Internal Controls & Fraud Prevention Flashcards

Which statute imposes criminal penalties for knowingly and willfully paying or receiving remuneration to induce referrals of federally covered healthcare services?

Answer: Anti-Kickback Statute

The Anti-Kickback Statute (42 U.S.C. § 1320a-7b) criminalizes remuneration intended to induce or reward referrals of federal healthcare program business.

A hospital's internal auditor discovers that a materials manager awarded supply contracts to a vendor in which the manager holds a 30% ownership stake. This is best described as:

Answer: Conflict of interest

A conflict of interest exists when an employee's personal financial interest influences—or appears to influence—their official decisions.

Which COSO component requires management to identify and analyze risks that could prevent achievement of organizational objectives?

Answer: Risk Assessment

Risk Assessment is the COSO component where management systematically identifies and evaluates risks relevant to achieving objectives.

An employee embezzles funds for three years before detection. Which control failure most likely allowed the fraud to persist?

Answer: Absence of mandatory vacation or job rotation policies

Mandatory vacation and job rotation force temporary coverage that often reveals concealed irregularities, limiting how long a fraud can go undetected.

'Bundling' as a Medicare fraud scheme involves:

Answer: Billing separately for services that should be reported as a single combined code

Bundling fraud means billing components of a service individually (unbundling them) to collect more than the single bundled code would pay—though the term 'unbundling' is more precise, payers label the scheme 'improper unbundling.'

Which document establishes the authority, independence, objectivity, and responsibilities of an internal audit function?

Answer: Internal audit charter

The internal audit charter, approved by the board or audit committee, formally defines the function's purpose, authority, and organizational independence.

A healthcare entity self-discloses an overpayment to CMS outside the 60-day repayment window. Under the ACA, this creates liability under the:

Answer: False Claims Act

The ACA's 60-day rule means that retaining an identified overpayment beyond 60 days constitutes a reverse false claim under the FCA.