Appeals of RAC denials are flat for first quarter

Sixty percent of the hospital claims reviewed by recovery audit contractors (RACs) in the first quarter of the year did not include an overpayment, according to data compiled by the American Hospital Association's RACTrac survey.

Altogether, the 730 hospitals that participated in this quarter's survey reported they appealed 47 percent of all RAC denials, about the same as last year, but down slightly from the historical norm.

The average value of a claim that was denied automatically during the quarter was $867, while the value of a denied complex claim was $5,451. Incorrect discharge status was the leading cause for an automated denial, while inpatient coding-- coding errors in particular--was the leading reason for a complex denial. And 59 percent of hospitals said that this issue was the reason behind the decision to appeal a payment denial.

RAC audits continue to be a bone of contention for many hospitals, given the rate at which payment clawbacks are appealed. Many appeals remained mired in federal administrative law court for months if not years. That prompted the Centers for Medicare & Medicaid Services last year to offer to settle disputed claims on short-term hospital stays for 68 cents on the dollar, or $1.3 billion in total. Thirty-seven percent of hospitals reported having a denial reversed during the quarter, a significant lag behind the percent of claims being appealed.

Hospitals are spending a significant amount of money managing their RAC process: 43 percent reporting spending at least $10,000 during the quarter; 26 percent spent more than $25,000; and 8 percent spent more than $100,000.

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

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