{Reference Type}: Journal Article
{Title}: MONITORING FOR WASTE: EVIDENCE FROM MEDICARE AUDITS.
{Author}: Shi M;
{Journal}: Q J Econ
{Volume}: 139
{Issue}: 2
{Year}: 2024 May
{Factor}: 19.013
{DOI}: 10.1093/qje/qjad049
{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.