What is Bundled Services in Medical Billing?
In the world of medical billing, what does the term “bundled services” mean and when might you use it in your practice? Here’s what you need to know.
In 2018, Americans spent a total of $3.65 trillion on healthcare – a 4.4% increase from the year before. This amount translates to $11,212 per person. Thankfully, the United States is moving away from the fee-for-service system.
There are alternative payment models (APMs) that seek to lower healthcare costs for patients by following value-based care models. This works because healthcare providers can be reimbursed if they meet certain requirements.
An example of an APM in medical billing is bundling. Continue reading to learn about bundled services and their advantages.
What is a Medical Billing Service?
A medical billing service turns healthcare procedures and services into billing claims. These claims are sent to the insurance company to be either accepted or declined. When a claim is accepted, the insurance company pays either all or some of the bill.
The rest is paid by the patient and the healthcare providers are reimbursed.
Medical billing companies will keep the billing process of your practice organized and efficient. You don’t have to worry about hiring an in-house billing team. You’ll also get paid more quickly.
The amount you pay the billing company depends on how large your practice is and which of their services you choose. You should do ample research before deciding on a company.
What is Bundling?
Bundling, or code bundling, involves putting multiple healthcare services under one billing code. A CPT code is a number that represents a specific service a healthcare provider has to receive reimbursement for. These codes make billing the patient easier.
Code bundling cuts down the number of bills that have to be created and sent out. Services will only be bundled if they are provided together. For example, getting an MRI and then treatment for the same condition can be put under one code.
There’s usually one major or dominant code that includes multiple services, such as a nasal endoscopy (31231). In this case, it makes sense to bundle.
Bundled payments or episode payment models (EPMs) are designed to make providers choose services wisely. This has good outcomes for both the providers and the patients.
An episode of care consists of the services given to treat a medical condition within a certain period of time. Each episode of care has a predetermined target price.
If providers go over this limit, they are charged with the difference. On the other hand, they save money when the total payment is below the target price. The patient still receives quality care and only the care that they absolutely need.
Providers are reimbursed a single amount for an episode of care. This is the opposite of fee-for-service models, which would have separate reimbursements for each service. Bundling has less paperwork and makes the billing process faster.
Retrospective and Prospective Payments
Retrospective payments follow a fee-for-service system, in which services are compensated for separately. Still, if the total cost goes above the target price, then the provider has to pay for the excess amount. The providers save money if they don’t go over the target price.
Prospective payments are a single payment that goes toward the whole episode of care. A convener sends the appropriate payments to each provider. Providers can also lose or save money.
Not every service provided within an episode of care may be able to be bundled. The provider may not be reimbursed for services that are not part of the bundled code.
There are cases where a provider won’t perform a certain service because its code can’t be bundled with the others or the expense will boost the total cost over the target price.
Upcoding is another potential risk. Providers that upcode overbill their patients so they make up what they paid for going over the target price. This is an illegal medical practice.
CPT modifiers are used when a service is different from the standard service. The modifier explains why. To prevent not being reimbursed for a service outside of a bundle, the modifier 54 should be added to the code. This modifier is an unbundling code.
Bundling is a Promising Healthcare Feature
Despite its potential drawbacks, bundling in medical billing offers several advantages. Providers have a financial incentive to perform the services that a patient needs. The set target prices will keep them from providing unnecessary services.
This payment model can help significantly lower the cost of healthcare.
Looking for a medical billing service? Don’t hesitate to get a free quote from us!
Author: Mike Cynar
Mike Cynar brings buyers and sellers together by producing reviews and creating non biased webpages allowing users to share their experiences on various products and services. He and his staff write informative articles related to the medical field, legal, and other small business industries.