Legislation introduced Tuesday aims to reduce some of the authority Medicare’s recovery audit contractors (RACs) wield over investigations into provider claims.

Reps. Sam Graves (R-MO) and Adam Schiff (D-CA) proposed a bill that would limit the volume of medical record requests by RACs, establish financial penalties on contractors who overstep their bounds, and require RACs to focus on widespread payment errors in their audits.

Additionally, the Medicare Audit Improvement Act (H.R. 6575) would require physician review for denials and allow inpatient claims to be billed as outpatient claims when appropriate, according to the legislation.

Rick Pollack, executive vice president of the American Hospital Association, expressed support for the legislation in a letter to Graves and Schiff.

“No one questions the need for auditors to identify billing errors; but the flood of new auditing programs, along with confusing and conflicting regulations, is drowning hospitals with a deluge of redundant audits, unmanageable medical records requests and inappropriate payment denials,” the letter states.

Skilled nursing facilities have increasingly been targeted by RACs and other auditing bodies intended to root out fraud in Medicare and Medicaid claims. A study released in August found that nonprofit providers are disproportionately targeted for outside audits.

Click here to read Pollack’s letter.