Chapter 37 — Exercises

How to use these. Section D is arithmetic and should be drilled until the shape of an extrapolation is automatic — universe, sample, point estimate, lower bound. Sections B, C, and G are the reasoning sections, and they are where auditors are actually made: an auditor who cannot state the authority behind a finding is expressing a preference. Items marked † have worked solutions in the answers appendix. No answers appear in this file.

Every account, dollar figure, sample size, universe, and confidence level below is a constructed teaching figure. Verify every real-world value — contractor program parameters, sampling methodology, disclosure protocol terms, and the sixty-day rule's current regulatory text — at CMS, at the OIG, and with your compliance officer. Nothing here is legal advice.

Section A — Why audit, and what an audit is (items 1–5)

A.1 In two sentences, define an audit in a way that a practice owner who has never had one would accept. Do not use the word "compliance."

A.2 † Give the three reasons §37.1 offers for auditing, and rank them by how persuasive each would be to (a) a physician owner, (b) a hospital compliance officer, (c) a coding manager defending a position in a budget meeting. Justify each ranking in one sentence.

A.3 A practice reports that its quarterly internal audit has found no errors for six consecutive quarters. State three explanations other than excellence, and say what you would check first.

A.4 Chapter 5 §5.6 lists the seven elements of an effective compliance program. Which one does an internal audit satisfy? Name one other element that a well-run audit program also strengthens, and explain how.

A.5 Explain, in a sentence a non-coder could repeat, why an unexercised written audit plan can be worse than no written plan at all.

Section B — Scope, universe, sample, standard (items 6–12)

B.6 † Write the audit universe for this question as a single sentence ending in a count: "Are our telehealth visits supported?" Name every filter your sentence needs, and say which one is most likely to be defined wrongly.

B.7 A colleague proposes auditing "twenty charts, whichever ones are on top of the queue Monday morning." Name what this is good for, name what it must never be used for, and state the one sentence that must appear in the report if it is done this way.

B.8 For each finding below, name the authority from §37.2's standard stack that a scoring sheet must cite. (a) A code reported for a service the record does not describe. (b) Two procedure codes reported together that are subject to a procedure-to-procedure edit. (c) A service the payer will not cover for the reported diagnosis. (d) A modifier that alters payment and is not permitted on the code. (e) A signature that cannot be authenticated.

B.9 † A contractor's finding letter scores your 2023 claims against a policy revised in 2025. State the rule that resolves this, and write the two-sentence rebuttal you would put in the response.

B.10 §37.2 argues an audit universe has three legs. Name them, and for each give one error from this book that only that leg would have found.

B.11 Your practice management system contains a macro that appends a modifier under stated conditions. Write the five assertion-register fields for it (§37.10), inventing plausible content, and then write the specific evidence test its owner would run.

B.12 A metric your department reports has improved sharply and unexpectedly for two quarters. Write the four questions the audit plan requires you to ask before the improvement is reported upward.

Section C — Scoring (items 13–18)

C.13 Name the four finding categories a scoring sheet must separate, and state which one does not change the claim. Why does the book insist on keeping it?

C.14 † A reviewed chart has four lines. One carries a modifier the record does not support; the other three are correct. Compute code-level accuracy and chart-level accuracy, state which one an external reviewer is more likely to be computing, and say why the difference matters in an extrapolation.

C.15 A quality standard reads "coders will maintain 95% accuracy." List the four things that sentence could mean and say what a manager must add to make it a standard.

C.16 Two credentialed coders read the same operative note and reach two defensible codes. What is this called on a scoring sheet, what is it not, and where does it go?

C.17 † Audit this claim. (constructed teaching example) An established patient is seen for follow-up of hypertension and hyperlipidemia. The note documents both conditions assessed with plans, two medications continued, and a lipid panel ordered. It also documents a new complaint of a painful skin lesion on the forearm, examined and excised the same day, with a procedure note and a documented excised diameter. Billed: 99213-25, and an excision code for a benign lesion of the arm. Score both lines. For each, state the finding category, the authority, and the basis. Then state one category-4 note you would add.

C.18 Rewrite this finding so it would survive a rebuttal: "Line 1 is overcoded. The visit does not look like a level 4 to me."

Section D — Extrapolation arithmetic (items 19–25)

All figures constructed. Round money to the cent and show the check.

D.19 Define, in one line each: universe · sampling frame · point estimate · lower bound · demand.

D.20 † A payer defines a universe of 520 paid claims carrying a code pairing over a twenty-four-month period, draws a random sample of 40, and finds a mean overpayment of \$318.75 per sampled claim. Compute the point estimate. Show the check.

D.21 Using D.20's sample, the reported standard deviation is \$142.00. Compute the standard error of the mean. (Use $\sqrt{40} \approx 6.3246$.)

D.22 † Continuing D.21: the contractor uses the lower limit of a two-sided 90 percent confidence interval, with a multiplier of 1.685 for this sample size. Compute the margin of error, the lower limit of the mean, and the demand. Show every check. Then state, in one sentence, why the demand is lower than the point estimate and who that difference protects.

D.23 Now suppose the same 40-claim sample had produced the same \$318.75 mean with a standard deviation of \$41.00 instead. Recompute the standard error, the margin, the lower limit, and the demand. State the dollar difference from D.22 and explain in two sentences what the practice did "right" to earn it.

D.24 † Account 31-2245's demand was 42 × \$612.40 = \$25,720.80. Explain precisely why this is not an extrapolation, and state the one fact about the practice that made the demand this size rather than six figures.

D.25 A colleague says the practice is safe because "they only pulled twenty charts." Correct the reasoning in three sentences, and say what actually determines the size of a demand.

Section E — The external programs (items 26–30)

E.26 Match each program to what it is looking for and what it can do: MAC · TPE · RAC · SMRC · CERT · UPIC. One sentence each.

E.27 † Four letters arrive in the same week: a CERT documentation request, a TPE round-one probe letter, a RAC complex review request, and a letter from a Unified Program Integrity Contractor. Put them in the order you would work them, say who writes each response, and identify the one that changes who is in the room before anything is written.

E.28 Explain why a TPE letter is described in §37.5 as "the cheapest audit you will ever receive," and name the single action in round one that most determines whether there is a round two.

E.29 The Recovery Audit Contractor is paid a contingency fee on what it finds. State one predicted consequence of that design in each direction — one that argues for it, one that argues against it — without asserting which is larger.

E.30 A practice receives a CERT request and treats it as low priority because "CERT is just a statistic." Name the two things wrong with that, and state what a non-response actually costs.

Section F — Records requests and the response letter (items 31–34)

F.31 A records request arrives dated the 3rd and is found in a fax tray on the 24th, with a 45-day response window. State the date the response is due and the date you would put on the internal calendar. State the control that would have prevented the twenty-one lost days.

F.32 † A claim under review is supported by an office note whose authenticating signature is a scanned image and illegible. State what you send with the packet, what you would send if the note were unsigned, and why those two answers are different.

F.33 A physician asks you to add one clarifying sentence to a note before the records go out, because "it's what I meant and it's obviously true." Write your answer, in the words you would actually use, and name the two rules it rests on.

F.34 † Write the response. (constructed) A reviewer's finding reads: "Claim 0142 — the documentation does not support a separately identifiable evaluation and management service. Modifier 25 is not supported." Your record contains an assessment addressing three chronic conditions with plans, two medications changed, and one laboratory test ordered with a stated reason, in addition to the procedure. Write the DISAGREED entry for the argument section: the finding restated, the authority you rely on, the record language you would quote, and one sentence of conclusion. Invent the quoted sentences and label them as constructed.

Section G — Self-disclosure, corrective action, and judgment (items 35–37)

G.35 † Route each finding to a door and say why. (a) A charge-capture rule has been adding a unit to a drug line for eleven months; the overpayment is quantified. (b) A billing analysis shows the practice has been paying a per-referral amount to a marketing company. (c) A physician's spouse's company leases equipment to the practice on terms nobody documented. (d) A coder reports that a supervisor instructed her to bill a level she cannot support, and that this has continued after she raised it. Before you route any of them, state what "identified" means for the sixty-day clock.

G.36 A judgment problem. You are the coding manager. An audit you ran has quantified an overpayment. Your practice owner, who is not hostile but is frightened, says: "Let's not put this in writing until we know more." Write what you say, what you do, and what you write down — and state which chapter's discipline you are applying.

G.37 † A corrective action plan reads, in full: "Staff will be educated on modifier 25 requirements. Coding manager. Ongoing." Rewrite it with all six required fields, and rank your chosen intervention on the durability ladder. Then say what would have to be true for a rung-1 intervention to be the wrong choice here. Finally: the CAP's owner later reports "we haven't had one of those denials since — I personally check every one of those claims before it goes out." Name the two problems with that report and the case study in this book that supplies each.

Section H — Certification-style items and the Encounter (items 38–40)

H.38 (Exam style) An auditor reviews a claim on which an evaluation and management service was billed with modifier 25 alongside a minor procedure. The record documents one problem, evaluated once, resulting in one procedure. The most appropriate finding is: - A. Reduce the E/M to the lowest level and rebill - B. Query the provider for additional documentation - C. The E/M is not supported; remove the line - D. Report the modifier as informational and leave the line

H.39 (Exam style) Under Medicare, a contractor may extrapolate an overpayment when: - A. Any error is found in the sample - B. There is a determination of a sustained or high level of payment error, or documented educational intervention has failed - C. The provider requests it - D. The sample exceeds one hundred claims

H.40 † The Encounter extension. §37.11 scored Account 10-4471 at four of four lines supported with two documentation findings. Now change one fact: the March 14 note contains no procedure note at all — the injection appears only as a line item generated at check-out from the charge ticket. Rescore all four lines. State each finding's category and authority, state what the financial variance becomes, and say what a reviewer would do with the claim. Then name the control from §37.10 that would have caught this before the claim left the building, and place it on the durability ladder.