Having recognized the differences in financial incentives between institutional providers and private practitioners participating in the Medicaid program, the New York State Health Department developed a streamlined mechanism of prior approval for 13 selected institutional providers of dental care. As part of the evaluation of this process, a retrospective audit of 316 dental records was conducted to assess the level of documentation present in the dental record. A followup audit was conducted 3 months after implementation of a plan to correct any deficiencies identified. More than 50 percent of the facilities were unable to present all the records requested at the time of the initial audit. Few of the audited records were free of deficiencies, and documentation of the results of the intra-oral examination was lacking in most facilities. The followup audit demonstrated statistically significant improvement in the level of record documentation. These results demonstrate that, even when good recordkeeping procedures were identified and agreed to by these institutional dental providers, performance was inadequate. However, the study also demonstrates that adequate records can be kept if sufficient incentives are provided. Efforts to evaluate retrospectively the delivery of dental care that are dependent on the dental record as a primary data source are unlikely to succeed unless incentives to encourage good recordkeeping are incorporated. Further research is needed to develop appropriate incentives that would operate in other practice settings.