Appeals Process Slow
According to the American Hospital Association's RACTrac survey, which monitors and summarizes the impact on providers of RAC activity, hospitals are generally pretty successful when it comes to appealing cases. In the second quarter of 2013, hospitals appealed 40% of all RAC denials with a 70% success rate.
Mary Ann Freas, senior vice president and CFO at Southwest General Health Center in Middleburg Heights, OH
Melissa Jackson, senior associate director for policy at the AHA, agrees with Testman that the RAC process is still costly for providers, even those with a high overturn rate.
"The process creates an administrative burden on hospitals. Our most recent RACTrac data show that 63 percent of hospitals spend $40,000 or more just managing the RAC process," Jackson says.
"… [O]ur data show that 60% or more of claims audited by RACs contain no error, and 72% of inpatient claims denied by RACs are reversed by an administrative law judge," she adds.
Additionally, the appeals process is slow and cumbersome, Jackson notes. "RACs can audit claims for up to three years after the service is provided, and if a hospital appeals a RAC's decision, it can take up to two additional years to work through the appeals system."
Mary Ann Freas, senior vice president and CFO at Southwest General Health Center in Middleburg Heights, OH, also believes the after-the-fact RAC review gives the auditors an unfair perspective.