Many RAC denials overturned on appeal

The recovery audit contractors working on behalf of the Medicare program denied a total of $86 million in claims during 2010--many of which were overturned on appeal--according to a survey of 1,850 hospitals conducted by the American Hospital Association, reports AHA News Now.

The AHA's RACTrac survey, which queried hospitals via the web, reported nearly 80 percent of hospitals surveyed experienced some sort of RAC activity. Of those, the vast majority were general medical and surgical hospitals. Altogether, they experienced 37,120 total denials, of which 21,406 were automated and 15,714 were complex.

However, 90 percent of the money involved in all RAC claims centered on complex denials. The average complex denial involved $5,281, while the average automated denial involved only $399. The majority of automated denials involved an outpatient billing error, while complex denials centered primarily on incorrect DRG coding or other errors.

Among the complex denials, 57 percent questioned the medical necessity of the care delivered. Another 57 percent reported appealing at least one RAC denial. Of those appeals that finished the process, 85 percent were overturned in favor of the provider.

Respondents also said underpayment determinations totaled $11.6 million through the fourth quarter of 2010.

For more:
- read the AHA News Today article
- read the RACTrac report