RAC outpatient claims denials on the climb

Hospitals still continue to aggressively appealing claims denials by Recovery Audit Contractors and get a large percentage of them overturned, according to new data from the American Hospital Association's RACTrac Survey. And RACs also are becoming more aggressive in terms of denying outpatient claims for payment.

Altogether, 48 percent of all RAC denials are being appealed, with hospitals reporting a 70 percent success rate in getting them overturned. However, 59 percent of all claims remain in the appeals process and have yet to be resolved. The AHA has asked the Office of Medicare Hearings and Appeals to try and clear up a mounting backlog of denials that are being heard in its administrative law courts.

Gaps between automated and complex claims denials remain large. The average automated denial was worth $688, while the average complex denial was $5,615. Outpatient billing errors were the biggest trigger for an automated denial, occurring 38 percent of the time.

For complex denials, inpatient coding issues were the biggest trigger, occurring 25 percent of the time at hospitals during the third quarter of 2014. Short inpatient stays were the second biggest RAC audit trigger, occurring at 23 percent of all hospitals during the quarter. Both totals are significantly slower than earlier this year, when more than half of all hospitals said they had activity in those categories.

Outpatient billing or coding errors comprised 29 percent of all dollars in dispute, with short inpatient stays taking up virtually no dollars at all.

Fifty-two percent of hospitals said they had a RAC denial overturned on appeal during the third quarter, with more than 70 percent of hospitals in region A, which covers the northeastern United States, getting a denial overturned.

More than a quarter of the hospitals surveyed said they spent at least $50,000 to manage their RAC workloads, and 13 percent said they had to add more staff to handle their RAC issues.

To learn more:
- read the AHA RACTrac report (.pdf)