“Unbundling” is a form of medical billing fraud that is similar to upcoding. In unbundling, medical providers bill complex, multi-step procedures separately, instead of as one coded procedure. Billing the steps individually allows the provider to recover more reimbursem*nt for the same services. Unbundling is also known as “fragmentation,” i.e, the provider is taking a medical procedure that could be billed with one code and “fragmenting” it into multiple codes, to add up to a higher reimbursem*nt.
Unbundling often occurs in medical coding. For example, on a routine surgical procedure, a provider engaging in unbundling might enter separate codes for incision and suturing, rather than using the standard billing code. This significantly increases a provider’s reimbursem*nt.
Duke University’s 2014 settlement is a well-known example of unbundling fraud. Duke paid $1,000,000 after it was accused of unbundling cardiac and anesthesia services. The Department of Justice said the hospital at Duke was applying a modifier to the codes so they could unbundle services that were typically billed together — in this case, anesthesia in a cardiac procedure.
Thanks to a whistleblower who served as a billing coder and auditor at Duke, the government recovered $1,000,000. The whistleblower was entitled to between 15 and 25%.
Although the FCA was initially implemented to protect the military from fraudulent activity, it was never limited to the military sphere. The Act also intended to eradicate fraud committed throughout all aspects of government. The two main goals for the enactment of the FCA were to involve private parties or relators in fraud enforcement and to combat all types of fraud that cause financial loss to the federal government.
Between the Civil War and World War II, the False Claims Act definition underwent many changes. Each set of amendments weakened the effectiveness of the FCA. As a result, whistleblowers rarely used the FCA as a weapon to combat fraud against government programs. The act greatly reduced the potential rewards for qui tam whistleblowers.
