Deterrence Effects of Antifraud and Abuse Enforcement in Health Care
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.
Dr. Howard has served as a consultant on an unrelated False Claims Act case. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Howard, David H. & McCarthy, Ian, 2021. "Deterrence effects of antifraud and abuse enforcement in health care," Journal of Health Economics, Elsevier, vol. 75(C). citation courtesy of