Health Information Management

News: Nearly half of RAC appeals overturned in favor of providers

CDI Strategies, June 21, 2012

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CMS recently posted two separate sets of data that provide nationwide statistics on its Recovery Auditor program. The first update contains improper payment figures as well as the top Recovery Auditor issue per region. In the second update, CMS provides appeals statistics for fiscal year 2011.

Recovery Auditor activity saw a huge spike in the latest quarter, as statistics for overpayments and underpayments both saw significant increases. For the time period January 2012 through March 2012, CMS identified $588.4 million in overpayments and $61.5 millionThese numbers are up from $397.8 million and $24.9 million from last quarter, respectively. These numbers have climbed considerably since the start of the permanent program. in underpayments for a total of $649.9 million in corrections.
Since the beginning of the RAC program CMS has identified $1.86 billion in overpayments and $245.2 million in underpayments for a sum of $2.1 billion in total corrections.
The correction amounts of each quarter of the program are as follows:
  • October 2009–September 2010: $92.3 million
  • October 2010–December 2010: $94.3 million
  • January 2011–March 2011: $208.9 million
  • March 2011–June 2011: $289.3 million
  • July 2011–September 2011: $353.7 million
  • October 2011–December 2011: $422.7 million
  • January 2012 – March 2012: $649.9 million
Much like in the previous report, medical necessity issues remain the top target of each individual Recovery Auditor, three of which are cardiovascular procedures:
  • Region A: Cardiovascular procedures (Medical necessity)
  • Region B: Cardiovascular procedures (Medical necessity)
  • Region C: Cardiovascular procedures (Medical necessity)
  • Region D: Minor surgery and other treatments billed as inpatient stay (Medical necessity)
Also released by CMS in the past month is a report on appeals statistics for fiscal year 2011. The number of claims with overpayment determinations in 2011 was 903,372, but providers only appealed 56,620 of these claims. Of these appeals, 24,548 or 43.4% were reversed in the provider’s favor. Considering the relative success of providers in their appeal efforts, the fact that 846,752 claims did not get appealed comes as a bit of a surprise.
To further reinforce the importance of appeals, consider the fact that of the 24,458 cases that were successfully appealed,$37.9 million—or approximately $1,550 per case—was overturned in 2011.  Overall, providers should consider the fact that there is a large amount of claim denials that should be appealed, according to Deborah Hale, CCS, CCDS, president and CEO of Administrative Consultant Service, LLC, in Shawnee, OK.
“I’m surprised at the low appeal rate given the volume of denials that I see that clearly warrant appeals,” says Hale. “This may be in part due to frustration with the process, an increased workload for hospitals associated with ICD-10 preparation and training, implementation of electronic health records, and the multitude of other high-priority projects—such as patient care—that hospitals are facing this year.”
Editor’s Note: This article originally published on the Revenue Cycle Institute website.

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