Medicare Upcoding and Unbundling

When submitting claims to Medicare and Medicaid for reimbursement for services rendered to patients, healthcare providers enter certain numerical codes which represent specific services.  “Upcoding” refers to a fraudulent practice of entering codes that represent more expensive services than the ones actually rendered.  Since this conduct causes the government to overpay healthcare providers, it can be a violation of the FCA.

Additionally, some codes represent a bundle of services that are usually performed together, such as a group of routine laboratory tests.  When entered as a bundle, the government will pay less than if the codes were entered individually.  Some healthcare providers defraud the government by “unbundling” these codes and entering the services individually.  This again causes the government to pay more than required based on a fraudulent billing practice and can violate the FCA.

Example

A former director of radiation oncology at Melbourne Internal Medicine Associates (MIMA) blew the whistle on a scheme involving several fraudulent billing practices.  For instance, when submitting reimbursement claims to Medicare using Medicare’s system of numerical codes, MIMA doctors entered incorrect codes representing more expensive services than those actually rendered.  In addition to this system of “upcoding,” MIMA doctors also billed Medicare for medically unnecessary services and services not rendered.  MIMA ended up settling with the U.S. government for $12 million, and the whistleblower received an award of $2.64 million.