AHA: Hospitals spend a lot of money managing RAC process

The American Hospital Association's latest survey on the activities of recovery audit contractors (RACs) indicates that while hospitals are spending a lot of money fighting RACs, they are also succeeding in getting many payment clawbacks overturned on appeal.

The facilities appeal 49 percent of claim clawbacks and prevail 39 percent of the time., according to its latest quarterly survey of 745 hospitals, Other highlights from the survey:

  • The average number of complex medical records requested by RACs increased during the fourth quarter to an unweighted average of 1,745, up significantly from 1,549 during the third quarter of last year.
  • The average value of an automated claims denial during the fourth quarter was $834 and a complex denial $5,427.
  • Outpatient coding errors was the leading reason for an automated denial.
  • Inpatient coding errors were the leading cause of complex claims denials.

Altogether, 60 percent of audited claims did not include an overpayment, according to the survey.

RACs have been a sore point for hospitals, leading to prolonged litigation over the process and the accompanying appeals. In 2014, there was at least a two-year backlog of appealed claims clogging federal administrative law courts.

Last year, the Centers for Medicare & Medicaid Services spent some $1.3 billion to settle claims still in dispute, paying hospitals about 68 cents on the dollar.

Some 84 percent of hospitals spent at least five figures managing the RAC process during the fourth quarter of 2015. Among those, 48 percent spent more than $10,000; 29 percent spent more than $25,000 and 7 percent spent more than $100,000.

To learn more:
- read the RacTRAC survey (.pdf)