What is upcoding and unbundling?

Upcoding and unbundling are examples of healthcare billing fraud that involve the improper use of billing codes by health care providers.

Billing codes (known as CPT codes) are a part of the Medicare healthcare program. The program uses a set of tables to determine how much a provider should be compensated for each type of procedure. Fraud occurs when providers manipulate these codes to maximize compensation. 

It’s important that all healthcare workers understand these types of fraud because being involved in either of them can expose you to serious criminal liability. Reporting them, on the other hand, can make you eligible to receive a portion of all the funds that are recovered from the fraud.

In this short guide, you’re going to learn what upcoding and unbundling are. You’ll also get to review some examples of this fraud, along with real cases that have involved them. Let’s start by taking a deeper look at upcoding.

Blowing the Whistle on Healthcare Billing Fraud

Healthcare billing fraud happens when healthcare providers—including doctors, hospitals, and nursing homes—knowingly file incorrect claims. 

The false claims may be submitted to patients or insurance companies. In most cases, however, the target is public programs such as Medicare and Medicaid. These programs don’t have the resources to audit every claim, so they rely on whistleblowers who work for these facilities.

Hospital Fraud

Hospital fraud is a broad term that refers to any action a hospital may take to improperly bill the Medicare and Medicaid programs. 

This type of fraud is a serious problem. A large percentage of the billions of dollars that are distributed by public health programs every year are paid directly to hospitals for the services they provide to patients and outside treatment centers.

Fraud involving hospitals is not easy to detect. Most hospitals around the nation process thousands of transactions every day as tests are performed, drugs are provided and treatments are administered. Fraud can slip through the cracks at any large facility, even without the administrators being aware of it.

The important work that hospitals do further complicates the detection of fraud. When auditors interfere with the daily operations of hospitals, it can endanger patients. In order to avoid threats to the patients, regulators rely heavily on whistleblowers within the hospital to provide evidence that proves fraud. 

Whistleblowers are highly incentivized to reveal fraud because, under the False Claims Act, they are entitled to receive a portion of all funds that are recovered.