The CBS program "60 Minutes" reported Sunday that several for-profit Health Management Associate hospitals set admissions quotas for their doctors in order to increase revenue. The report also suggested that a software program, Pro-Med, was designed improperly to indicate that more patients should be admitted than necessary and/or that unnecessary tests should be performed.
There are widespread newspaper reports as HMA owns about 70 hospitals spread out over many states: "60 Minutes" Report That Might Include Carlisle Regional Scheduled to Air Sunday" in the Harrisburg (Pa.) Patriot-News; "60 Minutes" Report: Hospital Buying Bayfront Pressed For More Hospital Admissions in the Tampa Bay Tribune; "Tennova Parent Is Subject of 60 Minutes Investigation" in the Knoxville News-Sentinel; and "60 Minutes Allegations of Fraud, Quotas Denied by Boss in the Naples Daily News.
The significance of these allegations, which I'm not saying are true or not, is that unnecessary hospital admissions and/or unnecessary tests is a means for a hospital to pump up its revenue. If the patient is covered by Medicare, then Medicare gets charged and likely pays for unnecessary care that does little more than increase by means of fraud the hospital's income. If the patient is covered by private medical insurance, the same thing happens only the cost is borne ultimately by other policyholders. In either case, you and me end up paying for the unnecessary care and help pump up the profits of the hospital.
The federal False Claims Act has application in instances like this: a hospital employee who knows of admissions quotas or other practices that result in unnecessary tests that are charged to Medicare can file a whistleblower suit under the False Claims Act and will be able to retain 15-25% of the money recovered from the wrongdoer.