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Defending Against Healthcare Claim Up-Coding & Unbundling Charges

Defending Against Healthcare Claim Up-Coding & Unbundling Charges

Upcoding and unbundling of healthcare claims are two common types of healthcare fraud that can cost patients, healthcare providers, insurers, and taxpayers millions of dollars each year. While not all instances of upcoding or unbundling are intentional or malicious, it is important for healthcare providers and medical practices to have a solid understanding of proper coding practices and implement safeguards to prevent improper coding. This article will provide an overview of upcoding and unbundling, explain why they are problematic, discuss laws and regulations prohibiting these practices, and offer practical tips for how healthcare providers can defend against upcoding and unbundling.

What is Upcoding?

Upcoding refers to a healthcare provider billing for medical services or procedures at a higher level than what was actually performed. It involves using billing codes that represent more complex diagnoses or treatments in order to receive higher reimbursement rates from insurers.For example, a doctor who performed a routine physical exam might bill it using a code for a more comprehensive annual preventive medicine examination. Or a hospital could bill for care provided by a nurse as if it was provided by a physician, which warrants higher reimbursement.Upcoding can occur with any type of medical code, including CPT (Current Procedural Terminology), ICD (International Classification of Diseases), DRG (Diagnosis-Related Group), and HCPCS (Healthcare Common Procedure Coding System) codes. It can take place in a variety of healthcare settings such as physician practices, hospitals, nursing homes, home health agencies, and more.Some common examples of upcoding include:

• Billing a higher level of E/M (evaluation and management) code than was warranted based on the services provided
• Using a code for a more serious diagnosis than the patient actually has
• Billing services as “medically necessary” when they were just routine or preventive
• Reporting care by a physician when it was actually provided by a nurse or assistant
• Billing outpatient services as inpatient services

Upcoding is problematic because it leads to inflated costs for insurers, government healthcare programs, patients, and taxpayers. It also skews healthcare data and statistics. Intentionally upcoding claims constitutes fraud and can result in significant fines or penalties if discovered.

What is Unbundling?

Unbundling, also known as fragmentation, is another improper billing practice that involves splitting or “unbundling” charges for groups of procedures that are commonly performed together.Certain sets of medical services are bundled together under a single billing code and payment rate. Unbundling refers to taking those bundled codes apart and billing the components separately. This “fragmentation” of billing results in higher total reimbursement.Some examples of unbundling include:

• Billing for each step of a surgery separately rather than using the single code for the entire procedure
• Separately billing for pre- and post-operative care that should be included in the surgery code
• Itemizing each lab test from a panel or profile rather than billing the panel code
• Billing for supplies or administrative tasks that should be part of an office visit code

Like upcoding, unbundling also contributes to inflated healthcare costs and inaccurate data on utilization and spending. Healthcare providers who engage in deliberate unbundling can face civil or criminal penalties.

Laws & Regulations Prohibiting Upcoding and Unbundling

Several important laws and regulations prohibit upcoding, unbundling, and other fraudulent billing practices:

• False Claims Act – This federal law imposes civil liability and penalties on any person or organization that knowingly submits false claims for payment to the government. The FCA has been used extensively to prosecute cases of Medicare/Medicaid fraud.
• Anti-Kickback Statute – This federal law prohibits offering, paying, soliciting, or receiving remuneration to induce or reward referrals or generation of business involving any item or service payable by the Federal health care programs. Both civil and criminal penalties can be imposed.
• Stark Law – This federal law prohibits physicians from referring Medicare patients for certain designated health services to an entity with which the physician or a family member has a financial relationship.
• Health Insurance Portability and Accountability Act (HIPAA) – HIPAA established national standards for electronic healthcare transactions, including billing codes and practices. It increased penalties for fraud and abuse violations involving federal healthcare programs.
• National Correct Coding Initiative (NCCI) – CMS developed this set of automated edits that prevent improper Medicare Part B payments by analyzing billed code combinations. Code pairs that should not be billed together trigger edits.

In addition to federal laws, healthcare providers must comply with any applicable state laws prohibiting false claims, kickbacks, self-referrals, and other billing fraud. Having a comprehensive compliance program is essential for avoiding coding violations.

Tips for Preventing Upcoding & Unbundling

Healthcare providers can take several steps to guard against improper coding and ensure compliance:

• Conduct internal audits – Routinely audit a sampling of medical charts and billing records to identify any potential upcoding, unbundling, or other errors. Identify any necessary corrective actions.
• Implement compliance training – Require annual training for all coding and billing staff on proper coding practices, common mistakes to avoid, and how to handle any uncertainties.
• Enhance documentation – Have providers document patient encounters with sufficient detail to support the level of codes billed. Vague, generic notes make errors more likely.
• Utilize coding experts – Employ a certified professional coder (CPC) or outsource coding to ensure codes are chosen accurately based on regulations and documentation.
• Update EHR templates – Configure EHR templates to match billing rules and documentation needs. Embed coding references or prompts.
• Run billing edits – Use software that checks billing codes against medical record documentation to flag discrepancies for review.
• Stay current on codes – Review code updates annually and train staff on new codes, rules, and guidelines.
• Seek legal guidance – Consult healthcare attorneys on risk areas, auditing practices, documentation standards, and training.

With increasing scrutiny on billing fraud, having procedures in place to prevent upcoding and unbundling is critical. Healthcare providers should make compliance a top priority to avoid penalties and protect patients. Accurate coding and billing ensures integrity, improves care quality, and benefits the entire healthcare system.