“Power tends to corrupt and absolute power corrupts absolutely”: A Tale of Corruption and Fraud

• In Event: Power, Damages, and Fraud Indicators

Abstract

Previous research has identified the costs that fraud and corruption has on society, including taking resources away from education, health and various other social programs. To fight fraud in the Medicare program, the Fraud Prevention System (FPS), a new state of the art predictive analytic tool, was implemented over Medicare Fee for Service claims to identify unusual claims that may be indicative of fraud. Subsequent to identifying an outlier, a Zone Program Integrity Contractor (ZPIC) is assigned the task of performing a forensic audit of the outlier as well as investigating for an overall pattern of fraudulent claims transactions. Through a cross-sectional field study, 24 individuals employed by healthcare providers subject to ZPIC audits were interviewed to share their experiences. Although the ZPICs were designed to fight Medicare fraud, results from the interviews indicate substantial corruption in the ZPIC auditor’s tactics. The results of this study contribute to the academic literature by examining environmental factors that provide opportunities for corruption and how corruption has been manifested. Additionally, this study provides an example of potential adverse implications of a completely independent auditor. The results of this study are very timely, as FPS technology is expected to be leveraged to other government programs as early as 2016, thus understanding the environmental factors contributing to corruption should be rectified prior to allowing corruption to manifest in other programs and further harm society.

Authors

• Jared Koreff, University of Central Florida

• Steve G Sutton, University of Central Florida