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."