A thorough understanding of the Recovery Audit Contractor (RAC) processes that result in denied claims will be essential in avoiding such denials. Understanding the RAC review process, the target areas, and the available appeal methods will help providers build an effective defense against inappropriate claim denials.
A recently released report on the three-year RAC Demonstration Program is available
here. As of March 2007, only 14% of the demonstration RAC adverse determinations have been appealed. However, many providers are pursuing full adjudication (taking appeals to the second and third appeal levels). Good physician documentation that justifies and supports the need for inpatient hospital admission will be essential in a hospital's effort to keep deserved reimbursement. Because the RACs will not be required to obtain physician input into the medical necessity of inpatient admissions, a hospital's best defense against criteria-based denials will be physician documentation that fully justifies the medical decision to admit the patient to the inpatient setting.
