Hospitals face increased RAC activity, denials

The number of hospitals reporting activity by recovery auditors, or RACs, inched up during the fourth quarter of 2012, reported AHA News Now, although the dollar amount of claims denied soared.

Ninety percent of the hospitals that participate in the American Hospital Association's RACTrac Survey experienced some level of RAC activity during last year's fourth quarter. That compares to 89 percent during the third quarter of 2012.

However, overall medical records requests went up nearly 10 percent quarter-over-quarter, to 720,590, compared to 662,710 during the third quarter of 2012.

Cumulative claim denials reached $1.3 billion through the end of 2012, up from $1.1 billion at the close of the  third quarter. Virtually all of the denials were connected to complex medical record denials, rather than automated ones.

Three-quarters of respondents said the No. 1 reason for complex denials in the fourth quarter was the medically unnecessary short stay, trailed by inpatient coding errors. Medically unnecessary short stay denials also were the most costly, according to the survey.

Insertion of a drug-eluting stent was the likeliest cause for a medically unnecessary short stay claims denial, representing more than 20 percent of all denials in the category.

Moreover, the survey found 63 percent of participating hospitals spent at least $10,000 during the fourth quarter to manage RAC activity, which included tasks such as hiring attorneys and purchasing relevant software.

However, 47 percent surveyed hospitals had at least one incident where they did not receive a demand letter from a RAC informing them of a denial.

To learn more:
- read the AHA News Now brief
- here's the RACTrac Survey (.pdf)