Working Paper: NBER ID: w27900
Authors: 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.
Keywords: antifraud enforcement; health care; Medicare; implantable cardiac defibrillator; False Claims Act
JEL Codes: I18; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| decline in unnecessary ICD implantations (O14) | savings to Medicare (H51) |
| DOJ investigation (L49) | shift in physician behavior (I11) |
| DOJ investigation (L49) | long-lasting deterrent effect of antifraud enforcement (G18) |
| decline in unnecessary ICD implantations (O14) | change in trends of ICD procedures (O14) |
| DOJ investigation (L49) | decline in unnecessary ICD implantations (O14) |