News: AHA report finds RAC program denied more than $86 million in fourth quarter 2010

March 17, 2011

Recovery Audit Contractors (RAC) denied $86 million in claims in 2010—more than double the $42 million reported in the third quarter. Medically unnecessary services accounted for 57% of the denials, with 33% of these for short stay patients, according to the American Hospital Association’s (AHA) RACTrac Survey released February 24.

AHA created RACTrac—a free, web-based survey—in response to a lack of data provided by CMS on the impact of the RAC program on hospitals. Hospitals use AHA’s online survey application to submit data regarding the impact of the RAC program. AHA collected data from more than 1,800 hospitals; 1,400 of which reported RAC activity through December 2010. Of this activity, 57% cited medical necessity reviews as the top reason RACs recouped Medicare payments at their hospital.

Automated reviews saw roughly a 10% increase from the third quarter, and complex reviews saw a 3% increase. However the percent of complex reviews was higher at 83% compared to 74% of reviews reportedly automatic.

According to the survey results, nearly all types of RAC activity doubled from the third quarter 2010 to the fourth. Automated denials rose by more than 10,000. Complex denials increased from 7,000 to more than 15,000. Requests for medical records rose from nearly 70,000 to more than 125,000.

Editor's Note: AHA will hold a free webinar analysis of results on Wednesday, April 6.

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