“We believe that AuditGuard® is an extremely effective service for physicians because of its comprehensive scope, turnkey design, and continued emphasis on detection and prevention of errors…For nearly 15 years we have been working with HMR to assist our healthcare clients in the billing and coding compliance area.”

— Robert L. Wilson, Jr., Health Care Group Leader, Smith Moore Leatherwood LLP



On January 1, 2010, as mandated by federal law, the RAC program was launched in all 50 states. Four RACs have been hired by the federal government to audit physician practices throughout the country. These sophisticated, technology-driven private companies are modern-day “bounty hunters” that are paid between 9% and 12% of the money they recover from health care providers like you. The RACs’ typical probe look-back period is six months, and they are empowered to audit your billing records for the past three years.


Each of the four RACs has an exclusive territory as illustrated above, which means you will have one RAC with which you will have to contend. Following is a list of the four RACs:

  • Region ADCS Healthcare Services
  • Region BCGI Federal, Inc.
  • Region C – Connolly, Inc.
  • Region D – HealthDataInsights, Inc.


Do I have to cooperate with the RAC/MIC/MAC when they come calling?

Definitely. There are substantial financial repercussions for failure to respond to a request for medical records. It is critical that the auditor perceive your practice to be prepared, professional, firm and at least as well versed in documentation, coding and billing as are they. Your AuditGuard® team will manage the audit process for you, from initial response through the appellate process, if required.

How much time do I have to respond to a demand letter?

You have thirty days to either pay the assessed repayment, penalties and interest or appeal the demand letter. The appellate process consists of five levels and your AuditGuard® team is well versed in each and every step of the process.

Did the AMA try to lobby against this program?

In our twenty years of experience it was the single largest lobbying effort ever mounted by AMA. The initial objective was to have physicians excluded from the RAC program. After all, of the more than $1 billion taken away from providers in the six state RAC demonstration program only 2% involved physician services. Ultimately, AMA was unsuccessful and physicians were specifically included in the federal statute that legislated RAC into permanence. In a last ditched effort to mitigate some of the impact RAC will have on physicians, AMA intensively lobbied to at least have evaluation and management codes carved out of the final legislation. Alas, they were also unsuccessful in that effort and evaluation and management codes were specifically included in the statute.

Is the program here to stay?

Absolutely. RAC/MIC/MAC/CERT are federally created and empowered audit programs that have been legislated into permanence. The unfortunate reality is that you will be interacting with these auditors year-in-year-out for the foreseeable future. Given the current federal budgetary morass it seems highly likely that audit scrutiny of providers will grow exponentially in the next few years.

I hear about RAC, MIC and MAC. Who are they and how are they different?

RAC, MIC and MAC are federally mandated and empowered provider audit programs. They all have one mission—to take back money from and assess penalties to Medicare and Medicaid providers.

RACs (Recovery Audit Contractors) audit all Medicare providers and are paid exclusively on a contingency basis—they are paid a percentage of the money they take back from providers. RACs are sophisticated, private, profit driven, technology based companies.

MICs (Medicaid Integrity Contractors) audit all Medicaid providers and are paid a professional fee for every audit they complete. Like RACs, they are profit-driven, technology-based companies.

MACs (Medicare Administrative Contractors) are the replacements for the old fiscal intermediaries. These large profit-driven companies will administer both Part A and Part B and have wide sweeping audit authority over Medicare providers. Since they maintain claims history and billing data for Part A and Part B, they are uniquely positioned to audit hospitals and physicians on specific patients and dates of service, looking for coordination of ICD-9 and CPT coding parameters.

What am I doing today that will likely prompt an audit?

Simply being a Medicare and/or Medicaid provider puts you on the audit list for RAC, MIC/MAC/CERT audits. With that said, many audits are triggered by coding, billing and utilization anomalies.

What do they normally look for?

The purpose of RAC/MIC/MAC/CERT is to take money back from providers who have not documented, coded and billed commensurate with the government’s standards and regulations. Typical targets are inaccurately coded services, under documented services, lack of documented medical necessity, bundling/unbundling of services, non-covered services and utilization of modifiers.

Why am I being targeted?

All providers are being targeted in a full court press to recoup reimbursement and eliminate all vestiges of fraud and abuse. Just being a Medicare and/or Medicaid provider puts you on the RAC/MAC/MIC/CERT audit list, but practices with coding, billing and/or utilization anomalies will be repetitively targeted.