Is Technology Perpetuating Medicare Fraud?

What are we to make of recent allegations that technology may be facilitating an uptick in Medicare fraud?

As the fiscal cliff looms, Medicare can ill afford a crisis. But that's just what CBS News' 60 Minutes December 2 broadcast set out to document.

The report opened with an estimate, derived from a 2009 Institute of Medicine statistic, that $210 billion per year—10% of all health expenditures—goes towards unnecessary tests and treatments, much of it paid out via Medicare and Medicaid.

In the report, former physicians working for Health Management Associates, which is the fourth-largest for-profit hospital chain in the U.S., accuse the corporation of systematically setting quotas for its doctors to admit more and more patients regardless of medical condition.

With 70 hospitals in 15 states, HMA has thrived by buying small, struggling hospitals in non-urban centers. Under fee-for-service reimbursements, the more empty beds hospitals fill, the more revenue they generate.

Scott Rankin, MD, interviewed by 60 Minutes, worked in the emergency department of the Carlisle Regional Medical Center in Carlisle, Pa. "In a relatively rural, limited resource community hospital, your admission rate out of the emergency department is somewhere in the neighborhood of 10%," Rankin told interviewer Steve Kroft. "And they wanted 20."