Medicare Audit Improvement Act of 2012

Medicare Audit Improvement Act of 2012 - Directs the Secretary of Health and Human Services (HHS) to establish a process under which the number of additional documentation requests made by a Medicare contractor pursuant to a complex prepayment or postpayment audit with respect to a hospital's Medicare part A (Hospital Insurance) claims in a year may not exceed, across all such contractors with respect to the hospital's claims, the lesser of: (1) 2% of all such claims for such year, or (2) 500 additional documentation requests during any 45-day period.

Amends title XVIII (Medicare) of the Social Security Act with respect to the Medicare Integrity Program and use of recovery audit contractors.

Requires the Secretary to ensure that recovery audit contracts include certain mandatory terms and conditions pertaining to: (1) penalties for certain compliance failures, (2) penalties for overturned appeals, (3) postpayment and prepayment audits, and (4) guidelines for prepayment review.

Directs the Secretary to publish on the Internet website of the Centers for Medicare & Medicaid Services information on recovery audit contractor performance regarding: (1) audit rates, denials, and appeals outcomes; and (2) independent performance evaluations.

Prohibits the Secretary, in conducting the Medicare Part A and Part B Rebilling Demonstration, from prohibiting any appeal by a hospital of any finding by a recovery audit contractor that an inpatient admission was not reasonably and medically necessary.

Deems to be an original claim for Medicare part B (Supplementary Medical Insurance) payment a resubmitted hospital claim for Medicare part A payment for inpatient hospital services which a recovery audit contractor determines: (1) were not medically necessary and reasonable based on the site of service, but (2) would be medically necessary and reasonable in an outpatient setting of the hospital. Requires payment to be made for such a resubmitted claim for all furnished items and services for which payment may be made under Medicare part B.

Deems to be a reopened claim, for purposes of a hospital's ability to resubmit a claim for Medicare payment in timely fashion, any claim that is the subject of an audit by a recovery audit contractor or a Medicare administrative contractor.

Requires contracts for a recovery audit contractor to require that a physician review each denial of a claim for medical necessity made by an employee of the contractor who is not a physician.