AHA: Hospitals appeal RAC denials with 77% success

Hospitals reported $355 million in denied claims between the first quarter of 2010 and the third quarter of 2011, according to the quarterly RACTrac survey from the American Hospital Association (AHA). However, hospitals appealed nearly one-third of those Medicare Recovery Audit Contractors (RAC) denials and saw 77 percent overturned. The value of the successful appeals totaled $27.2 million nationwide, the survey notes.

Moreover, 81 percent of hospitals said they appealed at least one RAC denial, with almost all (96 percent) of hospitals receiving complex denials based on medical necessity. That's up from the 84 percent and 93 percent of hospitals that had medical necessity denials in the first and second quarter of this year, respectively.

Like the previous 2011 quarterly surveys, the majority of the 3Q medical necessity denials involved 1-day hospital stays during which care was delivered in the wrong setting, not because the care was unnecessary.

Although 15 percent of hospitals waited at least 14 days to receive a RAC response and 17 percent still haven't heard back, most hospitals graded RAC responsiveness and overall communication as "fair" or "good."

This quarter's high success rate for hospitals appealing RAC denials could appease the hospitals and other providers concerned about Medicare RAC prepayment audits starting January 2012.

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