In a move expanding the reach of Recovery Audit Contractors (RACs), the Centers for Medicare & Medicaid Services (CMS) recently provided notice that RACs can request up to 500 records per period for hospitals with more than $100 million in Medicare payments. Previously, CMS limited the number of records a RAC could request to a 300-record cap. The American Hospital Association (AHA) has expressed concern over this increase and believes this change will affect approximately 87 hospitals.

A recently published AHA survey provides data to help understand the scope of RAC progress to date. The AHA survey revealed that 79 percent of the 1850 hospitals surveyed have had RAC activity through the fourth quarter of 2010. Of this 79 percent, nearly four out of five reported complex RAC reviews which involve the review of medical records and other documentation to identify improper payments. Therefore, it's not surprising that the majority (90 percent) of denials that hospitals are receiving from RACs are for complex reviews, totaling over $78 million dollars. Nationwide, hospitals are appealing only 23 percent of the denied claims; however, of the claims that have completed the appeals process, 85 percent were overturned in favor of the provider.  

While the Medicare RAC program appears to be proceeding full speed ahead, CMS issued an informational bulletin on February 17, 2011, delaying the requirement that states fully implement Medicaid RAC programs by April 1, 2011. The CMS bulletin states:

Out of consideration for State operational issues and to ensure States comply with the provisions of the Final Rule, we have determined that States will not be required to implement their RAC programs by the proposed implementation date of April 1, 2011.

A new implementation deadline will be announced in the publication of a final rule on Medicaid RAC programs expected later in 2011.