Compliance, Ethics, Fraud and Abuse, and Auditing
This domain tests whether you recognize the legal boundaries around coding and how a compliant program responds to errors. Exam items typically describe a pressure situation - a supervisor asking for a higher level, a provider asking you to code an undocumented diagnosis - and ask what a coder should do and which law applies.
The statutory framework
- False Claims Act: imposes liability for knowingly presenting, or causing to be presented, a false claim. Knowingly includes deliberate ignorance and reckless disregard - not just purposeful intent. Qui tam relators may share in the recovery.
- Anti-Kickback Statute: criminal. Prohibits offering or receiving remuneration to induce referrals of items or services payable by federal healthcare programs. Intent is required, and safe harbors protect certain arrangements.
- Stark Law: civil and strict liability. Prohibits physician referrals of designated health services to entities with which the physician has a financial relationship, absent an exception.
- Also relevant: Civil Monetary Penalties Law, OIG exclusion authority, HIPAA, and 42 CFR Part 2 for substance use disorder records.
Elements of a compliance program
- Written standards and policies; designated compliance leadership and a committee; training and education; open lines of communication including a hotline; internal monitoring and auditing; enforcement and discipline; and response and prevention, including corrective action and disclosure of overpayments.
Ethical coder conduct
- Code from the record only. Never code to a target or a benchmark, never change a code to increase payment, and never alter documentation to support a code.
- Query when documentation is unclear, but do not lead the provider toward a diagnosis or a higher-paying code.
Worked example
An audit shows a provider bills 99215 on almost every visit, while notes describe only stable chronic conditions with refilled prescriptions. Your manager says to keep billing 99215 because that is what the provider wants.
- The documentation supports a lower level; the billed level is unsupported.
- Correct action: bill per documentation, educate the provider, and if overpayments exist, refund or disclose them. Continuing deliberately meets the reckless-disregard standard under the False Claims Act.
- Escalate through the compliance officer or hotline, and document your concern. Retaliation for good-faith reporting is prohibited.
Traps that cost marks
- Assuming an honest error is automatically fraud - but also assuming no intent means no liability, since reckless disregard counts.
- Confusing anti-kickback (intent, remuneration) with Stark (strict liability, financial relationship, designated health services).
- Believing a modifier can fix an undocumented service.
- Treating upcoding and unbundling as administrative trivia rather than reportable conduct.