A recent data analysis by the federal Centers for Medicare & Medicaid Services (CMS) reveals that perception is not always reality when it comes to Medicare spending. Researchers have long contended that providers in high-income areas such as Manhattan have tried to game the system by performing unnecessary procedures. However, this new analysis, which incorporates additional factors into the equation, shows a different pattern.

In January, the Institute of Medicine (IOM) and Committee on Geographic Variation in Health Care Spending and Promotion of High-value Care sent a letter to CMS requesting new datasets and analyses. IOM had been asked to provide recommendations about improving Medicare to HHS Secretary Kathleen Sebelius. The formal request stated that the "information will help the Committee evaluate geographic variation and growth in health care spending and the volume and intensity of health care services utilization."

CMS created four new datasets, and the resulting expanded data analysis revealed that Manhattan and several other suspect areas actually have Medicare spending below the national average when their patients' medical needs are factored in. An article by Kaiser Health News noted that, "In CMS's analysis, 27 of the country's 306 hospital markets switched from higher than average to lower than average spenders after patient health and geographic cost factors were considered. Conversely, 60 regions that appeared to be low spenders in raw dollars actually were above the national average once the adjustments were made, the data show."

However, even amidst all the shifts caused by factoring in the new criteria, Miami retained its title as number one, with Medicare spending that averaged $10,145. That is 35 percent above the national average of $7,500. While demographics obviously play a role here, the Miami area has long been a focus of Medicare fraud, earning intense scrutiny from law enforcement.

In July 1997, FBI agents raided Columbia/HCA accounting offices in seven states, including Florida. Florida's new governor, Rick Scott, was the chain's CEO at the time. The investigation was and still is the biggest Medicare fraud case in U.S. history and ended with Columbia/HCA paying $1.7 billion in fines, penalties and damages.

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New Medicare Cost Spending Analysis Uses Enhanced Criteria

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