Medicare RAC Denials to Hospitals Climb 23% in 3Q

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Medicare Recovery Auditors (RACs) rate of claims denials to hospitals has continued to grow, as the number of denials was up 23 percent in the most recent quarter, according to the American Hospital Association's RACTrac Survey (pdf) results from the third quarter of 2012.

Nearly 1,300 hospitals participated in the third quarter RACTrac Survey, and the AHA said hospitals "continue to report dramatic increases in RAC activity." In addition to ballooning denials, medical record requests rose 21 percent in the third quarter compared with the second, and the dollar value of denials increased 26 percent.

However, hospitals have persisted in fighting back, as more than 40 percent of all RAC denials were appealed. Providers won their appeals 74 percent of the time.

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These figures come out as CMS reported record-high overpayment recoupments from RACs. In fiscal year 2012, CMS said Medicare RACs collected $2.29 billion in overpayments from providers, which tripled overpayment collections in FY 2011. However, CMS did not identify how many dollars were tied up in the appeals process or had been successfully appealed.

Here are other key findings from the AHA's third quarter RACTrac Survey:

•    Roughly 60 percent of medical records reviewed by RACs did not contain an improper payment.

•    Ninety-four percent of hospitals said medical necessity denials were the costliest complex denials.

•    Roughly 61 percent of medical necessity denials were for one-day stays in the wrong setting, not because the care was not medically necessary.

•    Roughly 75 percent of all appealed claims are still sitting in the appeals process.

•    Roughly 58 percent of all hospitals said they spent $10,000 or more managing their RAC process during the third quarter.

•    Roughly $6.1 billion in Medicare payments were targeted for medical record requests through the third quarter.

•    Region C, which is monitored by Connolly, had the highest number of hospitals reporting RAC activity. Regions B and C experienced the largest increases in medical record requests.

More Articles on RACs:

Could the Administrative Law Judge Level for RAC Appeals Disappear?

Medicare RACs Recoup $2.3B in 2012, Smashing Collections Record

Providers Filed 85% of Medicare Appeals in 2010

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