Monitoring for Waste: Evidence from Medicare Audits

Maggie Shi

No 31559, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the tradeoffs 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 healthcare 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 upfront and include investments in technology to assess the medical necessity of care.

JEL-codes: H0 H00 H5 H50 H51 H53 H57 I0 I00 I1 I10 I11 I13 I18 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-hea
Note: EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Maggie Shi, 2024. "Monitoring for Waste: Evidence from Medicare Audits," The Quarterly Journal of Economics, vol 139(2), pages 993-1049.

Downloads: (external link)
http://www.nber.org/papers/w31559.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:31559

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w31559

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().