U.S. Representative Sam Graves (R-5) last week introduced the Medicare Audit Improvement Act of 2015, legislation to reform and improve the nation’s Medicare audit system.

U.S. Representative Sam Graves (R-5) last week introduced the Medicare Audit Improvement Act of 2015, legislation to reform and improve the nation’s Medicare audit system. The bill, H.R. 2156, would amend the Medicare Modernization Act of 2003 to rectify problems in the Recovery Audit Contractor (RAC) program.

Specifically, the Medicare Audit Improvement Act of 2015 would replace RAC contingency payments, which cause hospitals to be denied proper reimbursement for services provided to patients. The bill also eliminates the one-year filing limit for rebilling Medicare Part B claims, giving hospitals ample time to process claims.

“While I believe we must continue to identify and correct Medicare fraud, hospitals have been buried in the administrative burdens brought by Medicare audit contractors,” Rep. Graves said.

 “My bill would bring common-sense reforms that maintain appropriate oversight over billing problems without an open-ended invitation to bombard hospitals with costly and needless audits. Our rural hospitals are particularly ill-equipped to handle this abuse of the audit system,” Rep. Graves continued.

The Medicare Audit Improvement Act of 2015 also seeks to improve auditor performance accountability by imposing penalties on RACs whose audits are consistently overturned when appealed by hospitals.

“Missouri’s hospitals deeply appreciate Congressman Graves’ ongoing leadership in RAC reform efforts,” said Herb B. Kuhn, Missouri Hospital Association President and CEO. “There is an abundance of evidence that the Medicare RAC program is broken. Fixing the program will require additional accountability and realigned incentives. Congressman Graves’ bill is a vehicle to a better system — for hospitals and the Medicare program.”

Background: The Recovery Audit Contractor (RAC) program was established under the Medicare Modernization Act of 2003 to identify and recover improper Medicare payments to healthcare providers. Initially intended as a 3-year demonstration in three states, the program was made permanent in 2006. It is overseen by CMS, with RACs performing the actual work of reviewing, auditing, and identifying improper Medicare payments. RACs receive a share of the improper payments they recoup.

Recently, Hospitals have faced a large increase in the amount of documents being requested during an audit. When a Medicare contractor detects the possibility of an improper payment, they will contact the hospital and request additional documentation, referred to as an Additional Document Request (ADR).

Last year, the Office of Medicare Hearings and Appeals (OMHA), which hears claims at the third level of the appeals process, announced that it had suspended assignment of most claim appeals for at least the next two years, as a backlog of 460,000 claims had built up from 2010-2013. Even more alarming, OMHA’s 65 Judges already have 375,000 claims before them waiting to be heard. This delay will cause extreme financial problems for medical providers across the country. During that time, providers are not paid for the services they have already provided to beneficiaries.

Note: This post is a press release from the office of Sam Graves.