CPC Compliance & Regulatory Guidelines — Questions and Answers

Question 1: A physician bills for a service that was performed by a medical student without direct supervision. Under Medicare rules, this represents:

Appropriate incident-to billing
Fraudulent billing (Correct answer)
Teaching physician exception billing
Locum tenens billing

Correct answer: Fraudulent billing

Medical students cannot independently bill Medicare; a qualified physician must perform or directly supervise services billed, making unsupervised student billing fraudulent.

Question 2: The 'three-day payment window' rule requires that outpatient services provided within how many days before an inpatient admission must be bundled into the inpatient DRG payment?

1 day
3 days (Correct answer)
7 days
14 days

Correct answer: 3 days

CMS's three-day payment window rule requires that most outpatient diagnostic services and related non-diagnostic services provided within 3 days prior to inpatient admission be included in the DRG payment.

Question 3: Which program uses data analytics and algorithms to proactively identify potentially fraudulent Medicare claims BEFORE payment is made?

Recovery Audit Contractor (RAC) program
Fraud Prevention System (FPS) (Correct answer)
Zone Program Integrity Contractor (ZPIC)
Comprehensive Error Rate Testing (CERT)

Correct answer: Fraud Prevention System (FPS)

The Fraud Prevention System (FPS) uses predictive analytics to flag suspicious claims for review before Medicare payment is issued, unlike RACs which review claims post-payment.

Question 4: Under HIPAA, a 'covered entity' that experiences a breach affecting 500 or more individuals in a state must notify which entity within 60 days of discovery?

State Attorney General only
HHS and prominent media outlets in the affected area (Correct answer)
FBI Cyber Division
CMS directly

Correct answer: HHS and prominent media outlets in the affected area

For breaches affecting 500 or more residents of a state, HIPAA requires notification to HHS and to prominent media outlets serving the affected area, in addition to affected individuals.

Question 5: What does it mean when a provider is placed on the OIG's List of Excluded Individuals and Entities (LEIE)?

They must pay a civil monetary penalty
Federal healthcare programs cannot pay for their services (Correct answer)
Their medical license is revoked
They must enter a Corporate Integrity Agreement

Correct answer: Federal healthcare programs cannot pay for their services

Exclusion from federal healthcare programs means no payment can be made by Medicare, Medicaid, or other federal programs for any items or services furnished by the excluded individual or entity.

Question 6: A compliance officer discovers a pattern of incorrect modifier usage that resulted in underpayments to the practice. The BEST immediate action is to:

Ignore it since it benefits the payer
Conduct a root cause analysis and correct the billing error (Correct answer)
Report it to the FBI
Retroactively recode all claims for the past 10 years

Correct answer: Conduct a root cause analysis and correct the billing error

Both overpayments and underpayments represent inaccurate billing; identifying the root cause and correcting the error is the appropriate compliance response.

Question 7: Which entity publishes the Work Plan each year identifying areas of focus for compliance audits of Medicare and Medicaid programs?

CMS
OIG (Office of Inspector General) (Correct answer)
DOJ
AMA

Correct answer: OIG (Office of Inspector General)

The OIG publishes an annual Work Plan that outlines its planned audits, evaluations, and investigations for Medicare, Medicaid, and other HHS programs.

Question 8: A hospital submits claims for services that were never provided to collect Medicare reimbursement. Under the False Claims Act, the government may recover up to how many times the actual damages, plus penalties?

Two times (double damages)
Three times (treble damages) (Correct answer)
Five times (quintuple damages)
Ten times (denary damages)

Correct answer: Three times (treble damages)

The False Claims Act provides for treble (triple) damages plus civil monetary penalties per false claim, making it the government's most powerful tool against healthcare fraud.

Question 9: In medical coding compliance, 'query fatigue' refers to the risk that:

Physicians answer too slowly to meet billing deadlines
Physicians begin agreeing to queries without carefully reviewing them to avoid repeated requests (Correct answer)
Coders stop querying physicians to save time
CDI specialists send too many educational queries

Correct answer: Physicians begin agreeing to queries without carefully reviewing them to avoid repeated requests

Query fatigue occurs when physicians, overwhelmed by frequent queries, begin rubber-stamping responses without proper review, potentially leading to inaccurate documentation.

Question 10: Which type of Medicare audit focuses on reviewing claims from providers with aberrant billing patterns identified through data analysis, using both prepayment and post-payment review?

RAC audit
CERT audit
ZPIC/UPICreview (Correct answer)
MAC audit

Correct answer: ZPIC/UPICreview

Zone Program Integrity Contractors (ZPICs), now called Unified Program Integrity Contractors (UPICs), conduct investigations targeting suspected fraud through both pre- and post-payment review based on data analysis.

Question 11: Under Medicare's teaching physician rules, what is required for a resident to bill an E/M service at the level documented by the resident?

Resident must be in the final year of training
Teaching physician must be present during key portions and document their presence (Correct answer)
Attending must co-sign the note within 24 hours
Service must occur in an outpatient teaching clinic only

Correct answer: Teaching physician must be present during key portions and document their presence

Teaching physicians must be present during the key or critical portions of the service and must document their presence and participation for billing at the level documented.

Question 12: A coder separates a bundled procedure into its component parts and bills each separately to increase reimbursement. This is called:

Upcoding
Unbundling (Correct answer)
Fragmenting
Overcoding

Correct answer: Unbundling

Unbundling involves billing separately for procedure components that should be included in a single, comprehensive code, violating NCCI edits and constituting fraudulent billing.

Question 13: The minimum standard for a compliant healthcare compliance program, as outlined by the OIG, includes how many core elements?

5 elements
7 elements (Correct answer)
9 elements
12 elements

Correct answer: 7 elements

The OIG's Compliance Program Guidance identifies 7 core elements of an effective compliance program, including written policies, a compliance officer, training, auditing, and disciplinary standards.

Question 14: A Local Coverage Determination (LCD) differs from a National Coverage Determination (NCD) in that an LCD:

Is issued by HHS and applies nationally
Is developed by a Medicare Administrative Contractor for its jurisdiction (Correct answer)
Overrides NCDs when they conflict
Applies only to inpatient hospital services

Correct answer: Is developed by a Medicare Administrative Contractor for its jurisdiction

LCDs are coverage policies developed by Medicare Administrative Contractors (MACs) that apply only within their specific geographic jurisdiction, unlike NCDs which apply nationally.

Question 15: Which section of the Social Security Act governs civil monetary penalties for healthcare fraud, including submitting false claims to Medicare?

Section 1848
Section 1128A (Correct answer)
Section 1862
Section 1395

Correct answer: Section 1128A

Section 1128A of the Social Security Act authorizes the OIG to impose civil monetary penalties on individuals or entities that submit false or fraudulent claims to federal healthcare programs.

Question 16: A Qui Tam lawsuit under the False Claims Act allows which party to file a lawsuit on behalf of the federal government?

State attorney general
Private whistleblower (relator) (Correct answer)
OIG investigator
Medicare Administrative Contractor

Correct answer: Private whistleblower (relator)

Qui Tam provisions allow private individuals (relators or whistleblowers) to file FCA suits on the government's behalf and receive a portion of any recovery.

Question 17: Under HIPAA's minimum necessary standard, when disclosing PHI for treatment purposes between treating providers, the standard:

Always applies and limits disclosure to the minimum needed
Does not apply — treating providers may share complete records (Correct answer)
Requires patient authorization before any sharing
Limits sharing to information from the past 12 months only

Correct answer: Does not apply — treating providers may share complete records

HIPAA explicitly exempts disclosures for treatment purposes between treating providers from the minimum necessary standard, allowing complete clinical information sharing to support patient care.

Question 18: A coder assigns diagnosis codes based on clinical indicators in the record without a physician's diagnosis. This practice is:

Acceptable for inpatient coding only
Generally prohibited — coders must code what physicians document (Correct answer)
Required by UHDDS guidelines
Permitted if the indicators clearly support the diagnosis

Correct answer: Generally prohibited — coders must code what physicians document

Coders must code diagnoses as documented by the treating physician; coding from clinical indicators without a physician diagnosis (except in specific UHDDS exceptions for inpatient coding) is improper.

Question 19: What is the statute of limitations for the government to bring a civil action under the False Claims Act?

3 years from the date of the false claim
6 years from the date of the violation, or 3 years from when the government knew/should have known (up to 10 years) (Correct answer)
5 years from discovery
7 years from the last payment on the claim

Correct answer: 6 years from the date of the violation, or 3 years from when the government knew/should have known (up to 10 years)

The FCA has a dual limitations period: 6 years from the violation date, or 3 years from when the government knew or reasonably should have known, whichever is later, but no more than 10 years.

Question 20: Which Medicare audit program is specifically designed to measure the overall accuracy of Medicare fee-for-service payments on a national level by reviewing a statistically valid random sample of claims?

RAC
ZPIC/UPIC
CERT (Correct answer)
MAC prepayment review

Correct answer: CERT

The Comprehensive Error Rate Testing (CERT) program measures the improper payment rate for Medicare FFS by reviewing a statistically valid random sample of claims paid during a given period.

Question 21: An Advance Beneficiary Notice (ABN) is required to be given to Medicare patients when the provider believes Medicare will likely deny a service as:

Cosmetic
Not medically necessary (Correct answer)
Experimental
Out-of-network

Correct answer: Not medically necessary

An ABN must be issued when a provider believes Medicare may deny a claim for lack of medical necessity, allowing the patient to decide whether to receive and pay for the service.

CPC Compliance & Regulatory Guidelines

A physician bills for a service that was performed by a medical student without direct supervision.
Under Medicare rules, this represents:

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Sources & references

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aapc.com — Score release, test delivery, renewal, time limit, exam format, passing score, fees, eligibility · verified Oct 2026
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