Discernment is the wisdom to know the difference between things that can be changed and things that can't. Informed discernment is the key to success when it comes to pursuing recovery audit contractor (RAC) appeals.

The decision to pursue an appeal or accept a RAC denial is an important one for provider organizations. Trying to overturn a denial beyond the second level of appeal can be a costly endeavor. This article provides HIM professionals with practical advice and proven strategies to determine when RAC denials are worth appealing--and when they're not.

What CFOs Don't Know about RAC For HIM professionals, RAC presents a new opportunity to elevate awareness about our profession, demonstrate our effectiveness, and provide exemplary leadership within our organizations. HIM professionals are in the driver's seat when it comes to RAC. Chief financial officers and other executives are looking for guidance and knowledge when it comes to RAC, and we can provide it! Question: Do you know how the RAC process works and how it will negatively affect the revenue of your facility? HealthPort Executive Survey 2009

Demonstration Project Lessons Learned
At an average cost of $4,000 per appeal, it is not surprising that of the $1 billion in improper payment determinations issued by the RACs in year one of the demonstration project, providers chose to appeal only 14 percent of the RAC decisions. While this percentage increased later in the demonstration, one important lesson was learned: the appeals process is a business decision impacting your operating margin, staffing and cash flow.

In addition to being costly, the appeals process is complex. Appeal processes will overlap and managing the complex array of paperwork, communications and  case reviews is a daunting task for provider organizations and their RAC teams; no matter how well-prepared or technologically equipped. In fact, one-third of provider organizations mention that managing the complexity of the appeals process is their greatest RAC concern. The good news is that for the 14 percent of cases that were appealed, 33 percent were overturned.

When to Appeal
Each organization must make a cost-benefit analysis decision. If pursuing the appeal will cost more than the RAC take-back, it may not be worth pursuing. On the other hand, many providers may move forward with the appeals process even when it is not cost-justified because:

• Reversing a denial at any level reduces the RAC contractor contingency payment to zero; and

• A provider win prevents the RAC from coming back later to review the same set of claims.

It also makes sense for providers to appeal when substantive proof is available and they truly disagree with the RAC decision. The appeal process is more than simply corresponding with the RAC; it involves in-depth review and clinical analysis of all documents and data available for the case. If substantial clinical documentation is available, an appeal is recommended. During the demonstration project, length of stay and admission/discharge status issues were the items most successfully appealed when thorough clinical documentation was present.

Beyond knowing "when" to appeal, it's important to know how to reduce your costs associated with the appeal and achieve a higher return-on-investment for your efforts. Here are some ideas to consider.

Tips for Successful Appeals

• Resubmit records and highlight pertinent sections: Even thought the RAC has a complete copy of the medical record, it may make sense to resubmit documents and highlight certain parts of the record that support your position.
• Group denials by issue and appeal together: Many denials will be for the same type of case or same issue. You can reduce effort and costs by grouping similar denials together and appealing them together.
• Scan and save all documents in electronic format. Make them easily accessible: Throughout the appeals process the same documents (correspondence and records) will be viewed and shared by many different parties. You can save time, money and manpower by scanning these documents and having them available in a single, easily-accessible, online database or image repository.
• Use technology! Review your successful appeals: RAC tracking technology is now available to monitor appeals and track critical information such as dollars at risk by appeal level, dollars resolved, performance by appeal level and more. RAC dashboards provide the high-level information you need with drill-down capabilities to the case level. By looking at which cases were successfully appealed you can make more-informed appeal / no appeal decisions.

• Re-evaluate your decision at each level of appeal: Each level of appeal gets more and more costly. As such, it is important that you re-evaluate the appeal / no appeal decision at each level. Again, a strong RAC tool with in-depth performance reports will help.

Discerning Minds Think Alike
With complex reviews just beginning, now is the time to take the pulse of your organization and determine tolerance levels for both revenue loss and appeal process stress. A guideline for cost-benefit analysis at each level should be created and approved by the RAC team and senior executives. With everyone on the same page, the decision to appeal or not appeal is always easier.

Tune-in next month as we conclude our RAC Ready column and provide some final words on RAC reserves.

Lori Brocato is currently the revenue cycle management product manager for HealthPort. Nancy Hirschl is president and CEO of Hirschl and Associates, Laguna Niguel, CA.