What is Bundling and Unbundling in Medical Coding?

by | Last updated May 16, 2023 | Published on Jan 16, 2023 | Medical Billing, Medical Coding

Unbundling in Medical Coding
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Medical coding is the conversion of healthcare diagnoses, procedures, medical services, and equipment into ICD-10, CPT, and HCPCS codes. Healthcare organizations need to use the appropriate medical codes to describe services provided in claims submitted to commercial insurance companies and government programs. Accurate billing depends on choosing the correct CPT code. Medical billing and coding service providers review medical records and select the correct code that describes the service or procedure that the patient received, helping the physician create accurate billing claims.

Assigning medical codes can be especially complex when procedures that have distinct codes are performed together. The question is whether they should be billed as a single procedure using one code or billed separately. This depends on medical coding rules. Bundling occurs when procedures or services with unique CPT or HCPCS Level II codes are billed together under one code. Unbundling is when two or more codes that are normally part of a single procedure can be billed separately. Knowing what to “bundle” or “unbundle” determines the accuracy of medical billing. Making an incorrect choice is a common cause of billing errors.

How Bundling and Unbundling Work

Bundling refers to the use of a single CPT code to describe separate procedures that were performed during an episode of care delivered within a defined period of time. Under the bundled payment approach, providers and/or healthcare facilities receive a single payment for all the services performed to treat a patient undergoing a specific episode of care.

The Office of Inspector General (OIG) defines unbundling as occurring when a “billing entity uses separate billing codes for services that have an aggregate billing code”. Unbundling can occur either by mistake or be done to increase payment.

Whether a procedure can be bundled basically depends on what was done:

  • Bundling applies in the case of a procedure that is necessary to successfully complete the primary procedure. For example, an incision is a necessary element of a surgical procedure and is not considered a separate procedure. Likewise, closure of the incision after the surgery is complete, is not separate but an important part of the surgery. Generally, incision and closure are included in the surgical codes.
  • Unbundling occurs when multiple procedure codes are billed for a group of procedures that are covered by a single comprehensive code. Unbundling may apply if the other procedures required additional skill and time required to perform. For example, if the closure of the surgical incision required an extensive amount of time and skill, these additional services may be unbundled or reported using individual codes along with an appropriate modifier.
  • An incidental procedure is that which is carried out at the same time as a more complex primary procedure. An incidental procedure cannot be unbundled and reported separately on a claim. Incidental procedures require little additional provider resources and are generally not considered required for performing the primary procedure. For example, a medically necessary appendectomy may be reported separately, but the removal of an asymptomatic appendix is considered an incidental procedure when done during another abdominal procedure and is not separately reportable. The Centers for Medicare and Medicaid Services (CMS) classifies certain procedure codes (status B codes) as always bundled when billed on the same claim with another procedure code or codes to which the bundled code shares an incidental relationship.

Unbundling is a major problem for payers and they are on the lookout for procedures that have been unbundled improperly. Inappropriate unbundling is considered fraud as it can result in significant overpayments. On the other hand, bundling services that should not be bundled will result in revenue loss.

Know Bundling Guidelines

CMS developed the National Correct Coding Initiative (NCCI) to prevent improper coding leading to inappropriate payment for services that should not be reported together. The edits are updated on a quarterly basis. The NCCI is considered the “end-all, be-all” bundling resource for Medicare payers and many commercial payers. CMS NCCI edits are used to determine relationships between codes. Key points:

  • Services considered to be mutually exclusive, incidental to or integral to the primary service rendered are not allowed additional payment.
  • Not all CPT or HCPCS Level II codes are subject to bundling edits, but a single code that is subject to bundling edits may bundle dozens of codes.
  • There are exceptions to the rule. A code that normally is bundled may be reported (and reimbursed) separately if the two procedures occur at separate anatomic sites, or during separate patient encounters.
  • When NCCI code pair edit is unbundled, the proper modifier must be appended to the code that is normally bundled. Without a modifier, payers will automatically reject this code, rendering it bundled and not separately payable.

A proper understanding of the rules pertaining to coding, billing, and reimbursement is essential to know when unbundling is potentially problematic and when it is not. Coding bundles can be confusing for providers as they may feel they are performing services for which they are not getting paid. Professional coders in leading medical coding companies are familiar with the CPT coding rules with regards to bundling. They knowledgeable about NCCI edits and can determine when and how to accurately identify a distinct procedure. They will review the medical documentation, refer to the latest version of NCCI to check for code bundles, and identify all billable procedural codes. Experts can help practices avoid claim errors and lost revenue.

Outsource Strategies International (OSI) is a US based medical billing and coding company serving medical practices, dental practices, dentists and physicians, and hospitals across the country. OSI has a skilled team of AAPC or AHIMA certified coders with extensive experience in serving multiple specialties.

Loralee Kapp

Since joining our RCM Division in October 2021, Loralee, who is HIT Certified (Health Information Technology/Health Information Management), brings her extensive expertise in medical coding and Health Information Management practices to OSI.

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