HAC Internal Controls & Fraud Prevention 3 — Questions and Answers
Question 1: A physician upcodes a 99213 office visit to a 99215 to increase reimbursement. Under the False Claims Act, this is most accurately classified as:
- Abuse
- Waste
- Fraud (Correct answer)
- A documentation deficiency
Correct answer: Fraud
Intentional upcoding to obtain higher reimbursement meets the FCA definition of fraud because it involves a knowing false claim.
Question 2: Which document formally defines the scope, objectives, and approach of an internal audit engagement?
- Audit report
- Engagement letter (Correct answer)
- Control matrix
- Risk register
Correct answer: Engagement letter
The engagement letter (or audit plan) formally establishes the scope, objectives, timing, and methodology before fieldwork begins.
Question 3: A radiology technician steals cash co-payments before they are recorded. Which control would most directly prevent this?
- Monthly bank reconciliation
- Mandatory pre-numbered receipt issuance at point of collection (Correct answer)
- Annual physical inventory of equipment
- Quarterly management review of revenue
Correct answer: Mandatory pre-numbered receipt issuance at point of collection
Pre-numbered receipts issued at the point of collection create an audit trail that makes skimming immediately detectable.
Question 4: Under the Sarbanes-Oxley Act Section 302, which individuals must certify the accuracy of financial reports for publicly traded healthcare entities?
- External auditors
- Chief Executive Officer and Chief Financial Officer (Correct answer)
- Board audit committee members
- Internal audit director
Correct answer: Chief Executive Officer and Chief Financial Officer
SOX Section 302 requires the CEO and CFO to personally certify the accuracy of financial statements and the effectiveness of disclosure controls.
Question 5: In healthcare, 'credential padding' in provider enrollment refers to:
- Billing for services performed by an unlicensed individual under a licensed provider's NPI
- Adding unnecessary clinical credentials to a patient chart
- Falsely claiming board certifications to enroll as a specialist (Correct answer)
- Over-credentialing staff beyond regulatory requirements
Correct answer: Falsely claiming board certifications to enroll as a specialist
Credential padding involves falsely listing certifications or training during enrollment to qualify for higher reimbursement rates.
Question 6: A healthcare organization's compliance hotline received an anonymous tip about billing irregularities. The compliance officer's first step should be:
- Report immediately to the OIG
- Conduct a preliminary assessment to determine if a formal investigation is warranted (Correct answer)
- Notify all department managers to preserve records
- Suspend the accused employee pending review
Correct answer: Conduct a preliminary assessment to determine if a formal investigation is warranted
A preliminary assessment establishes whether the allegation has merit before committing resources to a full investigation or taking adverse actions.
Question 7: Which ratio is most useful for detecting potential billing fraud in a physician practice by comparing it to specialty benchmarks?
- Days in accounts receivable
- E/M code distribution (coding bell curve) (Correct answer)
- Net collection rate
- Denial rate by payer
Correct answer: E/M code distribution (coding bell curve)
The E/M coding bell curve shows whether a provider's code-level distribution is an outlier compared to peers in the same specialty.
HAC Internal Controls & Fraud Prevention 3
A physician upcodes a 99213 office visit to a 99215 to increase reimbursement.
Under the False Claims Act, this is most accurately classified as: