April 7, 2024

Upcoding and Unbundling: Avoiding Illegal Billing Practices

Maintaining integrity and compliance is paramount, especially for physical therapy professionals and practice owners. Among the myriad challenges they face, illegal billing practices, such as upcoding and unbundling medical billing, represent significant risks not just to their professional reputation but also to their legal standing. 

This article delves deep into understanding these practices, with a focus on why it's crucial to steer clear of them, providing a guide aimed at reinforcing ethical billing practices within the physical therapy community.

Understanding Illegal Billing Practices in Physical Therapy

Illegal billing practices refer to any deceptive practices used to illicitly increase reimbursement from insurance providers. In physical therapy, just as in other medical fields, this often takes the form of upcoding, unbundling, or other fraudulent billing methods. Such practices not only breach legal and ethical standards but also undermine the trust between patients, providers, and payers.

Upcoding and Unbundling Are Considered to be the core of illegal billing practices. CPT codes are submitted to private insurers or government programs like Medicare or Medicaid for more serious, often more expensive diagnoses or procedures than were actually provided.

What is Upcoding in Medical Billing?

In medical billing, upcoding is the submission of insurance claims for more severe diagnoses or more complex procedures than were actually performed. This form of upcoding fraud is not only unethical but also illegal, attracting scrutiny and severe penalties.

Example of Upcoding: In a physical therapy context, an example of upcoding might involve submitting a CPT code and billing for an hour-long, one-on-one therapeutic session when the session lasted only 30 minutes or was conducted in a group setting. Such discrepancies between billed and actual services render this practice not just fraudulent but also harmful to the patient-provider relationship.

What is Unbundling Medical Billing 

This practice, conversely, involves itemizing services that should be combined into one billing code. Rather than treating complex, multi-step procedures as a single coded procedure, providers bill each step separately in order to recover more reimbursement.

If a physical therapy evaluation includes multiple elements that are standard parts of the assessment, unbundling these elements into separate charges is considered unethical and constitutes billing fraud.

Example of Unbundling: An instance of unbundling in physical therapy billing would be separating the charges for therapeutic exercises, manual therapy, and therapeutic activities that are typically part of a comprehensive treatment session. By billing for each component separately, the provider is engaging in fraudulent billing practices and inflating the reimbursement amount.


illegal billing practices during coding

Why Is It Important to Avoid Upcoding and Unbundling?

Engaging in upcoding and unbundling can lead to audits by insurance companies, financial penalties, and potential criminal charges. More so, it damages the reputation of the physical therapy practice and erodes the trust that is essential to the therapist-patient relationship. The long-term implications of being involved in billing fraud can be far-reaching, affecting not only the individual practitioner but the profession as a whole.

Strategies for Prevention and Compliance

  1. Maintain Accurate Records: Detailed documentation of therapy sessions, including duration, activities performed, and patient progress, is vital. These records serve as the foundation for ethical billing practices.
  2. Regular Training and Education: Ensuring that all staff members are educated about the legal and ethical aspects of billing in physical therapy is key. This includes understanding what constitutes upcoding and unbundling and the severe repercussions of engaging in such practices.
  3. Conduct Internal Audits: Regularly reviewing billing practices within your practice helps identify and correct inadvertent errors. These audits can be instrumental in preventing unintentional upcoding or unbundling.
  4. Develop Clear Billing Policies: Establishing and enforcing clear, compliant billing policies and procedures is essential. These policies should align with legal standards and ethical guidelines, serving as a reference point for all billing activities.
  5. Utilize Ethical Billing Software: Implementing robust physical therapy billing software can help prevent illegal billing practices by ensuring that billing codes match the services provided. Software designed with compliance in mind can automatically flag potential errors or inconsistencies before claims are submitted.

The Role of Physical Therapy Billing Software in Preventing Fraud

Physical therapy billing software, such as PtEverywhere, plays a pivotal role in maintaining billing integrity. By integrating advanced features and automated checks, it ensures accuracy and compliance, thereby safeguarding against fraudulent activities:

  • Automated Verification: Ensures patient and insurance information is accurate and up-to-date, minimizing the risk of billing errors.
  • Coding Compliance: Automatically updates and applies the latest billing codes, preventing unintentional misuse.
  • Audit Trails: Maintains detailed records of all billing activities, offering transparency and traceability for each transaction.
  • Error Detection: Identifies common billing mistakes before submission, reducing the likelihood of fraudulent claims.
  • Access Controls: Limits system access to authorized users, protecting sensitive information from unauthorized manipulation.

By leveraging these capabilities, PtEverywhere not only enhances operational efficiency but also significantly reduces the potential for fraudulent activities, ensuring practices operate within legal and ethical boundaries.

Conclusion: Upholding Ethical Billing Practices

The fight against illegal billing practices in physical therapy is not just about avoiding legal repercussions -  it's about preserving the trust and integrity that form the bedrock of the therapeutic relationship. By understanding what upcoding and unbundling entail, recognizing the importance of steering clear of such practices, and implementing strategies for prevention and compliance, physical therapy professionals and practice owners can safeguard their practices against the risks of billing fraud.

In this pursuit, PtEverywhere emerges as a pivotal ally, offering physical therapy billing solutions that are not only efficient but designed with compliance at their core. Our platform stands ready to support your practice in navigating the complexities of billing, ensuring that your focus can remain where it truly belongs—on delivering exceptional patient care. 

Join us in our commitment to fostering a professional environment defined by ethical billing practices. Discover how PtEverywhere can transform your billing process and help you uphold the highest standards of integrity. 

Explore PtEverywhere today and take the next step towards secure, compliant billing for your practice. Try it out for free!