30 J. Legal Stud. 579 (2001)
Health Care Fraud and Abuse: A Tale of Behavior Induced by Payment Structure

handle is hein.journals/legstud30 and id is 587 raw text is: HEALTH CARE FRAUD AND ABUSE: A TALE OF
BEHAVIOR INDUCED BY PAYMENT STRUCTURE
ARTI K. RAI*
ABSTRACT
The campaign to curtail fraud and abuse in the Medicare and Medicaid programs
represents an attempt by regulators to evade more fundamental and difficult questions
regarding cost and quality control. In the Medicare arena, tackling these larger ques-
tions will require dismantling the program's fee-for-service structure and imposing
on providers financial incentives to evaluate carefully health care costs and benefits.
L his thorough and insightful paper,' David Hyman undertakes an exam-
ination of the existing federal system for fraud control in the Medicare and
Medicaid programs. After offering an overview of current laws that govern
fraud control, he discusses how well these laws fit with the economics of
the medical marketplace and with the social norms of the various players in
this marketplace. In these comments, I address what I take to be the major
points of Hyman's paper. Although I concur with many of these points, I
believe that Hyman fails to focus sufficiently on structural features in the
Medicare program that actually encourage undesirable billing practices. As
a consequence, Hyman undersells one of the conclusions to be drawn from
the fact (noted by Hyman himself) that much of what the government pursues
under the rubric of fraud appears to fall short of intentionally deceitful be-
havior.2 This conclusion is that federal regulators have used politically ap-
pealing health care fraud strategies to attempt cost and quality control simply
because the government lacks effective mechanisms for addressing these
problems directly. In addition, Hyman is, to my mind, overly pessimistic in
his view that private-sector cost control techniques are unlikely to prove
effective at changing physician norms that militate in favor of providing all
care that has any marginal benefit. To the contrary, so long as such techniques
* Assistant Professor, University of Pennsylvania Law School. I thank Stuart Benjamin and
David Hyman for helpful comments.
'David A. Hyman, Health Care Fraud and Abuse: Market Change, Social Norms, and the
Trust Reposed in the Workmen, in this issue, at 531.
2 As Hyman points out, given the wide spectrum of conduct to which the terminology of
fraud and abuse is applied, little normative weight should be attached to its use. Id. at 532
n.2.
[Journal of Legal Studies, vol. XXX (June 2001)]
 2001 by The University of Chicago. All rights reserved. 0047-2530/2001/3002-0013$01.50

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