AHA RACTrac 2013 Third Quarter Results: Increase in RAC Activity

The American Hospital Association (AHA) recently released the third quarter results of its RACTrac survey.  RACTrac is a free, web-based survey aimed at collecting information regarding the impact of CMS’s Recovery Audit Contractor (RAC) program on hospitals nationwide.

Results for the third quarter included 1,269 participating hospitals.  Overall, participating hospitals reported a considerable increase in RAC activity, both in terms of medial record request and complex audit denials.  Medical record requests were reportedly up 13 percent since the first quarter of 2013.  Likewise, participating hospitals reported complex audit denials had increased 28 percent since the first quarter of 2013.

The impact of RAC claim denials is significant.  RACTrac reported $2.5 billion dollars in claim denials through the third quarter of 2013.  The vast majority of these dollars, 97.5 percent, are tied to complex denials.  The most common complex denial rationale continues to focus on “medically unnecessary” inpatient short stay cases.  Notably, 64 percent of medical necessity short stay denials determined not that the care was medically unnecessary for the patient but instead that it was provided to the patient in the wrong setting.  The survey reported complex claim denials involving stents as well as syncope and collapse as the MS-DRGs with the greatest financial impact.

RAC reviews continue to place a costly administrative burden on hospitals.  For the third quarter of 2013, participating hospitals reported an average number of medical record requests ranging from 1,089 in Region C to 1,726 in Region A.  The survey results also revealed that 56 percent of RAC complex reviews did not result in an improper payment finding.  While this statistic is encouraging on its face, it also highlights the considerable administrative burden hospitals continue to face as part of their RAC response.  Even where an improper payment is not ultimately identified, the hospital must still respond to the medical record request timely, track itsmedical record submission to the contractor and track the RAC review results on each particular claim.

Hospitals continue to appeal a significant number of RAC claim denials through the Medicare appeals process.  Specifically, participating hospitals reported appealing 47 percent of all denials, with a 67 percent success rate through the third quarter nationwide.  Hospitals continue to experience delays at various stages of the appeals process, including receipt of notices from the QIC indicating that it will require longer than the 60 day statutory timeframe to issue its determination.  Similarly, 94 percent of participating hospitals had experienced a delay in the issuance of an ALJ decision beyond the 90 day statutory timeframe.  RACTrac reports that over 70 percent of appealed claims remain in the appeals process pending a determination through the third quarter of 2013.

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