Healthcare News & Insights

Keep your money: RAC response team wins 88% of denials


Don’t think you need a recovery audit contractor (RAC) response team? Maybe this will change your mind: According to the American Hospital Association’s (AHA) May 2012 RACTrac survey, the number of medical records requested from RAC auditors increased from 306,349 in the third quarter of 2011 to 447,523 records in the first quarter of 2012.

The RACTrac survey analyzes the experiences of 1,854 hospitals that reported RAC activity, out of 2,200 hospitals surveyed. The survey also revealed, in that same time period, an increase in:

  • automated denials (generated by computer reviews) from 30,295 to 50,395, and
  • complex denials (generated by manual review) from 65,623 to 124,055.

And recently, the Centers for Medicare & Medicaid Services doubled the number of charts that can be reviewed every 45 days. Now instead of limiting RACs to 450 charts, they’re allowed to review 1,200. That’s a huge increase.

You also have to think about the fact that with an increase of RAC audits comes an increase in administrative costs for hospitals. Wouldn’t it be nice to get some of that money back?

Winning strategy

Ministry Health Care (MHC) in Wausau, WI, developed a RAC response team in 2010. Now, it wins about 88% of its denials, and has recovered about a million in payments via the appeals process and about another million in underpayments.

Here’s how MHC did it.

In 2010, MHC implemented a RAC response team to better manage RAC processes and control costs related to the RAC program. On the team were:

  • four database coordinators, who handle administrative functions such as tracking charts
  • four nurse reviewers, who make preliminary assessments of the denials and write case-review documents that act as the basis of the recommendations on whether to appeal
  • an administrative director, who manages the distribution and progress of the work, and
  • a medical director, who reviews the summaries and collaborates with the nurses on whether or not they should appeal.

The team handles the RAC process for all MHC’s hospitals, physician practices, home health services and hospice services. And all team members serve in a part-time capacity.

“If you really want to manage the complexities of the RAC process—and this is an incredibly complex process— adding responsibilities for RAC process management to an existing role is not an effective approach,”  Larry Hegland, MHC’s medical director for recovery audit services told the Healthcare Finance Management Association. “You really have to have dedicated people with dedicated time overseeing RAC process management. Otherwise, you’re leaving money and opportunity on the table.”

Dedicated staff will be more effective and efficient at the process.

Document and data management

Once a denial is entered into MHC’s system, the database tracks and calculates the deadlines for an appeal, providing reminders that allow the team to stay on top of the appeals process.

In addition, MHC’s document management system allows all patient records to be converted into electronic files, allowing for easy document manipulation, searches and retrieval. Plus, the system allows the team to highlight sections of the record so auditors can quickly find the information they need, speeding up the appeals process.

“We’ve managed to reduce the amount of manual/clerical effort involved with RAC process management and redirect the team’s efforts on more value-added services,” said Hegland.

The team also uses a time-tracker program to analyze the time they spend on about 40 different RAC-related activities. This allows Hegland to identify areas that are taking up a lot of the team’s time, and come up with solutions to make the process work more efficiently.

For example, the data showed the team was spending too much time creating customized dashboards that reported RAC findings to individual hospital leaders. So a standardized dashboard was created to report data to leaders more efficiently and in a more uniform way, allowing the team to spend more time on other areas that needed their attention.

Now with the RAC response team in place, Hegland feels the results have been so positive that MHC is prepared to withstand any increases RAC throw its way in the years to come.


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