Both private insurance companies and federal insurance programs negotiate repayment schedules with medical providers such as hospitals and physician’s offices to control costs. Agreeing to certain costs and terms are what make your practice an in-network care provider and allow you to accept certain kinds of insurance.

Some practices attempt to sidestep the cost limitations put in place by insurance providers by intentionally unbundling discounted services in order to maximize how much they can earn for a visit or treatment. Doing so, either as a medical professional creating records of a visit or a billing specialist, could result in allegations of medical insurance billing fraud.

What is unbundling?

In order to keep medical costs as reasonable as possible, insurance companies frequently group together procedures that are performed as a unit in order to limit the total cost to a patient, which is a practice known as bundling. Bundling basic anesthesia and the costs of sterile tools with a surgery would be one example, as would bundling x-ray imaging with setting a bone and applying a cast after a fracture.

By bundling these services that usually get performed together, the insurance provider negotiates a lower reimbursement payment with the medical facility and keeps their costs to the people who carry their insurance reasonable.

A medical practice or biller who intentionally separates traditionally bundled services and bills for each aspect separately engages in unbundling, a practice that could result in criminal charges. Not only does overbilling for typically bundled procedures violate the contract the medical provider has with the insurance company, but it also violates billing best practices and the law.