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Deterrence Effects of Antifraud and Abuse Enforcement in Health Care

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  • David H. Howard
  • Ian McCarthy

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 unnecessary 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

  • David H. Howard & Ian McCarthy, 2020. "Deterrence Effects of Antifraud and Abuse Enforcement in Health Care," NBER Working Papers 27900, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27900
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    References listed on IDEAS

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    13. Congressional Budget Office, 2014. "How Initiatives to Reduce Fraud in Federal Health Care Programs Affect the Budget," Reports 49460, Congressional Budget Office.
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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

    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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