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The Medicare audit process and coverage criteria do not work properly. They must be modified in order to reduce their negative impact on home medical equipment providers’ operational and financial resources, and consequently, their ability to continue caring for patients.

AAHomecare is concerned that the audit standards used by Medicare contractors are having the following unintended consequences:

  • Eligible Medicare beneficiaries are not receiving medically necessary and covered benefits.

  • Auditors for CMS misinterpret and therefore misapply Medicare rules and regulations sometimes on a retroactive basis, leading to inaccurate error rate data.

  • Legitimate providers furnishing medically necessary items and services are being hurt by unjustified monetary recoupments.

  • Data regarding fraudulently paid claims is being distorted.

CMS will not be able to achieve the Administration’s goal of reducing the error rate until it modifies its current audit policies.

Audit Imrovement and Reform Act Bill Text

Audit Improvement and Reform Act Section by Section

Audit Improvement and Reform Issue Brief

While AAHomecare works with Congress and CMS to make the necessary modifications, the Association will continue to educate providers and help them improve compliance.

AAHomecare Medicare Audit Oversight Issue Brief

Congressional Letter to HHS on RAC Audits (February 10, 2014)

See more information on what you can do to share your audit experiences and advocate for a fairer and more transparent audit program at AAHomecare's new issue-focused website.

Audit Resources for DME Providers

Audit Checklists

Audit checklists developed by experts on the Association's Regulatory Council to assist you in processing orders according to Medicare documentation requirements. The checklists, covering diabetic supplies, enteral nutrition, hospital beds, oxygen, and PAP devices, can be found on our Audit Resources page, and are free to AAHomecare members.  The checklists are available to non-members for a nominal charge.

Audit Tracker

AAHomecare has also developed an Excel-based Audit Tracking Tool that providers can use to track their audits. This is available free of charge to everyone in the homecare sector, and can also be found on the Audit Resources page


Three Audit Types

When conducting postpayment claims reviews, contractors apply the same criteria—Medicare regulations, and coverage and coding policies—to determine whether or not a claim was paid properly. CMS outlines the general process and requirements for conducting reviews in manuals and contractor statements of work.

  1. Automated: Use computers to check claims for evidence of improper coding or other mistakes in paid claims and identify those that can be determined to be improper without examining any additional documentation.

  2. Semi-automated: Use computers to check for possible improper payments, but allow providers to send in information to argue against a denial before it is finalized. If providers send additional information, contractor staff review it before making a final determination.

  3. Complex: Conducted if additional documentation is needed to determine whether a payment was made in error. A complex review involves manual examination of a claim and any related documentation requested and received from the provider by licensed clinical professionals and certified coders. Contractors have physician medical directors on staff who provide guidance and who may discuss determinations with providers.

Four Contractor Types

Medicare Administrative Contractors (MACs):  MACs have primary responsibility for processing and paying fee for service (FFS) claims in each of four jurisdictions. In addition, they conduct program integrity activities, including prepayment and postpayment claim reviews. They also implement local coverage determinations, as long as such determinations do not conflict with national coverage policy or other Medicare payment requirements. MACs identify ways to address future payment errors including automated controls and provider education.

Zone Program Integrity Contractors (ZPICs):  The ZPICs’ primary function is to identify and investigate potentially fraudulent FFS claims and providers in each of seven geographic jurisdictions, which are called zones. Investigations include complaints from other Medicare contractors, and analyzing claims data. ZPICs prioritize investigative leads based on predictive model analysis to identify which providers’ billing patterns are most aberrant.

Recovery Audit Contractors (RACs):  Conducting postpayment claims reviews is the RACs’ primary function. Use of RACs was designed to be an addition to existing MAC claim review processes, since the number of postpayment reviews conducted by the MACs and other contractors was small relative to the number of claims paid and the amount of improper payments.

Comprehensive Error Rate Testing (CERT):  The CERT contractor conducts complex claim reviews on a random sample of FFS claims selected nationwide from those that the MACs have processed to determine whether or not the claims were processed in error. As a result, claims reviews are a central part of the CERT function. CERT reviews also help identify program integrity vulnerabilities by measuring the payment accuracy of each MAC, and the FFS improper payment rate by type of claim and service.

Get Involved in Making Audit Policy

AAHomecare members can find more information and get involved in shaping policy on audits through the Association's Regulatory Council.

Audit Task Force

AAHomecare’s Audit Task Force meets quarterly to evaluate activities related to audits in the homecare sector and how to best address current issues surrounding audits.


  • Educate DMEPOS providers, physicians, and beneficiaries on the link between the DMEPOS Medicare payment error rate and CMS audit activity.

  • Engage policymakers in Congress and the Administration in a dialogue about the need to reform the Medicare audit process.

  • Work with DME MACS, auditing contractors, and CMS to streamline the audit and appeals processes in order to be more effective and efficient for providers and contractors.


  • Work toward Medicare audit contractor reform relating to audits and coverage policies, and establish clear and unambiguous guidance to medical review staff so that the process is less subjective.

  • Change the Medicare audit process to mirror how audits are conducted in the private sector.  

  • Work with DME MACs to have overturned audit denials removed from error rate calculations.

Audit Task Force Action Plan (January 2015)

One of AAHomecare’s key initiatives is to look at data from the DME MACs to aggregate and present information in a manner that helps our industry with lawmakers, CMS, and other interested parties.

As a part of this initiative, the AAHomecare Regulatory Council now tracks the quarterly pre-pay error rates for each of the MACS in order to measure change and to get an overall picture of how the rates are trending. The Council’s summary shows data for the different MACS, what product lines they are looking at, and how the industry is measuring up.

DME MAC Quarterly Pre-Pay Error Rates by Product (January 2014)