June 1, 2023

Many physicians and healthcare organizations rely on Medicare and Medicaid reimbursements as a primary source of revenue. However, such medical providers must deal with governmental scrutiny relating to their reimbursement practices, and regulators and law enforcement agencies contribute vast amounts of resources to investigating and prosecuting those providers suspected to be involved in Medicare and Medicaid fraud. According to government publications, tens of billions of dollars in taxpayer funds are lost each year to Medicare fraud alone. Two of the key types of fraud that governmental authorities have cracked down on over the years are so-called “upcoding” and “unbundling.” 

The healthcare defense attorneys of Zweiback, Fiset & Zalduendo LLP are experienced in providing robust defense to physicians, other healthcare professionals, and healthcare organizations in state and federal investigations, criminal inquiries, and civil litigation related to alleged upcoding and unbundling in the context of Medicare and Medicaid reimbursement.

What Is Upcoding?

Medicare provides reimbursement for health care services using “Evaluation and Management” codes, or often referred to as E&M codes. Upcoding occurs when a physician or hospital submits an inaccurate code for the type of services rendered, such that the state or federal government is billed for a higher amount than what would otherwise be charged for the actual services rendered. 

Examples of upcoding include:

  • Billing for a longer period of time of care than what was actually provided (e.g., billing for 60 minutes of care when only 15 minutes of care was provided)
  • Billing for services that are different than what was actually provided
  • Billing for a more experienced physician’s services when a less experienced (or even non-licensed) individual provided the actual services 
  • Billing for medical services that were not actually needed by the patient 
  • Billing for Medicare-covered services when the actual services provided are not covered by Medicare

What Is Unbundling?

Unbundling is another form of Medicare and Medicaid fraud. While upcoding involves a disconnect between what services are actually provided and what services the health care provider seeks reimbursement for, unbundling does not necessarily mean that the services and goods billed for were not actually provided. 

Instead, with unbundling, a healthcare provider bills the state or federal government for separate services or goods that should have been billed together, or in other words “bundled.” According to the Office of the Inspector General, unbundling “is the practice of a physician billing for multiple components of a service that must be included in a single fee…For example, if dressings and instruments are included in a fee for a minor procedure, the provider may not also bill separately for the dressings and instruments.” 

Penalties for Upcoding, Unbundling and Similar Fraudulent Act

Healthcare fraud cases require a significant amount of investigative work on the part of state and federal law authorities, and, when they are pursued, the fines and penalties pursued are often similarly significant. It is not uncommon for individual physicians to be required to pay penalties in the hundreds of thousands of dollars for Medicare fraud. 

Under California law, it is a criminal offense to knowingly make or cause to be made any false or fraudulent claim for health care benefit with the intent to defraud. When the claim or amount at issue is $950 or less, a person faces six months in a county jail and/or a $1000 fine. When the claim or amount at issue is over $950, a person can face felony charges, with up to five years in a county jail and a fine of $50,000 or double the amount of the fraudulent charges, whichever is greater.  

Under federal law, a person can be charged criminally with violating the False Claims Act for submitting a false claim for reimbursement to the federal government, which includes claims involving upcoding and/or unbundling. This can result in a prison sentence of up to five years and a fine of $25,000. 

Additionally, a private individual with knowledge of upcoding or unbundling fraud can bring a civil lawsuit under the federal False Claims Act or the California False Claims Act, and the federal or California state government may join in prosecuting the lawsuit. Such lawsuits can result in significant fines as well as damages totalling three times the amount of the fraudulent charges. Because private individuals stand to collect between 15 and 30 percent of these damages as a reward for bringing an FCA or CFCA case, persons such as nurses, billing specialists, physicians and even executives with knowledge of such fraudulent activities are incentivized to come forward with these claims.  


Healthcare providers and professionals face unique and complex legal risks, and our attorneys have the legal experience and industry knowledge to counsel and protect clients in all aspects of the industry. It is important to respond properly to legal risks as soon as they arise.  Our attorneys are here to provide counsel and representation to mitigate risk at the earliest possible moment. Contact our office to speak with an experienced healthcare defense attorney regarding your situation today.

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