Reducing Waste through Anti-Fraud Enforcement: Evidence from Hospital Admission Cases

The use of federal anti-fraud laws to address unnecessary medical care is controversial. Targeted providers frequently argue that, in their judgment, the treatment in question was appropriate. We examine the effects of anti-fraud litigation against hospitals for over-admitting patients from the emergency department, using 100% Medicare claims for 2005-2019 and a design based on the staggered rollout of these lawsuits. We find that anti-fraud lawsuits reduced admission rates by 3.6 percentage points without increasing mortality rates. We estimate five-year savings to Medicare of $1.3 billion. Our results suggest that anti-fraud enforcement can be successful in reducing costly, unnecessary care.