Medical necessity contentions are fueling more RAC denials

Hospitals reported $167 million worth of claims denied by Medicare Recovery Audit Contractors between the first quarter of 2010 and the first quarter of this year, although in many instances the facilities eventually prevail, reports AHA News Now.

Among the 1,960 hospitals participating in the quarterly RACTrac survey, 84 percent of those that received complex denials cited the questioning of medical necessity as the reason for the denial. Syncope and collapse DRGs--treatment for fainting--was the most-questioned of the medically necessary RACs, followed by brief cardiac episodes.

Most of the denials involved hospital stays lasting less than one day, and most had to do with an inappropriate care setting triggering the denial, not that the care itself was completely unnecessary.

Altogether, nearly a quarter of all RAC denials were appealed by hospitals, and they won most of the time. Seventy-one percent of denials were overturned.

Moreover, 57 percent of the participating hospitals reported receiving underpayment determinations, meaning they were entitled to more money. Altogether, the underpayments totaled $17.4 million between the first quarter of 2010 and this year.

To learn more:
- read the AHA News Now article
- read the RACTrac survey (.pdf)

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