From: The Honorable Adam B. Schiff
Sent By:
Bill: H.R. 1250
Date: 7/10/2014

Reform Medicare Audit Contracting: Eliminate Inefficiencies and Hold Auditors Accountable for Unfair, Costly Practices

Bipartisan Cosponsors (175): Andrews, Bachus, Barletta, Barr, Barrow, Bera, Bishop (GA), Bishop (NY), Blackburn, Braley, Brooks (IN), Brown, Brownley, Bustos, Capito, Capuano, Chabot, Clay, Cleaver, Coffman, Cohen, Collins (NY), Conaway, Connolly, Costa, Cotton, Courtney, Cramer, Crawford, Cuellar, Daines, Davis (CA), DesJarlais, Duffy, Duncan (SC), Duncan (TN), Edwards, Enyart, Eshoo, Esty, Farenthold, Farr*, Fleischmann, Flores, Gallego, Garamendi, Gibson, Goodlatte, Gosar, Granger, Graves (GA), Graves* (MO), Gutierrez, Guthrie, Hall, Hanna*, Harper, Harris, Hartzler, Hastings (WA), Higgins, Himes, Hinojosa, Holt, Huelskamp*, Huffman, Israel, Johnson (OH), Jones, Kennedy, Kildee, Kilmer, King* (IA), King (NY), Kirkpatrick, Labrador, LaMalfa, Langevin, Latham, Latta, Lee, LoBiondo, Loebsack*, Lofgren, Long*, Lowenthal, Luetkemeyer, Lujan, Maffei, Maloney (NY-18), Maneval, Marino, Massie, Matheson, Matsui, McCaul, McCollum, McGovern, McIntyre, McKeon, McKinley, McMorris Rodgers, Michaud, Miller (MI), Moran, Mullin, Neal, Neugebauer, Nugent, Nunes, Nunnelee, Olson, Owens*, Palazzo, Pastor, Payne, Perlmutter, Peters (CA), Peterson, Petri, Pocan, Poe, Polis, Pompeo*, Rahall, Ribble, Roby, Roe, Rogers (AL), Rogers (KY), Rokita, Rooney, Royce, Ruiz, Ruppersberger, Rush, Ryan (OH), Sanchez (CA-46), Schiff*, Scott (GA-8), Scott (GA-13), Sensenbrenner, Sessions, Shuster, Simpson, Slaughter, Smith (MO), Smith (TX), Speier, Stivers,  Stockman, Takano, Terry, Thompson (MS), Thornberry, Tierney, Tipton, Valadao, Vargas, Veasey, Visclosky, Wagner, Walden, Walorski, Weber, Webster, Welch, Whitfield, Williams, Wilson (CA), Wilson (SC), Wittman, Womack, Yoder, Young (AK)

Supported by: American Hospital Association, Federation of American Hospitals, Catholic Health Association of the United States, America’s Essential Hospitals, Premier Healthcare Alliance, VHA Inc., Association of American Medical Colleges, National Association of Psychiatric Health Systems, American Health Information Management Association, American Association of Healthcare Administrative Management, National Healthcare Collectors Association, Children’s Hospital Association

Dear Colleague,

We invite you to become a cosponsor of the Medicare Audit Improvement Act of 2013 (H.R. 1250). This bipartisan bill addresses critical operational problems in the Medicare Recovery Audit Program and ensures that Medicare recovery auditing is efficient, transparent and fair.

Since 1990, the GAO has identified the Medicare program as at risk for improper payments and fraud. Recovery Audit Contractors, or RACs, are private organizations that contract with the Centers for Medicare and Medicaid Services (CMS) to identify and collect improper payments made in Medicare’s fee-for-service (FFS) program. RACs are paid a 9.0 – 12.5 percent commission on every claim they deny.  This contingency payment provides the incentive for RACs to make inaccurate denials and introduce inefficiencies into the audit process.

Since 2010, when the Medicare Recovery Audit Contractor program was rolled out nationwide, RACs have had success in recouping improper payments to the Medicare Trust Funds.  However, RAC determinations have also resulted in thousands of errors and have been frequently overturned in costly appeals.  Hospitals are experiencing a deluge of redundant audits, burdensome medical record requests and inappropriate payment denials.  According to a November 2012 OIG report, 72 percent of hospital Medicare Part A appeals that reach the third level of the Medicare appeals process are overturned in favor of the hospital.  The inefficiencies of the program are a waste of valuable resources and contribute to growing health care costs.

The Medicare Audit Improvement Act would:

  • Establish a consolidated limit for medical record requests;
  • Improve auditor performance by implementing financial penalties and by requiring medical necessity audits to focus on widespread payment errors;
  • Improve recovery auditor transparency;
  • Allow denied inpatient claims to be billed as outpatient claims when appropriate; and
  • Require physician review for Medicare denials.

We encourage you to become a cosponsor of the Medicare Audit Improvement Act of 2013 (H.R. 1250), to increase the transparency and accuracy of audits so we can continue to recoup improper Medicare payments fairly and efficiently and protect the fiscal integrity of Medicare.

To cosponsor, please contact Dao Nguyen in Rep. Schiff’s office or Jonathan Mason in Rep. Grave’s office.


Adam B. Schiff                                    Sam Graves

Member of Congress                           Member of Congress