25 Statistics on Hospitals and RAC Audits

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CMS' Recovery Auditors — formerly known as Recovery Audit Contractors — have been conducting automated and complex reviews of Medicare payments to healthcare providers for several years now.

RACs scour a hospital's expense records looking for improper payments such as incorrect payment amounts, incorrectly coded services (e.g., MS-DRG miscoding), non-covered services, duplicative services and, in the rarer event, underpayments.

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Every quarter, the American Hospital Association conducts its RACTrac Survey, in which it asks thousands of member hospitals questions on their RAC activity. More than 2,200 hospitals have participated in the RACTrac Survey since January 2010, and the AHA released its most recent survey covering the first quarter of 2012. Here are 25 statistics from the RACTrac Survey on hospitals' RAC audit activity.

1.    Roughly 87 percent of hospitals experienced RAC activity in the first quarter ended March 31, 2012.
2.    Hospitals reported 447,523 medical record requests from RACs through the first quarter of 2012 compared with 306,349 in the third quarter of 2011.
3.    There were 124,055 complex denials compared with 65,623 in the third quarter of 2011.
4.    Automated denials totaled 50,395 compared with 30,295 two quarters ago.
5.    Among participating hospitals, $4.3 billion in Medicare payments were targeted for medical record requests through the first quarter of 2012.
6.    Roughly 67 percent of medical records reviewed by RACs did not contain an improper payment.
7.    About $741 million in denials were reported through the first quarter of 2012, nearly double the amount of denials reporting through the last quarter of 2011.
8.    Of all the denied dollars involving RACs, 96 percent were complex denials.
9.    The average dollar value of an automated denial was $521.
10.    The average dollar value of a complex denial was $5,839.
11.    Of the automated denials, hospitals reported 73 percent involved outpatient services.
12.    Of the complex denials, hospitals reported 97 percent involved inpatient services.
13.    Outpatient billing errors were cited as the top reason for a RAC automated denial at 42 percent.
14.    Roughly 68 percent of complex denials are short-stay medically unnecessary denials.
15.    About 52 percent of hospitals were issued short-stay medical necessity denials because the care was provided in the wrong setting, not because the care was not medically necessary.
16.    Out of all the medical necessity denials, 25 percent involved MS-DRG 312, syncope and collapse.
17.    MS-DRG 247, percutaneous cardiovascular procedure with drug-eluting stents, was the second-most denied MS-DRG by RACs at 24 percent.
18.    Roughly 72 percent of participating hospitals with RAC activity said they received at least one underpayment determination.
19.    Underpayments across all hospitals reached $72.7 million in the first quarter.
20.    Roughly 83 percent of hospitals reported appealing at least one RAC denial. The average number of appealed denials per hospital was 83.
21.    Of the claims that completed the appeals process, 75 percent were overturned in favor of the hospital.
22.    RAC activity increased administrative costs for 55 percent of hospitals.
23.    About 55 percent of hospitals said they spent more than $10,000 managing the RAC process during the first quarter of 2012.
24.    Hospital RAC coordinators spent an average of 114 hours responding to RAC activity in the first quarter, the most of any hospital staff member.
25.    Roughly 59 percent of hospitals indicated they have not received any education related to avoiding payment errors from CMS or its RACs.

More Articles on RACs:

75% of Appeal RAC Denials Overturned in 1Q of 2012

How to Build RAC-Proof Admission Screening Criteria

Medicare RACs Collected $1.27B in Overpayments Since 2009

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