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Deterrence Effects of Antifraud and Abuse Enforcement in Health Care

David H. Howard and Ian McCarthy

No 27900, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: I18 K42 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-hea, nep-ias and nep-law
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Published as Howard, David H. & McCarthy, Ian, 2021. "Deterrence effects of antifraud and abuse enforcement in health care," Journal of Health Economics, Elsevier, vol. 75(C).

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