When working with medical billing for insurance companies there is a great deal of confusion , about the Medical Billing Terminology used.

Two confusing terms that are often heard are ‘unbundling’ and ‘fragmentation’.

“Unbundling”, (which is sometimes known as “fragmentation” and vice versa), is the incorrect used of CPT codes. More specifically, it means improperly coding the component parts of a procedure instead of reporting a single code that includes the entire procedure.

Medical coders assign specific codes, called CPT codes (an acronym for Current Procedural Terminology), that communicate information about a service or procedure that has been performed by the healthcare provider.

If additional skill and physician time are required to perform the services, then the other procedure may qualify for additional reimbursement.

Medicare and Medicaid, for example, often will have lower reimbursement rates for groups of procedures commonly performed together, such as incisions and closures incidental to surgeries.

Intentionally unbundling or fragmenting billing codes increases a provider’s profits by billing bundled procedures separately. This results in higher reimbursement from Medicare and Medicaid.

However, In some cases, unbundling may occur because the coder simply misunderstands the proper coding process.

Is Unbundling in Medical Billing illegal?

According to a report by Outpatient Surgery, “there have been cases where healthcare providers intentionally manipulated coding to maximize payment; and this constitutes Medicare fraud.”

To help reduce unintentional unbundling, Medicare developed Correct Coding Initiative (CCI) edits to prevent providers from fragmenting or unbundling when coding and billing for Medicare services.

How to avoid medical billing unbundling and fragmentation?

Most Medical Billing software programs identify identify procedures that have been unbundled improperly. It is important to note that they don’t identify procedures that should have been included but that are missing.

As a medical billing professional, it is your responsibility as the coder to review the medical documentation and identify all billable procedural codes.