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Figure 8. Sample mean for sample size=100 and 1000 replicates
where each X is either 0 or 1 depending upon the presence or absence of an identified condition. This
value will clearly increase if more values of X are one, and will increase if more of the values with the
highest weights α are one. Therefore, the expected length of stay (or other outcome variable) will be
predicted larger if a provider can increase the number of nonzero X's. Since a provider can receive more
favorable outcomes, and increased reimbursements, the incentive to upcode is considerable.
Figure 9. Sample mean for sample size=1000 and 1000 replicates
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