Unbundling & Upcoding Fraud in Healthcare Explained

Upcoding fraud occurs when a healthcare provider submits a false reimbursement claim to Medicare or Medicaid for a different procedure or diagnosis than the one provided.

The name “upcoding” refers to the codes that are used to seek reimbursement from public health programs. To ensure predictable costs for these programs, common healthcare services are organized into codes that signal when a service can be reimbursed at a specific rate.

Billing codes exist for nearly all common procedures, supplies, and advanced medical devices. There are CPT codes for everything from the application of anesthesia, doctor visits, to the fitting of prosthetic devices.

Healthcare providers are required to submit accurate codes for the services they performed. Submitting the wrong code can result in penalties. Purposefully submitting the wrong code in order to claim a larger reimbursement is considered upcoding fraud.

Also known as fragmentation, unbundling fraud occurs when healthcare providers must bill groups of services together but choose to bill each separately to collect a greater reimbursement.

Services are supposed to be grouped together when they are part of the same treatment plan. For example, if a patient requires surgery, the billing code for that surgery may combine the costs of anesthesia, incisions, closures, and other typical services involved in a surgery.

Medicare and Medicaid save money when services are bundled together. The reimbursement rates for individual services do not include these savings, so health care providers may attempt to bill for each service so that they can collect more money overall.

The use of electronic health records (EHR) software can facilitate unbundling. These programs can make it simple for providers to copy notes from past visits or other patients. The records created with these programs can make it more difficult for audits to detect fraud.

Unbundling is a common form of fraud. It may be done without fraudulent intent because of the complexity of the rules involved in whether a procedure should be bundled. Unbundling fraud may be identified when health care providers deliberately alter correct records to result in unbundling.

The following examples of unbundling may be considered fraud:

• A lab is asked to provide a series of tests related to the same patient issue and code each test as coming from a different request.
• A patient is receiving standard recovery care for the same injury several times a day, and each instance of care is recorded as a separate service.

How do I report upcoding and/or unbundling?

To begin a fraud report, your first step should be to speak to a whistleblower attorney for protection. Not all confusing billing practices are considered to be upcoding or unbundling. If you file a report and are mistaken about fraud taking place, it could expose you to a difficult position at work.

Collect as many records as you can, particularly written instructions or internal policy handbooks that instruct employees to change documents or record information in an inaccurate way.

Your lawyer will review the situation, the details shared, and any evidence you have provided. You may be eligible to file a qui tam lawsuit under the False Claims Act

If you move forward with a False Claims case, you may be permitted to sue on the government’s behalf as a relator. As a relator, you are entitled to collect a portion of the funds that are recovered. In past cases, relators have been awarded millions of dollars in settlements.