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Facilities Investing More in Managing the RAC Process

CMS’ (Centers for Medicare and Medicaid Services) permanent recovery audit contractor (RAC) initiative is full-fledged now, having identified around $1.45 billion in improper payments during the first quarter of fiscal year 2012. The process of audit is still going strong with practitioners and facilities becoming increasingly perturbed. RACs managed to collect overpayments amounting to $1.27 billion and returned underpayments of $183.7 million during the period October 2009 through December 2011.

A recent report from the American Hospital Association RACTrac program indicates that around fifty nine percent of the participating hospitals has recorded that they have not received any instruction from the CMS or its contractors as to the ways in which payment errors can be avoided. At least 50% declared they have not received a demand letter, which they view as the main RAC process problem. The report also highlights the fact that 87% of the participating hospitals saw some RAC activity through March. There was a considerable increase in the requests for medical records, with two thirds of the total number found to contain no improper payments.

  • In the first quarter of 2012, claim denials came to $741 million, which is almost double the amount reported during the last quarter of 2011. Hospitals were seen appealing at least 83 denials in the first quarter, of which 75% were successful in the long run.
  • At least 55% of the hospitals spent more than $10,000 for managing the RAC process in the first quarter of the year 2012; 34% spent more than twenty five thousand dollars and 7% shelled out more than $100,000.

It has been found that the increasing number of medical record requests and overpayment demands has made many hospitals in the US to improve their internal practices. Many of these have invested heavily in obtaining additional resources to handle their RAC processes. Hospitals need to ensure they are analyzing denials carefully; they could use this information to eradicate any internal limitations. Ideally, a database can be created to identify various issues, trends and results. It is important to see that no important deadlines are missed, all necessary records are submitted on time and the results letters are received on time. If all information right from the point the patient is admitted to the facility to the time of discharge is carefully tracked, it becomes easy to spot the weaknesses and handle specific underpayments/denials. A dedicated team to manage government audits would be ideal. Facilities finding it difficult to handle all this in-house could consider utilizing an outside agency to analyze denials, and help in the appeals process.

About Julie Clements

Julie Clements

With some background in the healthcare staffing arena; as well as 6 years as Director of Sales and Marketing at a 4 star resort; Julie joined MOS in March of 2008. Hired for sales and support, Julie has proven capable across multiple product lines and in early 2011 was promoted to supervise all solutions managers.