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Monitoring for Waste: Evidence from Medicare Audits*
Resource type
Author/contributor
- Shi, Maggie (Author)
Title
Monitoring for Waste: Evidence from Medicare Audits*
Abstract
This article examines the trade-offs of monitoring for wasteful public spending. By penalizing unnecessary spending, monitoring improves the quality of public expenditure and incentivizes firms to invest in compliance technology. I study a large Medicare program that monitored for unnecessary health care spending and consider its effect on government savings, provider behavior, and patient health. Every dollar Medicare spent on monitoring generated $24–$29 in government savings. The majority of savings stem from the deterrence of future care, rather than reclaimed payments from prior care. I do not find evidence that the health of the marginal patient is harmed, indicating that monitoring primarily deters low-value care. Monitoring does increase provider administrative costs, but these costs are mostly incurred up-front and include investments in technology to assess the medical necessity of care.
Publication
The Quarterly Journal of Economics
Volume
139
Issue
2
Pages
993-1049
Date
2024-05-01
Journal Abbr
The Quarterly Journal of Economics
ISSN
0033-5533
Short Title
Monitoring for Waste
Accessed
6/28/24, 1:02 PM
Library Catalog
Silverchair
Citation
Shi, M. (2024). Monitoring for Waste: Evidence from Medicare Audits*. The Quarterly Journal of Economics, 139, 993–1049.
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