Understanding Unbundling in Medical Billing

Medical bills can be inaccurate for many reasons. Sometimes coders make mistakes when they prepare medical bills. Sometimes medical practices deliberately make coding decisions that result in overbilling. One of the coding issues that leads to overbilling is known as unbundling.

Unbundling can affect the reasonableness of medical charges. Personal injury claims that require the proof of reasonableness may be undermined by expert testimony that points to unbundling as the cause of unreasonable billing.

Unbundling might also be exposed by whistleblowers. Medical billing experts support whistleblowing lawsuits against providers who overbill Medicare and other government insurers by providing expert testimony about unbundling that they detect in healthcare bills.

An understanding of unbundling begins with an understanding of how medical bills are coded. Medical billings are created by billing specialists who rely on codes developed by the American Medical Association. The AMA has assigned a five-digit code to each procedure or service that doctors provide to their patients. These Current Procedural Terminology (CPT) codes are the backbone of modern billing systems.

Insurance companies rely on CPT codes as a means of standardizing the descriptions of procedures and services for which physicians and medical practices seek reimbursement. Medicare and Medicaid bills must follow the Healthcare Common Procedure Coding System (HCPCS), which incorporates the AMA’s CPT codes.

Medical practices employ or hire medical billing coders to translate medical records into CPT codes for billings. A medical coder reviews the medical records, determines the precise service or procedure that the patient received, identifies the CPT code that describes that service or procedure, and includes the CPT in the billing. The insurance company or Medicare/Medicaid then reimburses the amount they have agreed to pay for services and procedures described by each billed CPT code.

Selecting the correct CPT code is vital to accurate billing. That can be a formidable task, as the AMA has created thousands of CPT codes. Several different codes may be available to describe the same service or procedure, depending on (for example) the amount of time involved, the complexity of the procedure, how it is performed, or whether a service was provided in person or by telehealth.

Ideally, coders have extensive training and experience, making them adept at understanding medical records and identifying the correct CPT code to describe the services or procedures that are documented in those records. Coders have typically studied medical terminology, anatomy, pathology, and other aspects of medical science, in addition to learning the nuances of the CPT coding system.

In some cases, procedures described by different CPT codes are provided at the same time. For example, a surgeon might perform a procedure described by a CPT code as “Repair of double outlet right ventricle with intraventricular tunnel repair.” At the same time, the surgeon might perform a procedure described as “repair of right ventricular outflow tract obstruction.” Rather than billing those two procedures as separate procedures, they should be bundled by using the single CPT code that describes both procedures.

In other cases, performing a minor procedure is an expected component of a major procedure. For example, it is common to cauterize a nosebleed while performing a diagnostic nasal endoscopy. While there is a CPT code for cauterizing nosebleeds, it should not be used when that procedure is encompassed by the more complex endoscopy. Rather, the procedure should be billed using just the CPT code for the endoscopy.

Coders need to determine when bundling is required and when it is not. Bundling procedures that should be billed with separate CPT codes can cause a practice to lose revenue. Whether procedures should be bundled typically depends on whether they were performed at the same time. Bundling recognizes that procedures provided at the same time take less total time than procedures provided as different times.

In the endoscopy example, suppose the patient leaves the clinic after the endoscopy is finished but returns later in the day with a nosebleed. If the physician cauterizes the nosebleed, it is appropriate to bill the endoscopy and the cauterization using separate CPT codes because they were provided at different times. The coder would then add a modifier (59, signifying a “distinct service”) to indicate that the two procedures were performed separately and that reimbursement for both is appropriate.

Unbundling is the flip side of bundling. When two procedures are provided at the same time and the two procedures are described by a single comprehensive CPT code, billers are overcharging the patient (and the insurer) by billing the two procedures separately using two CPT codes.

Overbilling also occurs when a coder charges for two services when the code for the major service assumes that the minor service is also provided. For example, the code for a cardiovascular stress test assumes that the physician administered an ECG during the test. If the billing includes a code for a cardiovascular stress test and a separate billing for an ECG, the billing is excessive.

Unbundling inflates billings. Excessive billing may be caused by a coder who does not understand the CPT coding system or did not take the time to determine the correct codes. Unbundling can also be a deliberate strategy to charge more than a health care provider is entitled to receive for the billed procedures. An occasional bundling error might lead to denied payments, or to payments that are delayed until the error is corrected. A series of unbunding errors over time may lead to a fraud investigation, particularly when bills are submitted for payment by Medicare or Medicaid.

Medical billing experts search for instances of unbundling in medical billings. By comparing medical records to medical billings, a medical billing expert can determine whether separately coded procedures were performed at the same time. A careful comparison can uncover unbundling errors that result in inflated billing. 

Medical billing experts help lawyers by identifying unreasonable and fraudulent billings. Unbundling is one of many issues that a medical billing expert might discover after a careful screening of medical bills.