The effect of audit regimes on applications for long-term care

This paper studies the effects of various audit regimes, differing in the degree of control and the presence of performance incentives, on behavior of care providers filing applications for providing long-term care services to patients. We present evidence from a large-scale field experiment in the Dutch market for long-term care. We find that increasing the degree of control reduces the number of applications and that introducing performance incentives reduces this even further. However, we find evidence for substitution with other types of long-term care services, which are often less extensive. Finally, we find detrimental effects on audit approval rates, but we provide some results showing that assessors are less strict when audits do not have direct implications.