Detecting Medicare abuse

This paper identifies which types of patients and hospitals have abusive Medicare billings that are responsive to law enforcement. For a 20% random sample of elderly Medicare beneficiaries hospitalized from 1994 to 1998 with one or more of six illnesses that are prone to abuse, we obtain longitudinal claims data linked with social security death records, hospital characteristics, and state/year-level anti-fraud enforcement efforts. We show that increased enforcement leads certain types of types of patients and hospitals to have lower billings, without adverse consequences for patients' health outcomes.