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Unbundling in Medical Billing

Unbundling in medical billing refers to upcoding, using multiple codes instead of one comprehensive code, and separating a procedure into parts that should be billed together in a single code. Unbundling leads to overbilling and is considered a fraudulent activity in medical billing. Practices do unbundling to convert a simple procedure into a complex one to increase the charges. Unbundling involves breaking the procedure into multiple codes and inflating reimbursement. i.e., in a procedure, a patient has been treated under a routine surgical procedure, but a provider might bill every part of the procedure separately instead of using a single code. This process increases the provider’s reimbursements.

Factors Contributing to Unbundling in Medical Billing

Unbundling occurs when the codes are misunderstood or when procedures are intentionally fragmented to increase the payments. Unbundling is a red flag for fraud investigators, especially if it is deliberately done to boost the practice’s revenue. Errors in the billing process due to unbundling may lead to legal challenges, which the practice might face in the investigation. Practices always need to avoid unbundling.

Types of Unbundling

Unbundling in medical billing means billing medical services separately, which were performed together and should be billed together in a single code. Here are some common types of unbundling in medical billing:

Laboratory Tests

Laboratory tests are usually grouped into panels for efficiency; unbundling occurs when these tests are billed separately. For example, individual tests like glucose, electrolytes, and liver function tests are billed independently instead of billing for a Comprehensive Metabolic Panel (CMP) as a single code. This increases the providers’ reimbursements by charging each specific test separately.

Surgical Procedures

Surgical procedures are divided into many parts. They involve preoperative observations, postoperative care, and surgical supplies. Unbundling occurs when these small processes are further separated into different codes as separate procedures. For example, a surgeon bills separately for his consultation, anesthesia, surgical procedure, and post-surgery services instead of charging them into a single code.

Emergency Department Services

The emergency department includes multiple services, including physician evaluation, diagnostic tests, procedures, medications, and supplies. Unbundling occurs when all these services are billed separately instead of as a single emergency procedure. This allows the practice to capture all the services provided during an emergency visit and increase reimbursement.

Therapy Services

Therapy practices often face unbundling errors because of their complex coding and level of services. It involves multiple stages, such as evaluations, treatments, and modalities throughout the treatment. Unbundling occurs in these services when all stages are treated as separate services during the treatment and billed separately. Instead of billing a therapy session as a single service, each part of the treatment may be billed separately.

Drawbacks of Unbundling in Medical Billing

Due to coding inaccuracies and wrong documentation, unbundling risks healthcare providers to compliance issues and legal complications, complicating the reimbursement and negotiations with payers and leading to higher out-of-pocket patient costs. Healthcare providers must carefully pinpoint the unbundling issues for patient satisfaction and to smooth out the billing process. Unbundling in medical billing has some drawbacks that affect the practice financially; let’s discuss those:

Increased Administrative Burden:

Unbundalling demands additional time and resources for proper documentation and coding. This burdens the billing team and increases operational costs, with additional errors leading to compliance issues and claim denials.

Billing Errors and Compliance Issues:

Unbundling leads to coding inaccuracies or wrong documentation, which results in claim denials, payment delays, and fraud allegations. Compliance regulation with medical billing becomes complicated, resulting in legal penalties.

Complexity in Reimbursement Negotiations:

Unbundling creates numerous problems for healthcare providers, like complicated reimbursement negotiations with payers. This intense situation makes the negotiations with payers less favorable for providers, making billing more challenging.

Patient Dissatisfaction Due to Out-of-Pocket Costs:

When a practice sends their patients multiple bills due to unbundling billing, it causes confusion and frustration for the patients. Patients get irritated the most when the payment in the bills escalates patient out-of-pocket expenses, especially when their insurance plans impose separate deductions, copayments, or coinsurance for each billed component.

Tips to Avoid Unbundling in Medical Billing

Unbundling in medical billing causes errors while coding and affects reimbursements. It is also considered a fraudulent activity and strictly prohibited. Here are a few tips practices can follow to avoid unbundling.

Review Claims

Reviewing medical claims before submitting them to the payers is an effective practice. As we have discussed above, unbundling is the process of coding two or more procedures or services separately that are performed together. This practice increases claim payments. Healthcare practices can avoid this by reviewing their bills before submitting them to the insurance companies. This helps them identify the unbundled codes and saves the practice from severe allegations and penalties.

Conduct Billing Audits

Practices must conduct medical billing audits to minimize service unbundling. Audit experts perform thorough audits and compare them with other medical bills to identify errors. They look deep into the discrepancies where procedures are coded separately, which were performed together and also needed to be coded in a single code. These billing experts also help legal advisors to identify fraudulent billing, including fragmentation or unbundling.

Outsource Billing Services

Outsourcing medical billing services reduces the risk of unbundling while ensuring adherence to HIPAA regulations. With their proactive quality measures, providers can streamline billing processes along with efficient and improved medical billing practices.
Physicians Revenue Group, Inc., a leading medical billing company in the USA, provides medical billing services to minimize the risk of unbundling and other complex billing errors while upholding integrity and compliance. Additionally, their superbilling facility streamlines the billing process more efficiently by consolidating all relevant billing information into a single document.


Unbundling in medical billing has significant challenges and drawbacks for healthcare providers, like compliance issues, patient dissatisfaction, and legal penalties. Unbundling not only complicates reimbursements but also affects the practice’s reputation; however, by outsourcing medical billing services to a company like Physicians Revenue Group, Inc., healthcare providers can minimize the risk of unbundling and optimize the revenue cycle management. PRG offers extensive medical billing services, including super billing, offset amount management, and payment posting. These services uphold integrity and compliance along with revenue cycle management.