Reference no: EM131741620

Question: The three most common treatments for blocked coronary arteries are medication, bypass surgery, or angioplasty, a medical procedure that involves clearing out arteries and that leads to higher profits for doctors than do the other two procedures. The highest rate of angioplasty in the United States is in Elyria, a small city in Ohio. A newspaper article stated that "the statistics are so far off the charts-Medicare patients in Elyria receive angioplasties at a rate nearly four times the national average-that Medicare and at least one commercial insurer are starting to ask questions." The rate, in fact, is three times as high as that of Cleveland, Ohio, which is located just 30 miles from Elyria.

a. How did probability play a role in the decision of Medicare and the commercial insurer to begin investigations?

b. How might the z distribution help the investigators to detect fraud in this case?

c. Does Elyria's extremely high percentile mean that the doctors in town are committing fraud? Cite two other possible reasons for Elyria's status as an outlier.