Current Issues in RAC Audits
The Medicare Recovery Audit Contractors (RAC) audits of hospitals are going into are going into high gear. It is very important for hospitals to review RAC denials immediately as the appeal periods at the various review levels are very short. The RAC auditors are paid on a percentage of the amount of dollars they disallow; they have every incentive to "disallow first, ask questions later." Some of the important issues include:
- Date of claim and initial Medicare determination on the claim. RACs may not go back more than three years beyond the date of the initial determination.
- Was the RAC claim based on an automated review when it should have been made on a review of medical records?
- Inpatient vs. Observation Short Stays. The RACs may contend the care could have been provided at the observation level of care rather than the inpatient level of care. If the RACs are correct, the entire claim is disallowed--the hospital cannot go back and bill at the observation level. Hospitals need to have strong physician documentation. Currently, the initial decisions at the ALJ level are in a state of flux.
- Inpatient Rehabilitation Facility (IRF) vs. Skilled Nursing Facility (SNF). Can become "battle of the experts." Important that hospital clinical staff understand the different criteria for IRF versus SNF.
- Precedential effect of ALJ and other administrations. As a body of cases begins to develop at the administrative level, it is unclear what effect this will have have regarding RAC denials on similar issues.
- When in doubt, appeal! Can lose appeal rights quickly by inaction.
