Hospitals hammered by RAC audits

March 12, 2013 in Medical Technology

Hospitals continue to see increases in recovery and contractor, or RAC, audits, according to the latest survey by the American Hospital Association.

The March 8 report, which explores the impact of the RAC program on hospitals nationwide, shows results of a 2012 fourth quarter survey. According to AHA, 1,233 hospitals participated in this latest survey, and participants “continue to report dramatic increases in RAC activity.”

Highlights of the survey include:

  • Nearly 60,000 medical record requests have been made of survey respondents since last quarter.
  • More than 30,000 complex audit denials have been issued to respondents since last quarter.
  • Nearly two-thirds of medical records reviewed by RACs did not contain an overpayment, according to the RAC.
  • 94 percent of hospitals indicated medical necessity denials were the most costly complex denials.
  • 61 percent of medical necessity denials reported were for one-day stays where the care was found to have been provided in the wrong setting, not because the care was medically unnecessary.
  • Hospitals reported appealing more than 40 percent of all RAC denials, with a 72 percent success rate in the appeals process.
  • 61 percent of all hospitals filing a RAC appeal during the fourth quarter of 2012 reported appealing short stay medically unnecessary denials.
  • Nearly three-fourths of all appealed claims are still sitting in the appeals process.
  • 63 percent of all hospitals reported spending more than $10,000 managing the RAC process during the fourth quarter of 2012; 43 percent spent more than $25,000 and 13 percent spent over $100,000.
  • Over one-third of participating hospitals reported having a RAC denial reversed through utilization of the discussion period.

[See also: Meaningful use, ICD-10, RAC ACOs: A perfect storm in the making?]

Centers for Medicare Medicaid Services Recovery Audit Contractors conduct automated reviews of Medicare payments to healthcare providers — using computer software to detect improper payments, AHA says. RACs also conduct complex reviews of provider payments — using human review of medical records and other medical documentation to identify improper payments to providers.

Improper payments include: incorrect payment amounts; incorrectly coded services (including Medicare Severity diagnosis-related group (MS-DRG) miscoding; non-covered services (including services that are not reasonable and necessary); and duplicate services.

Automated activity includes the traditional automated activity as well as semi-automated review activity. These claims are denied in an automated manner if supporting documentation is not received on a timely basis, according to AHA.

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