Since the American Hospital Association (AHA) began tracking data related to the Centers for Medicare & Medicaid Services’ (CMS) Recovery Audit Contractors (RAC) program in 2010, 2,127 hospitals have reported a total of $355 million in denied claims.
The RAC program audits Medicare payments to healthcare providers to detect and stop improper payments. The AHA responded to the RAC program with RACTrac, an online reporting tool it developed and invited member institutions to use, in order to collect data on RACs' effects on hospitals.
In the recently published results of AHA’s quarterly RACTrac survey, 85 percent of hospitals report having experienced a RAC review, 81 percent of hospitals reported that they’ve appealed at least one RAC denial, 71 percent reported that RAC has impacted their institution and 51 percent reported higher administrative costs due to RAC.
RAC reviews are classified as automated, performed by a computer, and complex, performed by a human. According to the AHA survey’s results, 97 percent of denials have been determined through complex reviews since RACTrac began collecting data.
The majority of these cases were denied after care was classified as being medically unnecessary. Approximately 70 percent of complex review denials were made due to insufficient medical necessity, 17 percent were made due to improper coding, 5 percent were due to absence of documentation, 1 percent were due to incorrect discharge statuses and 6 percent were due to other reasons.
According to the AHA survey results, approximately two-thirds of RAC reviews did not identify improper payments and hospitals, which appeal approximately one-third of all denials, experience a 77 percent success rate on appeals.
Additionally, RACTrac allows hospital administrators to report concerns with the RAC program. Their list of concerns includes: waiting periods for RAC responses to inquiries, problems reconciling pending and actual recoupment and reviews that take longer than the 60 days allocated to make a determination.