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What would happen if you tried to ward off a werewolf with a clove of garlic? What if you tried to thwart a vampire with a St. Francis pendant?

I’ve seen a lot of monster movies during the last couple of months, and there’s one thing I’ve learned: with preparation and the right weapons you can defeat most monsters, but you better have the proper arsenal or you’ll end up as disassembled pile of goo before the first reel is over.

Some real-life bogeymen, the RACs and the MICs, are being spoken of without similar discrimination and I fear that providers who don’t understand the differences in their missions and tactics will meet a dreadful fate.

The RACs came first, rising from the mist in New York, California and Florida. They attacked hospitals through recoupment of improper payments, common to most and often based on technicalities, while using the resulting contingency fees to grow stronger and smarter.

Enter the MICs

Now come the MICs. The Medicaid Integrity Contractors are companies that have been hired by CMS to seek out fraud and abuse in Medicaid payments. The MICs make use of comprehensive data mining to identify probable improper payments and to conduct audits to verify the scale of the impropriety. Sure, the RACs and the MICs both are frightening to hospitals, but are they really the same breed of monster?

“Actually, the RACs and the MICs have many differences,” according to Robb Miller, director of the Division of Field Operations for the CMS Medicaid Integrity Group (MIG). In a recent conversation, Mr. Miller described a MIC as an entity that is more imposing than a RAC, but one that wields an impact that’s more likely to be focused on a smaller number of providers while leaving others unscathed.

Some of the important differences are rather straight forward. MICs are not paid based on contingency fees, but that’s the end of the good news. MIC audits can “look back” at accounts older than three years (the time period is state-specific), they have no record limits and they only have to give you two(!) weeks to prepare what can be hundreds of accounts for review. The MIC also can review accounts that previously have been reviewed or authorized by another entity.

Although many MIC audits will be carried out as “desk audits” in the MIC’s administrative offices, many other audits will be done on site because of the large volume of accounts on file at hospitals compared to other types of providers. This gives the MICs the ability to poke and probe a little more.  MIC auditors have been known to ask for on-site tours of facilities, including the emergency room and the HIM department.

Avoid the Basement

Just as I always tell every B-movie heroine NOT to go looking for trouble in the basement of the creepy old house, I would advise hospitals NOT to let MIC auditors roam around your hospital. It’s not something that you are obligated to do and it is never going to lead to anything good.

The Entrance

MIC audits begin with an “entrance conference” and end with an “exit conference.” The initiation of the audit includes the completion of a “provider intake questionnaire” that requires an audited hospital to list all previous recoupments and identify its board members and billing services. And if, for instance, stark violations come to light during the audits, they would just be rolled in with the other findings.

Scared yet? Who wouldn’t be? But Robb Miller wants most of you to rest easy tonight. “The MICs’ data-driven approach to identifying potential overpayments helps ensure that efforts are focused on those providers with truly aberrant billing practices,” Miller said. To restate that for those of us who attended state colleges, the analysis of four or five years’ worth of Medicaid data allows the “review of provider” MICs to create and analyze benchmarks that highlight troublesome providers for targeted audits by the “audit of provider” MICs.

This is good news in three ways:

1)   The MIC audits will have the greatest impact on providers that, at least statistically, look to be guilty of fraud or abuse, not merely random and common overpayments.

2)   Because the MICs are not paid through contingency fees, the audits are less likely to focus on hospitals, but more on any type of provider that stands out as an abusive biller.

3)   Prior to providing an audit MIC with an audit assignment, CMS is committed to reviewing the providers identified for audit with state Medicaid agencies, state and federal law enforcement agencies and Medicare contractors. This will ensure that audits and investigations don’t conflict with each other, but it also should provide states an opportunity to identify hospitals that are critical to the well-being of local communities.


Know Your Data

In some ways, preparation for MIC audits will be similar to preparation for RAC audits. Know your own data, educate your physicians, review your policies and carry out extensive self-audits. But remember that the RACs target particular issues across all providers. They are aimed at improper payments and driven by contingent payments, not fraud.


With the RACs, the audits are ongoing – like those vampires on “True Blood” that keep you around so that they can snack on you whenever the mood strikes them – and every 45 days they will return with new demands.  The ongoing copying of clinical documentation and the composition of recoupment appeals are effective as your weapons of last resort.


The MICs will not be pursuing all hospitals, but they will pounce like the Wolfman on unlucky providers and ravage them until they submit. The audit will be traumatic and mounting a defense will be exhausting.

In the end, though, you can survive the audits. You just need to know what kind of monster you’re facing.

About the Author

Dennis Jones is the director of compliance services for CBIZ KA Consulting. While Dennis is recognized as a leading RAC issues expert, his expertise covers a wide variety of topics including managed care, uncompensated care, Medicare and Medicaid compliance, HIPAA, and process improvement. As a result he has spoken previously for NJHA, World Research Group and various state chapters of HFMA, AAHAM, and AHIMA. Dennis is a past president of the New Jersey Chapter of AAHAM and has held senior management positions in provider, IT vendor and reimbursement consultant arenas.

He is a graduate of the Pennsylvania State University with a degree in Health Planning and Administration and hopes to be able to afford football season tickets some day.

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