Government spending on healthcare and the cost of healthcare in general has risen dramatically in the past few decades. With costs continuously escalating, the federal government has more incentive than ever before to root out the fraud and corruption in the healthcare sector that costs taxpayers billions of dollars each year.
In both the Medicare and Medicaid programs, a set of specific billing codes is used by medical providers to submit claims to government healthcare programs for services rendered. Manipulating or altering billing codes to maximize reimbursement from government healthcare programs like Medicare and Medicaid is a type of healthcare fraud that can be reported by whistleblowers under the Qui Tam provision of the False Claims Act.
A complicated, but common scheme used to defraud the government and taxpayers involves a procedure called upcoding. Upcoding occurs when a provider intentionally uses a higher-paying code on the claim form for a patient to fraudulently reflect the use of a more expensive procedure or device than was actually used or was necessary. Ultimately, an ongoing pattern of upcoding can result in the pocketing of large and fraudulently obtained profits by medical providers. This type of Medicare/Medicaid fraud is estimated to cost the taxpayers billions of dollars.
Another common type of coding fraud, frequently seen in laboratory billing, is “unbundling”, also known as “fragmentation.” “Unbundling” is the practice of submitting bills piecemeal or in a fragmented fashion to maximize the reimbursement for various tests or procedures that are required, pursuant to Medicare and Medicaid guidelines, to be billed together and therefore at a reduced cost.
The classic example of unbundling is found in the clinical laboratory setting. Because certain “batteries” or “panels” of tests are so frequently ordered by physicians and performed as a group, separate billing codes have been established for these groups of tests. However, billing codes also exist for the individual tests when they are performed separately. Consequently, the amount of reimbursement for the same tests, if billed separately, can easily exceed the amount of reimbursement allotted for the panel of tests. As a result, in an unbundling scheme, a healthcare provider or clinician can artificially maximize their reimbursement amount by billing the tests separately rather than under the single group billing code