RAC Medical Record Requests Up 22 Percent in Second Quarter, Survey Finds

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Medical record requests from Medicare Recovery Audit Contractors (RACs) increased by 22 percent from the first quarter of 2012 through the second quarter of 2012, according to a survey from the American Hospital Association.

Hospitals reported 546,000 medical record requests through the second quarter of 2012, compared with 448,000 in the first quarter of 2012 (23 MCR 621, 6/1/12), the RACTrac survey found.

Hospitals also reported increases in both automated and complex RAC denials, with automated denials increasing from 50,000 through the first quarter of 2012 to 57,000 through the second quarter--a 14 percent change--and complex denials increasing from 124,000 through the first quarter to 160,000 through the second quarter, a 29 percent change.

An automated RAC denial generally involves billing or coding errors, such as the absence of documentation in a claim, and occurs without human supervision. A complex RAC denial is based on human review of medical records related to a claim.

The survey, based on responses from 2,266 hospitals and released Aug. 22, determined that 1,906 (88 percent) of hospitals experienced RAC activity in the second quarter and 360 (12 percent) experienced no RAC activity.

Basis for RAC Denials.

Automated denials in the second quarter of 2012 were based on several issues, including outpatient billing errors (39 percent of all automated denials); outpatient coding errors (17 percent); inpatient coding errors (9 percent); duplicate payments (6 percent); and incorrect discharge status (4 percent).

The remaining 25 percent of automated denials were classified as “other.”

The majority of complex RAC denials (78 percent) were associated with hospital short stays deemed medically unnecessary, followed by:

• incorrect MS-DRG, or another coding error (12 percent);

• other conditions deemed medically unnecessary (5 percent);

• insufficient claim documentation, incorrect discharge status, incorrect ambulatory payment classifications (APC), or another outpatient coding or billing error, and all other reasons (4 percent); and

• medically unnecessary inpatient stays lasting for more than three days (1 percent).

 

RAC Administrative Burden.

More than half of participating hospitals reported spending more than $10,000 overseeing the RAC process, the survey said, with 9 percent reporting spending more than $100,000.

For example, 37 percent of hospitals reported hiring a utilization management contractor for their RAC issues, at an average price of $38,000, and 37 percent of hospitals reported purchasing a RAC claim management tool at an average price of $24,000.

Among hospital staff members, RAC coordinators had the highest burden related to the RAC process, averaging 106 hours on RAC work in the second quarter, followed by:

• decision support/data analysts, who averaged 77 hours;

• medical records staff, who averaged 71 hours; and

• nurses, who averaged 63 hours.

 

The Medicare RAC program, designed to detect and recover improper Medicare payments, was created by the Tax Relief and Health Care Act of 2006. It began as a six-state demonstration project before it was expanded nationally in October 2009.

The program is split into four geographic regions, each administered by its own contractor. The four RACs are paid a contingency fee for every overpayment or underpayment identified.

The RAC model has been operational in the Medicaid program since January 2012.

By James Swann  


The AHA report is at http://op.bna.com/hl.nsf/r?Open=jswn-8xkp6c.