The number of Recovery Audit Contraction (RAC) requests for medical claims reviews has increased “dramatically” since 2012, according to the American Hospital Association’s (AHA) newest RACTrac survey. More than 1200 hospitals reported 47% more requests than last year, and 58% more complex audit denials than they saw in 2012 as Medicare attempts to rein in spending and make physicians more accountable for their costly treatment choices.
Hospitals of all sizes across the nation have experienced a sharp rise in the amount of RAC activity, mostly on claims averaging approximately $9,000 apiece. Six out of ten medical records reviewed by RACs did not contain any overpayment, the survey found, but the majority of hospitals are now spending more than $10,000 per quarter managing the RAC process. Eleven percent of hospitals spent more than $100,000.
Medicare denied more than $2.2 billion in payments through the second quarter of 2013, with 98% of those denials related to complex claims. While the average automated denial was worth $576 on average, a complex denial was valued at $5,704. Inpatient services were responsible for complex denials 92% of the time, while the automated denials were largely for outpatient services.
Three-quarters of complex claims were denied due to the perceived “medically unnecessary” admission of patients for short hospital stays. Two-thirds of these short-stay denials were not because the treatment was medically unnecessary, but because it should have been conducted in an outpatient setting instead.
