AHA Survey Identifies Continuing Problems with Medicare RAC Program

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The American Hospital Association (AHA) published its RACTRAC Survey results for the third quarter of 2012. The AHA created the survey in response to the lack of information released by CMS on its Medicare RAC program. For the third quarter of 2012, the survey notes several problems with the Medicare RAC program, including a significant rate of claims that were erroneously disallowed, as well as many issues with administration of the RAC program. The report is likely to be relevant to the litigation currently being pursued by the AHA, which we discussed here.

Providers that participated in the survey reported that they have appealed 40 percent of RAC denials, and that they have enjoyed a 74 percent success rate on the appeals that have reached resolution. The survey also identifies many performance issues with current RACs, including 51 percent of hospitals reporting that they failed to receive a demand letter notifying them of a RAC denial. The report of the survey can be viewed here [PDF].

Ober|Kaler's Comments

The large proportion of disallowances that are reversed through the appeals process evidences a continued “ready, fire, aim” approach by the RACs, which results in excessive disallowances. It is promising that the appeals process is working for providers, but that may be cold comfort in light of the expense associated with pursuing appeals. However, CMS has not given any indication that it intends to rein in its contractors, despite mounting evidence of contractor excesses. Therefore, pursuing appeals may be a necessary expense, pending resolution of the problematic aspects of the RAC program through intervention by Congress or the courts.