25-30 percent from four or five years ago. That’s because plaintiffs’ attorneys don’t want to pay the high costs of filing suit unless they have a very good case. According to the PIAA, only 30 percent of all claims filed against doctors end up in a payment to the plaintiffs.

There are also more competitors in the marketplace. In 2004, when the dominant St. Paul Fire and Marine Insurance Company abruptly left the market, no one was offering coverage. Now there are a couple of dozen companies either renewing business or seeking new policyholders.

Other reasons: Arkansas has not had any huge verdicts in several years. Also, physicians appear to be doing a better job of applying risk management practices that reduce the potential of a lawsuit.

One factor not really affecting the rates: tort reform. Arkansas’ 2003 law has been eviscerated by the courts. Health care reform also should have little effect, good or bad, on rates.

We’re due for a comprehensive Insurance Department report that will shed more light on the subject. I will keep you posted.

The overhaul of the state’s Medicaid system will move a little more slowly than earlier anticipated, but it’s still moving.

That was one of the takeaways from a question and answer session in Little Rock attended by hundreds of medical providers and led by State DHS Director John Selig, Medicaid Director Dr. Joe Thompson, Medicaid Medical Director Dr. Bill Golden, and Steve Spaulding, vice president of enterprise networks for Blue Cross.

DHS and the Beebe administration have proposed replacing the state’s fee for service system, in which Medicaid keeps paying as long as doctors keep treating, with concepts such as “bundled payments” for “episodic care.” The state has gotten a waiver from the federal Department of Health and Human Services to try to implement the idea as a pilot project.

In other words, the state would pay a certain amount to all the providers (bundled payments) for an episode, such as an appendectomy, and no more. The idea is to give medical providers a financial incentive to provide only necessary care.

How that system will work is a topic of big concern and debate in the medical community. As originally planned, providers would decide how to divide the money for each patient. That’s still being talked about, though Selig did indicate to one questioner that Medicaid could be the decision maker. Still, it could be a mess. As David Wroten, director of the Arkansas Medical Society told me, a state is a pretty big pilot project.

The plan was to start going into effect in July 2012, and that’s still the timeline, but the presenters said the state may begin by trying to pick low-hanging fruit and roll out the changes over time. For example, an early focus area could be early delivery of babies, which data show is being done too often for convenience instead of medical necessity.

The idea is being considered because the state faces a $200 million shortfall in Medicaid in 2013, with future deficits looking even scarier. Thompson pointed out that a 5 percent savings in Medicaid’s $4 billion budget would equal $200 million.

Medicaid is the program that pays for care for the poor, the disabled, many nursing home residents and others, and you can’t reform health care without it. In Arkansas, 750,000 people are on it, and it pays for 60 percent of all childbirths.

Spaudling said Blue Cross wants to participate so it won’t be at cross purposes with the state. “The whole idea is to share information and find ways that we can both push on the same side of the rock,” he said.

I talked with Selig (above) after the meeting to get his thoughts. I have no idea why his head is so flat in the video. I promise he does not look like that in real life.