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News: Study 'findings suggest a need for RAC reform'

CDI Strategies, March 5, 2015

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Three university hospitals saw a doubling of Recovery Auditor (RAC) audit activity from 2010–2011 to 2012–2013, and a nearly three-fold increase in overpayment determinations, according to a new study in the Journal of Hospital Medicine.

RACs audited 8% of inpatient Medicare cases and identified overpayments in 31% of records reviewed for reasons related to medical necessity and patient status—whether the services should have been provided as outpatient, observation, or inpatient, the study states.

“This increased RAC activity, and hospital willingness to dispute the RAC overpayment determinations equaled a more than 300% increase in appeals and discussion request volume related to Part A complex review audits in just two years,” the study states.

The facilities, tertiary care academic medical centers, included:

• University of Wisconsin-Madison Health Sciences, a 592-bed hospital located in Madison
• Johns Hopkins Hospital, an 1145-bed medical center located in Baltimore, Maryland
• University of Utah, a 770-bed facility in Salt Lake City

Additionally, the study finds fault with the government’s own analysis and reporting of RAC efforts, citing different auditing and appeals numbers reported by the Office of the Inspector General (OIG), CMS, and the hospitals themselves. OIG data may be too dated to reflect current RAC processes, and, while CMS’ employs more current information from the 2013 fiscal year, it doesn’t account for denials overturned during the discussion period, or overpayment determinations which may have been paid prior to 2013.

“Medicare fraud and abuse should not be tolerated… however, there are increasing concerns that the RAC program has resulted in overaggressive denials… These findings suggest a need for RAC reform, including improved transparency in data reporting,” the study states.

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