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The impact of RAC audits on US hospitals.
Jeffrey P Harrison1, Rachel M Barksdale
1Department of Public Health, University of North Florida, USA.
Journal of Health Care Finance
|September 6, 2013
Summary
Recovery Audit Contractors (RACs) audits, expanded by the Affordable Care Act (ACA), significantly increased improper payment collections from hospitals. These growing collections negatively impact hospital profitability, requiring complex appeals and medical record submissions.
Area of Science:
- Health Services Research
- Healthcare Policy and Management
Background:
- The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) initiated the Recovery Audit Contractors (RACs) program to address improper Medicare payments.
- The Affordable Care Act (ACA) expanded the RAC program to include Medicaid, reflecting Centers for Medicare & Medicaid Services (CMS) confidence in its cost-effectiveness.
Purpose of the Study:
- To assess the financial impact of the RAC audit program on US acute care hospitals.
- To analyze the trend of improper payment collections by RACs over time.
Main Methods:
- Analysis of CMS data on RAC overpayment collections for Fiscal Years 2010-2012.
- Inclusion of data from the American Hospital Association (AHA) RACTrac audit survey regarding denial complexity.
Main Results:
- RAC overpayment collections increased dramatically from $75.4 million in FY 2010 to $986.2 million in the first six months of FY 2012.
- The majority of collections involved complex denials requiring extensive medical record documentation.
- These increasing collections are negatively impacting hospital profitability.
Conclusions:
- The RAC audit program is experiencing significant growth in collections.
- The complexity and volume of RAC audits pose substantial challenges for healthcare providers.
- The financial burden of RAC collections presents a significant threat to the profitability of US acute care hospitals.
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