Third party recovery audit contractors are harnessing the power of big data and analytics to dramatically grow their auditing capabilities, reports RACmonitor.
Specifically, RAC auditors are using computerized techniques to pick targets for audits. This enabled auditors to increase the amount of audits they can perform by 936 percent. According to RACmonitor, an entire industry has emerged that specializes in processing Medicare claims data and finding "sweet spots" on which RACs can focus their attention.
RACs have designed and patented IT systems with algorithms that comb through hundreds of thousands of provider claims information per minute looking for chances to downgrade diagnosis-related group codes.
Downgrading DRG codes reduces the reimbursement amount owed to providers. This can significantly impact hospitals' revenue.
Hospitals hit with thousands of DRG code downgrades can file an appeal in the Medicare appeals system. However, the cost RACs incur running the audit is a thousand times less expensive than what hospitals must spend in time and money to refute the downgrades.
Hospital and healthcare advocates have argued that using statistical analysis to downgrade medical claims does not account for the reality of the patient's condition or medical treatment.