Three Insights into RAC Redeterminations That Could Save You Future Headaches

[Editor's note: This month insidePatientFinance will present a series of articles, white papers, best practices, and news surrounding the always-controversial Recovery Audit Contractors.]

Over the past several weeks RACs have been front and center in the news, from the recent decision by the Centers for Medicare and Medicaid Services (CMS) to delay RAC enforcement of the two-midnight rule to the recent Office of Inspector General report that found that CMS was not pushing RACs hard enough to collect overpayments.

Last month the Office of Inspector General released a report examining the significant increase in requests by healthcare providers for redetermination of Medicare denials and overpayments made by CMS contractors.

The findings, which should have surprised no one, found that the bulk of the increase came from the RAC audit program and that hospitals, along with home health, constituted most of the requests for redetermination.

By digging deep into the data of the report, here are three vital takeaways that you should consider incorporating into your Medicare reimbursement strategy. The following only applies to Part A appeals:

Get through the RAC redetermination appeal as quickly as possible. Admittedly there is little providers can do to speed up the process of redeterminations because the RACs control the workflow, but what has been made evident from the OIG report is that first level appeals are becoming perfunctory. When RACs began, providers won redeterminations more than 80 percent of the time. In 2011 RACs slashed that percentage to 21 percent and in 2012 to a measly 11 percent.

According to RACs, the dramatic drop was because “they have become more skilled in interpreting Medicare payment policies.” However, because RACs are not required to report on the specifics of redeterminations, OIG had to rely on their explanation.

Many providers have appear to have caught on, because the number of appeals of redeterminations has skyrocketed. And the good news, from the report, is that the redetermination process and subsequent appeals process will get faster, thanks to the expansion of the Medicare Appeals System to these first level appeals, which reportedly began in September.

Despite declining success percentages, providers still won more than twice as many RAC redeterminations from 2011 to 2012. The OIG report does not make explicit raw numbers of how many redeterminations by RACs were successful, only the percentage of that total. By extrapolating the data in the report, it appears that while the percentage of successful appeals between 2011 and 2012 fell from 21 percent to 11, because so many more appeals were filed, providers won well more than double the number over the same period, from slightly less than 11,000 in 2011 to more than 23,000 in 2012.

You have a 1 in 3 chance to win a non-RAC determination. As mentioned above, providers win RAC redeterminations only 11 percent of the time; redeterminations of non-RAC contractors were successful 33 percent of the time. The next question the OIG should investigate is why RACs are so successful–almost three times more successful–while other contractors in the Medicare food chain are not.