Incorporating new data from the third quarter of 2010, the AHA's RACTrac survey of participating hospitals made the following findings about denials by Medicare recovery audit contractors in the first three quarters of 2010.
1. Almost $1 billion in payments under scrutiny. Among responding hospitals, $970 million in Medicare payments were targeted for medical record requests through the third quarter of 2010. Broken down, $414 million of the payments were in Region C, $319 million in Region B, $128 million in Region D and $109 million in Region A.
2. Accumulated medical record requests doubled in third quarter. The accumulated number of medical record requests rose from 32,926 in the second quarter to 69,374 in the third.
3. Regions B and C accounted for the most records requests. The Region B RAC made 26,899 requests for medical records, compared with 26,316 requests in Region C, 8,286 in Region D and 7,873 from Region A. The average number of medical record requests per reporting hospital was 120 in Region B, 87 in Region A, 85 in Region C and 66 in Region D.
4. Accumulated denials more than doubled in third quarter. Accumulated RAC denials for 2010 more than doubled from the second to the third quarter of 2010. Accumulated denials rose from $19 million in the second quarter to $42 million in the third.
5. Regions B and C accounted for 80 percent of denials. Region B accounted for 45 percent of reported denials, compared with 38 percent for Region C, 15 percent for Region D and 2 percent for Region A.
6. Variances of denials by region. Against the national trend, only 9 percent of Region A hospitals ranked outpatient billing errors as the top reason for automated denials. Region B had more than half of all automated denial activity and its top denial reasons were consistent with the national trend. In Region C, 60 percent of hospitals reported outpatient billing errors as the top reason for automated denials. In Region D, incorrect discharge status was more likely to be cited as a top reason for automated denials.
7. Complex denials made up 88 percent of all denials. Complex denials totaled more than $37 million by the end of the third quarter.
8. Complex denials 11 times more costly than automated denials. The average dollar value of an automated denial was $494, compared with $5,540 for complex denials. While 94 percent of hospitals reported automated denials in outpatient service areas, 84 percent reported
9. Coding errors top reason for complex denials. DRG or other coding error represented the top reason by dollars for complex denials for 82 percent of hospitals.
10. Denials for medical necessity have started. With medical necessity reviews now under way, 14 percent of hospitals cited medical necessary as the top reason for complex denials.
11. Incorrect MS-DRG one of most common automated denials. Incorrect MS-DRG or other coding errors were the top reason for complex denials in Regions A and D. Region B hospitals saw the first medical necessity denials. In Region C, some hospitals identified medical necessity as a top reason for complex denials for the first time.
12. Nearly half of hospitals got an underpayment determination. Nearly half of all hospitals with RAC activity reported receiving at least one underpayment determination and two-thirds of them cited incorrect MS-DRG as a reason for the underpayment. Region D hospitals reported more than 50 percent of all underpayment determinations.
13. Almost half of hospitals filed an appeal. Hospitals reported appealing denials worth $8.6 million in and 46 percent of hospitals reported appealing at least one RAC denial. They said they appealed 16 percent of RAC denials available for appeal.
14. More than one-third of appeals have been overturned. Of appeals that have been completed, 38 percent were overturned in favor of the provider. Region B has the highest overturn rate upon appeal at 51 percent. Hospitals reported a total of $1.7 million in overturned denials, with $1 million in Region C alone.
15. Half of hospitals have higher costs due to RACs. In the survey, 72 percent of hospitals reported RACs impacted their organization in the third quarter and 51 percent reported increased administrative costs. Hospitals getting external help on RACs spent $52,782 on average in the third quarter to hire an external utilization management consultant.
16. RACTrac hospitals make up 13-36 percent of all hospitals. About 1,700 hospitals report to the RACTrac survey, making up 13 percent of hospitals in Region A (the Northeast), 27 percent in Region B (Midwest), 36 percent in Region C (South) and 24 percent in Region D (West).
17. Three-fourths of participating hospitals are experiencing RAC activity. Most of the hospitals with RAC activity were general medical and surgical hospitals. Region C had the highest number of hospitals reporting RAC activity, followed by Region D and Region B.
18. Two-thirds of affected hospitals had 200 beds or fewer. Of hospitals reporting RAC activity, 64 percent had 200 or fewer beds, 23 percent had 200-399 beds and 13 percent had 400 or more beds. In addition, 58 percent were urban and 42 percent were rural, while 8 percent were teaching and 92 percent were non-teaching.
Read the RACTrac third quarter report.
1. Almost $1 billion in payments under scrutiny. Among responding hospitals, $970 million in Medicare payments were targeted for medical record requests through the third quarter of 2010. Broken down, $414 million of the payments were in Region C, $319 million in Region B, $128 million in Region D and $109 million in Region A.
2. Accumulated medical record requests doubled in third quarter. The accumulated number of medical record requests rose from 32,926 in the second quarter to 69,374 in the third.
3. Regions B and C accounted for the most records requests. The Region B RAC made 26,899 requests for medical records, compared with 26,316 requests in Region C, 8,286 in Region D and 7,873 from Region A. The average number of medical record requests per reporting hospital was 120 in Region B, 87 in Region A, 85 in Region C and 66 in Region D.
4. Accumulated denials more than doubled in third quarter. Accumulated RAC denials for 2010 more than doubled from the second to the third quarter of 2010. Accumulated denials rose from $19 million in the second quarter to $42 million in the third.
5. Regions B and C accounted for 80 percent of denials. Region B accounted for 45 percent of reported denials, compared with 38 percent for Region C, 15 percent for Region D and 2 percent for Region A.
6. Variances of denials by region. Against the national trend, only 9 percent of Region A hospitals ranked outpatient billing errors as the top reason for automated denials. Region B had more than half of all automated denial activity and its top denial reasons were consistent with the national trend. In Region C, 60 percent of hospitals reported outpatient billing errors as the top reason for automated denials. In Region D, incorrect discharge status was more likely to be cited as a top reason for automated denials.
7. Complex denials made up 88 percent of all denials. Complex denials totaled more than $37 million by the end of the third quarter.
8. Complex denials 11 times more costly than automated denials. The average dollar value of an automated denial was $494, compared with $5,540 for complex denials. While 94 percent of hospitals reported automated denials in outpatient service areas, 84 percent reported
9. Coding errors top reason for complex denials. DRG or other coding error represented the top reason by dollars for complex denials for 82 percent of hospitals.
10. Denials for medical necessity have started. With medical necessity reviews now under way, 14 percent of hospitals cited medical necessary as the top reason for complex denials.
11. Incorrect MS-DRG one of most common automated denials. Incorrect MS-DRG or other coding errors were the top reason for complex denials in Regions A and D. Region B hospitals saw the first medical necessity denials. In Region C, some hospitals identified medical necessity as a top reason for complex denials for the first time.
12. Nearly half of hospitals got an underpayment determination. Nearly half of all hospitals with RAC activity reported receiving at least one underpayment determination and two-thirds of them cited incorrect MS-DRG as a reason for the underpayment. Region D hospitals reported more than 50 percent of all underpayment determinations.
13. Almost half of hospitals filed an appeal. Hospitals reported appealing denials worth $8.6 million in and 46 percent of hospitals reported appealing at least one RAC denial. They said they appealed 16 percent of RAC denials available for appeal.
14. More than one-third of appeals have been overturned. Of appeals that have been completed, 38 percent were overturned in favor of the provider. Region B has the highest overturn rate upon appeal at 51 percent. Hospitals reported a total of $1.7 million in overturned denials, with $1 million in Region C alone.
15. Half of hospitals have higher costs due to RACs. In the survey, 72 percent of hospitals reported RACs impacted their organization in the third quarter and 51 percent reported increased administrative costs. Hospitals getting external help on RACs spent $52,782 on average in the third quarter to hire an external utilization management consultant.
16. RACTrac hospitals make up 13-36 percent of all hospitals. About 1,700 hospitals report to the RACTrac survey, making up 13 percent of hospitals in Region A (the Northeast), 27 percent in Region B (Midwest), 36 percent in Region C (South) and 24 percent in Region D (West).
17. Three-fourths of participating hospitals are experiencing RAC activity. Most of the hospitals with RAC activity were general medical and surgical hospitals. Region C had the highest number of hospitals reporting RAC activity, followed by Region D and Region B.
18. Two-thirds of affected hospitals had 200 beds or fewer. Of hospitals reporting RAC activity, 64 percent had 200 or fewer beds, 23 percent had 200-399 beds and 13 percent had 400 or more beds. In addition, 58 percent were urban and 42 percent were rural, while 8 percent were teaching and 92 percent were non-teaching.
Read the RACTrac third quarter report.