With RAC program, targeted strategies and oversight may be best
The Centers for Medicare & Medicaid Services (CMS) has released updates to the Medicare Recovery Audit Contractor (RAC) program, a three-year evaluation started in July 2008. Other organizations, such as the American Hospital Association (AHA), have provided tactics and statistics to help providers through the RAC process.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 mandated that the U.S. Department of Health and Human Services (HHS) conduct the three-year report that used RACs to track and fix unfitting payments in the Medicare fee-for-service program.

Under the program, RACs conduct automated or complex reviews of providers' Medicare payments to detect improper payments.

During the three-year period, CMS reported that there were 598,238 claims that had overpayment while 76,073 were provider-appealed.

The update included information regarding the differences in data, including the number of claims with overpayment determinations, which increased by 73,105 in January 2009 to 598,238. The increase was due to claims that were manually included but were not entered into the RAC database, according to CMS.

CMS said that the rates of provider-appealed claims decreased by 41,978 because the previous reporting measures counted claims at multiple levels of each appeal, whereas the current system counts an appealed claim only once.

In addition, duplicate claims that may have caused overpayment determinations have been removed from the database, decreasing the overall number of incorrect claims, CMS said.

To get a better handle on the updated RAC program, the AHA has released results of a web-based survey conducted to provide insight on what the association said was "a lack of data and information provided by the CMS on the impact of the RAC program on America’s hospitals.”

The survey results collected by RACTrac showed that more than two-thirds of the 653 hospitals reporting experienced RAC activity in the first quarter of 2010. For 437 hospitals reporting, denied claims equated to $2.47 million during the first quarter of 2010—the average dollar amount was $709 on each denied claim.

The top reasons for these denials were outpatient billing errors (51 percent), duplicate payments (13 percent), outpatient coding errors (8 percent) and inpatient coding errors (5 percent).

Results showed that 88 percent of the hospitals reporting underwent “complex activity”--a human review to determine whether a wrongful payment could be identified--whereas 20 percent experienced “automated activity,” an automated review without human review of records.

According to the survey responses, 7,905 of RAC program requests were for medical record requests, while 606 were complex denials and 470 were automated denials.