Health Information Management

Q&A: OIG considers "unbundling" to be fraudulent behavior

APCs Insider, May 30, 2008

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Part 2 of a 2-part series. See the May 23, 2008 APCs Weekly Monitor for the CMS stance on unbundling.
 
QUESTION: Does CMS and the OIG define intentional ‘unbundling’ of codes as fraudulent?  If so, where is this documented?
 
ANSWER: The OIG has published numerous materials over the years to address the topic of unbundling as fraudulent coding. For example, as early as 1996, the OIG told CMS in a report that:
 
Our review showed a need for additional edits to detect the following:
 
Unbundling of billings for two chemistry tests from chemistry panels, unbundling of billings for individual urinalysis tests and microscopy examinations from the combined urinalysis with microscopy service, and duplicating the individual tests with the combined service.
 
Note  that although this report focused on unbundling of laboratory tests, unbundling applies to all codes. Subsequent audits and code edits were expanded to cover all areas of the healthcare continuum.

On November 30, 1998, the OIG issued its compliance program guidance for third-party medical billing companies ("Guidance"). This information was adopted by all fiscal intermediaries. It states:  

In addition to providing a blueprint for a billing company’s compliance plan, the OIG also uses the Guidance to advise billing companies of the particular areas which the OIG believes pose a compliance risk in the areas of billing and coding. The Guidance identifies twenty practices which the OIG believes present particular compliance concerns. Among the areas identified by the OIG is:
  • Using separate billing codes for services that have an aggregate billing code, a practice known as "unbundling" 
Several OIG reports identifying unbundling as fraudulent continued through the early 2000s. The 2006 OIG Work Plan includes the following statement: 
 
Unbundling of Hospital Outpatient Services
We will determine the extent to which hospitals and other providers are submitting claims for services that should be bundled into outpatient services. Sections 9342 (c) and (g) of the Omnibus Reconciliation Act of 1986 prohibits the unbundling of hospital services to include outpatient as well as inpatient services. The unbundling of services could lead to unnecessary Medicare expenditures.
 
In 2007 the OIG Work Plan again addressed unbundling: 
 
Unbundling of Hospital Outpatient Services
We will determine the extent to which hospitals and other providers have been submitting claims for services that should be bundled into outpatient services. The unbundling of services could lead to inappropriate Medicare expenditures.
 
Remember, unbundling prohibitions apply to all healthcare providers and facilities.
 
Unbundling for non-Medicare payers can be even more complex. Each non-Medicare payer establishes their own billing guidelines, and therefore the definition of unbundling can change from payer to payer. It is important that hospitals should require that managed care providers spell out all billing guidelines in the contracts with their managed care providers. For non-contracted payers, it is helpful to obtain a copy of their billing manual before you accept their patient.



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