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The 2012 second-quarter results of the RACTrac Survey conducted by the American Hospital Association (AHA) recently were released. The findings show that the RACs are requesting more records, denying more records, and losing more appeals. Furthermore, providers continue to see a dramatic uptick in RAC activity, with a 22 percent increase in record requests compared with the first quarter of the year.

Providers Continue to be Burdened

The increase in RAC activity has put even greater pressure on providers to respond to RAC requests, to track case statuses and to appeal cases they deem winnable. Hospitals appeal more than 40 percent of all RAC denials, winning these appeals about 75 percent of the time, according to the recent survey.

This high overturn rate, however, indicates that RACs are taking a very broad approach.

The challenges continue to mount, as providers need to protect their revenue streams by dedicating more of their limited resources to RAC concerns. The statistics show that hospitals are spending more money and staff time on RAC activity.

For example:

  • Fifty-five percent of respondents spent more than $10,000 managing the RAC process in the second quarter.
  • Thirty-three percent spent more than $25,000.
  • Nine percent spent more than $100,000.

Remember, these are quarterly numbers, not annual. And they may not reflect the full spectrum of human resources rework and administrative focus required. 

Survey Reveals Inappropriate Action

While providers are bearing the brunt of the costs associated with RAC activity, they also continue to see areas where mistakes are causing additional activity. Nineteen percent cited RACs rescinding medical record requests after documents were pulled, photocopied and sent.


  • Ten percent of respondents reported requests going to the wrong hospital or to the wrong contact at the hospital.
  • Ten percent reported audit requests for records older than the prescribed three-year lookback period.
  • Six percent still are experiencing problems with postage reimbursement.
  • Five percent are seeing RACs issuing more than one medical record request within a 45-day period.

The initial RAC statement of work stated that the Centers for Medicare & Medicaid Services (CMS) would provide education related to avoiding payment errors. Fifty-eight percent of providers indicated that they have yet to receive any of this education. CMS is delegating this task to the MACs, which do not seem to be stepping up to perform.

Clues to Mitigate Risk

The survey also highlights areas where hospitals can mitigate revenue risk. On the inpatient side, the vast majority of denials stem from complex reviews. Outpatient services predominantly generate automated denials. Here are three targeted areas to consider in order to mitigate risk.

  • Short-Stay Cases

RACs are acutely focused on short-stay cases they deem medically unnecessary. These short-term cases are the most common appeal area, with 61 percent of respondents reporting appeals in this area. As is often the case, clinical documentation is the driver. It sets the stage for accurate coding and the justification of medical necessity. Clinical documentation improvement (CDI) initiatives focused on short-stay cases already should be underway.

  • Coding Quality       

Inpatient coding and outpatient coding issues follow as the second and third most common appeal areas, with 31 percent and 20 percent of the hospitals respectively appealing these cases. Additional resources should be applied to improve coding quality. These efforts may include external audits, internal audits and coder education and training. All of this not only will boost compliance and mitigate risk, but also improve case mix index and quality reporting accuracy.

  • Discussion Period

Another area for hospitals to mitigate risk is the discussion period, or the time between denial of a claim and the filing of an appeal. During this period providers can state their case to RACs as to why their denials should be overturned. More than one-third of responding hospitals reported having a denial reversed during the discussion period.

More and More

The tsunami of audits continues. Remember, tsunamis often are followed by subsequent waves. These audits are no exception. They just keep coming. Get your audit team centralized, your clinical documentation improvement program in place, your audit tracking system up and running, and your workflow optimized to handle them. 

About the Author

Lori Brocato, HealthPort Audit Product Manager, has over 16 years of experience in the healthcare technology industry creating product lifecycle plans and executing product strategies. Ms. Brocato frequently serves as an audit expert sharing audit management trends and best practice guidelines as a regular presenter for industry events and webinars.  She is the author of HealthPort’s audit Insights Blog and provides expert input for many trade publication articles each year. Ms.Brocato holds the distinction of being RAC-certified by the Medicare RAC Summit and is a member HIMSS, HFMA, and AHIMA.

Contact the Author


To comment on this article please go to editor@racmonitor.com

For further details on the RACTrac Survey, go online to: http://www.aha.org/aha/issues/RAC/ractrac.html

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