The diffusion of health care fraud: A bipartite network analysis

Abstract

Many studies have examined the diffusion of health care innovation but less is known about the diffusion of health care fraud. In this paper, we consider the diffusion of potentially fraudulent Medicare home health care billing in the United States during 2002-16, with a focus on the 21 hospital referral regions (HRRs) covered by local Department of Justice (DOJ) anti-fraud "strike force" offices. We hypothesize that patient-sharing across home health care agencies (HHAs) provides a mechanism for the rapid diffusion of fraudulent strategies. We measure such activity using a novel bipartite mixture (or BMIX) network index, which captures patient sharing across multiple agencies and thus conveys more information about the diffusion process than conventional unipartite network measures. Using a complete population of fee-for-service Medicare claims data, we first find a remarkable increase in home health care activity between 2002 and 2009 in many regions targeted by the DOJ; average billing per Medicare enrollee in McAllen TX and Miami increased by $2127 and $2422 compared to just an average $289 increase in other HRRs not targeted by the DOJ. Second, we establish that the HRR-level BMIX (but not other network measures) was a strong predictor of above-average home health care expenditures across HRRs. Third, within HRRs, agencies sharing more patients with other agencies were predicted to increase billing. Finally, the initial 2002 BMIX index was a strong predictor of subsequent changes in HRR-level home health billing during 2002-9. These results highlight the importance of bipartite network structure in diffusion and in infection and contagion models more generally.

Keywords: Beneficiary-sharing; Bipartite degree; Bipartite mixture network index; Diffusion; Health care fraud; Home health care; Peer-effect; Social network.