Can Whistleblowers Root Out Public Expenditure Fraud? Evidence from Medicare

Area of Science:

• Health economics
• Public policy
• Law and economics

Background:

• The False Claims Act incentivizes whistleblowers to report healthcare fraud.
• Medicare fraud by healthcare providers poses a significant financial burden on government expenditure.

Purpose of the Study:

• To analyze the effectiveness and cost-efficiency of private anti-fraud enforcement under the False Claims Act.
• To quantify the impact of whistleblower settlements on Medicare cost savings and government expenditure.

Main Methods:

• Case studies of successful whistleblower lawsuits concerning Medicare fraud.
• Analysis of new legal data combined with large samples of Medicare claims data.
• Estimation of deterrence effects and cost savings generated by whistleblower settlements.

Main Results:

• An estimated $1.9 billion in whistleblower settlements generated nearly $19 billion in Medicare cost savings.
• The costs imposed on the government by private enforcement actions were minimal.
• Private enforcement proved to be a highly cost-effective method for combating fraud.

Conclusions:

• Private anti-fraud enforcement, particularly through whistleblower actions under the False Claims Act, is a successful strategy.
• This model offers significant returns on investment by reducing public expenditure fraud, specifically within Medicare.
• The findings support the continued utilization and potential expansion of private enforcement mechanisms to safeguard public funds.