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Deterrence effects of antifraud and abuse enforcement in health care

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  • Howard, David H.
  • McCarthy, Ian

Abstract

Estimates of the benefits of antifraud enforcement in health care typically focus on direct monetary damages. Deterrence effects are acknowledged but unquantified. We evaluate the impact of a Department of Justice investigation of hospitals accused of billing Medicare for unnecessary implantable cardiac defibrillator (ICD) procedures on their use. Using 100 % inpatient and outpatient procedure data from Florida, we estimate that the investigation caused a 22 % decline in ICD implantations. The present value of savings nationally over a 10 year period is $2.7 billion, nearly 10 times larger than the $280 million in settlements the Department of Justice recovered from hospitals. The investigation had a large and long-lasting effect on physician behavior, indicating the utility of antifraud enforcement as a tool for reducing wasteful medical care.

Suggested Citation

  • Howard, David H. & McCarthy, Ian, 2021. "Deterrence effects of antifraud and abuse enforcement in health care," Journal of Health Economics, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:jhecon:v:75:y:2021:i:c:s0167629620310511
    DOI: 10.1016/j.jhealeco.2020.102405
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    Cited by:

    1. Maggie Shi, 2023. "Monitoring for Waste: Evidence from Medicare Audits," NBER Working Papers 31559, National Bureau of Economic Research, Inc.
    2. Victoria Perez & Julio A. Ramos Pastrana, 2023. "Finding fraud: enforcement, detection, and recoveries after the ACA," International Journal of Health Economics and Management, Springer, vol. 23(3), pages 393-409, September.
    3. Jonathan Gruber & David H. Howard & Jetson Leder-Luis & Theodore L. Caputi, 2023. "Dying or Lying? For-Profit Hospices and End of Life Care," NBER Working Papers 31035, National Bureau of Economic Research, Inc.
    4. Atul Gupta & Ambar La Forgia & Adam Sacarny, 2024. "Turbocharging Profits? Contract Gaming and Revenue Allocation in Healthcare," NBER Working Papers 32564, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Medicare; False Claims Act; Fraud; Physicians’ financial incentives; Deterrence; Medical overuse; Physician behavior; Supplier induced demand;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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