HEALTH CARE FRAUD PAST PAPERS WITH ANSWERS

QUESTION 1 : Harold, a medical provider, is compensated based on each service that he provides to patients. Which of the following best describes this method of compensation?

  1. Capitation
  2. Episode-of-care
  3. Salary
  4. Fee-for-service

There are several types of reimbursements for providers: fee-for-service, capitation, episode-of-care, and salary. Each has advantages and disadvantages from an anti-fraud perspective. Fee-for-service reimbursement occurs when providers receive payment for each service rendered. The disadvantage of fee-for-service payment is that it creates an incentive for providers to increase their compensation by performing excess and unnecessary services. However, providers tend to like this payment system because it gives them wide discretion in selecting the services that meet the patient’s needs. Capitation is a reimbursement method in which providers receive one lump sum for each patient that they treat, regardless of how many services the provider renders. While this method avoids some of the incentives for providers to perform unnecessary services, it might give providers a reason to focus on the quantity of patients they see rather than the quality of service. Additionally, capitation does little to stop schemes involving fictitious patients. Episode-of-care reimbursement is a health care payment method in which providers receive one lump sum for all the services they provide related to a condition or disease (as opposed to capitation, which is a lump sum per patient). This method captures some of the benefits of capitation by removing incentives to provide unnecessary services, but it is also (in theory) more fair to providers than capitation because it compensates them more when multiple health When governments directly operate health care facilities, it is common to pay providers a basic salary rather than offer service-based compensation.

 

QUESTION 2 : When a medical provider performs a service for a patient but bills the patient’s health care program for a more complex and more expensive service, this practice is called upcoding.

  1. True
  2. False

Upcoding occurs when a provider bills for a higher level of service than actually rendered. One common form of upcoding involves generic substitution—filling a prescription with a less expensive drug

 

QUESTION 3 : A health care provider’s practice of charging a comprehensive code, as well as one or more component codes, by billing separately for subcomponents of a single procedure is known as ______________.

  1. Segregating
  2. Unbundling
  3. Subdividing
  4. None of the above

Because health care procedures often have special reimbursement rates for a group of procedures typically performed together (e.g., blood test panels by clinical laboratories), some providers attempt to increase profits by billing separately for procedures that are actually part of a single procedure. This process is called unbundling or coding fragmentation .

 

QUESTION 4 : Michael, a medical provider, performs an appendectomy, a procedure that is supposed to be billed as one code. Instead, he intentionally submits two codes for the same procedure, one for an abdominal incision and one for removal of the appendix. Which of the following best describes Michael’s scheme?

  1. Procedure compounding
  2. Decompressing
  3. Unbundling
  4. Fictitious services

Because health care procedures often have special reimbursement rates for a group of procedures typically performed together (e.g., blood test panels by clinical laboratories), some providers attempt to increase profits by billing separately for procedures that are actually part of a single procedure. This process is called unbundling or coding fragmentation .

 

QUESTION 5 : Which of the following health care frauds would be best described as a fictitious provider scheme?

  1. A provider operates a mobile lab that bills a health care program for unnecessary tests and then relocates.
  2. A doctor at a hospital inflates the cost of his services by coding them as being more complex than they should be.
  3. A thief steals a health care provider’s identifier and bills a government health care program under the name of a fake clinic.
  4. A group of people posing as medical professionals provide services without proper licenses.

In a fictitious provider scheme, corrupt providers or other criminals fraudulently obtain and use another provider’s identification information and steal or purchase lists of patient identifying information. Thereafter, the perpetrator submits bills using the fictitious provider’s information to the insurance provider or government health care program for medical services, although no services are performed.

 

QUESTION 6 : Falsified prescriptions for equipment, excessive supplies, noncovered supplies, and scooter scams are forms of fraud commonly involving what type of health care entity?

  1. Out-patient services groups
  2. Special care facilities
  3. Reusable medical equipment suppliers
  4. Hospitals

Reusable medical equipment, often called durable medical equipment (DME), includes items such as crutches, wheelchairs, and specialized patient beds. Fraud schemes perpetrated by reusable medical equipment suppliers Falsified prescriptions for equipment or supplies Intentionally providing excessive supplies Equipment not delivered or billed before delivery Billing for equipment rental beyond when the equipment was checked out Billing for supplies not covered by the insurance policy or health care program Scooter scams (i.e., billing for electric-powered wheelchairs that are either unnecessary or are of poorer quality than the model billed for)

 

QUESTION 7 : A doctor provides services to both patients who pay directly and patients whose bills are paid by a government program. To make his services more attractive to patients outside the coverage of the government program, he gives patients who pay directly a discount that is not applicable to patients under the program. Which of the following best

  1. Upcoding
  2. Disparate price
  3. Fictitious claim
  4. Overutilization

Many government health care programs require that they receive the best available price that providers offer. In a disparate price scheme, providers charge some patients (e.g., those in direct payment situations) a lower rate than they charge the government. This disparate bill rate causes the government to pay a higher rate in violation of regulations mandating that the government receive the lowest rate. In addition, some government health programs require that wholesale pharmacies provide the program at the average wholesale price.

 

QUESTION 8 : All of the following are types of medical provider fraud EXCEPT:

  1. Fictitious services
  2. Smurfing
  3. Clinical lab schemes
  4. Fictitious providers

Fictitious services, clinical lab schemes, and fictitious providers are all types of medical provider fraud. In a fictitious services scheme, legitimate health care providers charge or bill a health care program for services that were not rendered at all. Often, the providers submit bills for patients they have never seen but whose private patient information they purchased from someone involved in identity theft or someone who otherwise improperly obtained it. In a fictitious provider scheme, corrupt providers or other criminals fraudulently obtain and use another provider’s identification information and steal or purchase lists of patient identifying information. Thereafter, the perpetrator submits bills using the fictitious provider’s information to the insurance provider or government health care program for medical services, although no services are performed. Clinical lab schemes occur when a provider advises a patient that additional medical testing is needed to diagnose a problem when the testing is not actually required or advisable. The fee for the unnecessary work often is split with physicians. In some cases, physicians own the medical testing service. Additional medical testing, which is later viewed as excessive, is not always fraud. Many doctors have a genuine fear of retaliation from their patients; they are afraid of malpractice lawsuits that might result from a delayed or erroneous diagnosis. Smurfing is a scheme to launder funds through financial institutions.

 

QUESTION 9 : Fraudulent kickbacks in the health care industry can include which of the following?

  1. Payment for additional medical coverage
  2. Waiver of deductibles and copayments
  3. Payment for referral of patients
  4. All of the above

Kickbacks in the health care industry can come from several sources. Examples of kickbacks include: Payment for referral of patients Waiver of deductibles and copayments Payment for additional medical coverage Payment for vendor contracts Payments to adjusters

 

QUESTION 10 : Lindsey, a medical provider, provides monetary payments to existing patients and to other providers for referring new patients to her practice. Which of the following best describes Lindsey’s scheme?

  1. Kickback
  2. Beneficiary fraud
  3. Fictitious services
  4. Deductible forfeiture

Kickbacks in the health care industry can come from several sources. Examples of kickbacks include: Payment for referral of patients Waiver of deductibles and copayments Payment for additional medical coverage Payment for vendor contracts Payments to adjusters Providers in an area of high competition will pay runners to recruit new patients. In addition, patients might receive a monetary reward if they refer another patient to a provider. The provider makes up for the kickback in the unnecessary billing of medical expenses or false claims.

 

QUESTION 11 : Examples of fraud schemes perpetrated by health care institutions and their employees include all of the following EXCEPT:

  1. Improper contractual relationships
  2. DRG creep
  3. Unintentional misrepresentation of the diagnosis
  4. Billing for experimental procedures

Fraud schemes perpetrated by institutions and their employees include those commonly used by doctors and other providers. However, the more common schemes in which hospitals are primarily involved include: Filing of false cost reports DRG creep Billing for experimental procedures Improper contractual and other relationships with physicians Revenue recovery firms to (knowingly or unknowingly) bill extra charges

 

QUESTION 12 : Which of the following can best be described as fraud perpetrated by medical practitioners, medical suppliers, or medical institutions on patients or health care programs to increase their own income by illicit means?

  1. Uncovered party fraud
  2. Provider fraud
  3. Beneficiary fraud
  4. Insurer fraud

Provider fraud consists of practices by health care providers (including practitioners, medical suppliers, and medical institutions) that cause unnecessary costs to health care programs or patients through reimbursement for unnecessary or excessive services, or services that do not meet the recognized standards for health care.

 

QUESTION 13 : Which of the following statements concerning fraud involving special care facilities is TRUE?

  1. Many patients in special care facilities are less likely to report fraud because they often are not responsible for their own financial affairs
  2. It is difficult for fraud in special care facilities to be committed in high volume because patients are located in close proximity to each other
  3. When fraud is committed against special care facilities, it is common for victims to obtain repayment from the perpetrators
  4. All of the above

Medical facilities that offer special care services, such as nursing homes and psychiatric hospitals, and the patients in them are at a greater risk of fraud than most other medical institutions. Many health care fraud schemes are revealed after a patient reports strange charges or other red flags. Unfortunately, criminals take advantage of the fact that patients in special care facilities are more vulnerable to fraud. There are several features unique to special care Unscrupulous providers can operate their schemes in volume because the patients are all in the same facility. Many patients in special care facilities do not have the legal capacity or ability to be responsible for their own financial affairs and, consequently, are not as likely to report fraud involving their care. In some instances, special care facilities make patient records available to outside providers who are not responsible for the direct care of the patient (sometimes in violation of regulations). In automated claims environments, scrutiny of the claims at the processor level is inadequate because the automated systems used do not accumulate data that would flag indications of improbably high charges or levels of Even when abusive practices are detected and prosecuted, repayment is rarely received from wrongdoers because they usually go out of business or deplete their resources so that they lack any resources to repay the funds. Patient personal funds are often controlled by the facility’s administration and are an inviting target for embezzlement. Individually, patients generally maintain a relatively small balance in their personal funds accounts.

 

QUESTION 14 : Which of the following health care frauds would be best described as a fictitious services scheme?

  1. A doctor uses the identifying information of patients he has never serviced to bill an insurer or health care program.
  2. A patient who is not covered under a health care program pretends to be a covered party to receive medical services.
  3. A doctor intentionally submits a bill to an insurer or health care program using improper codes for the services provided.
  4. A patient fraudulently reports symptoms he does not actually have to receive a prescription.

In a fictitious services scheme, legitimate health care providers charge or bill a health care program for services that were not rendered at all. Often, the providers submit bills for patients they have never seen but whose private patient information they purchased from someone involved in identity theft or someone who otherwise improperly obtained it.

 

QUESTION 15 : A patient goes to the doctor for a medical condition. The doctor identifies the condition, but he decides to order additional lab testing that he knows to be unnecessary. The doctor owns the lab that he sends the patient to, and he will profit from the unnecessary testing. Which of the following best describes the doctor’s scheme?

  1. Clinical lab scheme
  2. Fictitious provider scheme
  3. Fictitious services scheme
  4. Front organization scheme

Clinical lab schemes occur when a provider advises a patient that additional medical testing is needed to diagnose a problem when the testing is not actually required or advisable. The fee for the unnecessary work often is split with physicians. In some cases, physicians own the medical testing service. Additional medical testing, which is later viewed as excessive, is not always fraud. Many doctors have a genuine fear of retaliation from their patients; they are afraid of malpractice lawsuits that might result from a delayed or erroneous diagnosis.

 

QUESTION 16 : Why is the health care industry concerned about the potential effect of the Electronic Data Interchange (EDI) on fraudulent activity?

  1. Only a few types of health care transactions can be processed by EDI
  2. The tools required to detect EDI fraud are difficult to use
  3. The efficiency of EDI allows for more vendors and thus more claims to process
  4. All of the above

The reasons the health care industry is concerned about EDI’s potential to stimulate fraudulent activity include: There is a lack of tools to detect EDI fraud. The variety of health care services increases the potential for dissimilar frauds. The efficiency of EDI allows for more vendors and thus more claims to account for. The swiftness in which transactions take place allows less time to uncover fraud.

 

QUESTION 17 : A medical institution receives funding based on all the services it provides related to a condition or disease. This system of compensation is referred to as capitation.

  1. True
  2. False

There are several types of reimbursements for providers: fee-for-service, capitation, episode-of-care, and salary. Each has advantages and disadvantages from an anti-fraud perspective. Capitation is a reimbursement method in which providers receive one lump sum for each patient that they treat, regardless of how many services the provider renders. While this method avoids some of the incentives for providers to perform unnecessary services, it might give providers a reason to focus on the quantity of patients they see rather than the quality of service. Additionally, capitation does little to stop schemes involving fictitious patients. Episode-of-care reimbursement is a health care payment method in which providers receive one lump sum for all the services they provide related to a condition or disease (as opposed to capitation, which is a lump sum per patient). This method captures some of the benefits of capitation by removing incentives to provide unnecessary services, but it is also (in theory) more fair to providers than capitation

 

QUESTION 18 : Heidi, a Certified Fraud Examiner and internal auditor for a health care program, has been asked to review the program’s system of internal controls in the claims processing area. Heidi has decided to present the management of the unit with a list of general indicators for fraud that are applicable to many health insurance fraud schemes by program beneficiaries. All of the following would be included on Heidi’s list EXCEPT:

  1. Anonymous telephone or email inquiries regarding the status of a pending claim
  2. Individuals who mail their claim and ask for their claim payment to be sent through direct bank transfer
  3. Pressure by a claimant to pay a claim quickly
  4. Threats of legal action when a claim is not paid quickly

A fraud examiner should be aware of the following indicators of fraud by insured individuals and beneficiaries under health care programs: Pressure by a claimant to pay a claim quickly Individuals who hand-deliver claims and insist on picking up their payment in-person Threats of legal action if a claim is not paid quickly Anonymous telephone or email inquiries regarding the status of a pending claim Identical claims for the same patient in different months or years Dates of service just prior to termination of coverage or just after coverage begins Services billed that do not appear to agree with the medical records Billing for services or equipment that are clearly unsuitable for the patient’s needs Of course, everyone wants their claim paid as soon as possible. Red flags don’t arise unless the person continually pressures for payment or continually threatens legal action.

 

QUESTION 19 : Which of the following is a common scheme perpetrated by suppliers of reusable medical equipment?

  1. Providing a poorer quality wheelchair or scooter than billed for
  2. Billing for equipment rental after it is returned
  3. Falsifying prescriptions for medical equipment
  4. All of the above

Reusable medical equipment, often called durable medical equipment (DME), includes items such as crutches, wheelchairs, and specialized patient beds. Fraud schemes perpetrated by reusable medical equipment suppliers Falsified prescriptions for equipment or supplies Intentionally providing excessive supplies Equipment not delivered or billed before delivery Billing for equipment rental beyond when the equipment was checked out Billing for supplies not covered by the insurance policy or health care program Scooter scams (i.e., billing for electric-powered wheelchairs that are either unnecessary or are of poorer quality than the model billed for)

 

QUESTION 20 : Billing for experiments with new medical devices that have not yet been approved by a jurisdiction’s health care authority is one form of medical fraud.

  1. True
  2. False

One form of medical fraud is the billing for experimental use of new medical devices that have not yet been approved by the jurisdiction’s health care authority. Some hospitals are deliberately misleading third-party payers by getting them to pay for the manufacturer’s research.

 

QUESTION 21 : DRG creep occurs when staff members at medical institutions intentionally manipulate diagnostic and procedural codes in a pattern to increase claim reimbursement amounts.

  1. True
  2. False

Diagnostic-related groupings (DRG) is a reimbursement methodology for the payment of institutional services. This method or similar models have become more popular in various countries for the purposes of determining costs and reimbursing institutional providers. DRG categorizes patients who are medically related with respect to various types of information, such as primary and secondary diagnosis, age, gender, weight, length of stay, and complications. DRG creep occurs when medical staff members manipulate diagnostic and procedural codes to increase reimbursement amounts or other forms of funding. When it becomes a pattern and intent is established, it becomes fraud. For example, a hospital might repeatedly and incorrectly code angina (pain or discomfort in the chest due to some obstruction of the arteries) as a myocardial infarction (a more serious event, commonly known as a heart

 

QUESTION 22 : Many health care claims are now paid via EDI (Electronic Data Interchange). Because EDI leaves no paper trail, it makes detecting fraud in the health care industry easier.

  1. True
  2. False

EDI frustrates fraud examiners’ ability to detect fraud in the health care industry in three ways: The automation of claims has erased claims professionals’ ability to detect suspicious-looking claims. Because they are used to handling the paperwork of claims, EDI hampers the claims professional from getting a good picture of the overall nature of an account, instead reducing each transaction to individual claims. Because of the impersonal nature of electronic transactions, EDI raises the temptation of would-be fraudsters to commit white-collar crime. EDI leaves no paper trail, making the process of fraud detection difficult for the fraud examiner

 

QUESTION 23 : Special care facilities generally have the capability to meet all of their patients’ needs without the services of outside providers, leading to a lower likelihood of fraud involving such institutions.

  1. True
  2. False

Medical facilities that offer special care services, such as nursing homes and psychiatric hospitals, and the patients in them are at a greater risk of fraud than most other medical institutions. Many health care fraud schemes are revealed after a patient reports strange charges or other red flags. Unfortunately, criminals take advantage of the fact that patients in special care facilities are more vulnerable to fraud. Many special care facilities do not have the in-house capability to provide all the services and supplies their patients need. Accordingly, outside providers market their services and supplies to special care facilities to meet the needs of their patients.

 

QUESTION 24 : Common methods of inflating health care billings include all of the following EXCEPT:

  1. Altered claims
  2. Code manipulation
  3. Added services
  4. Sliding policies

Health care billings can be inflated by providers as well as beneficiaries. The following are some of the most common fraud schemes encountered by investigators and claims approvers: Altered claims Added services Code manipulation

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