Weapons of Mass Corruption (WMCs) Part VI: Unbundling

Note: If you are new to Broken Healthcare or just want to catch up, we’ve put together this page with the best and most useful reading all summarized in one place.

First, an update. This weekend saw the launch of the second phase of signature collection for Colorado Initiative 146. Phase one started with volunteers and a small team. Over the past few weeks, we’ve been ramping up and this weekend, we had dozens of new people all over the Denver metro area at big events like the Bolder Boulder.

With dozens of paid signature collectors out there, the costs are piling up fast. If this is an effort you believe in and you expect to benefit from yourself, please consider making an investment now to ensure we get it done (hint: everyone benefits from lower healthcare costs).

“Until the great mass of the people shall be filled with the sense of responsibility for each other’s welfare, social justice can never be attained.”-Helen Keller

“Every social justice movement that I know of has come out of people sitting in small groups, telling their life stories, and discovering that other people have shared similar experiences.”
-Gloria Steinem

“Throughout history, it has been the inaction of those who could have acted; the indifference of those who should have known better; the silence of the voice of justice when it mattered most; that has made it possible for evil to triumph.”
-Haile Selassie

“The hardest thing to explain is the glaringly evident which everybody had decided not to see.”
-Ayn Rand


Bundling? Fragmentation? These are words that most of us don’t use every day. Yet the healthcare industry uses them all the time—very strategically—to maximize profits at our expense.

Bundles are easy to understand. When you order a number six at McDonalds, you pay a bundled price. If you order a cheeseburger, a drink, and fries separately, you expect the teller to say to you, “Would you prefer the meal, ma’am? It’s a better price.” Or better yet, you just expect them to do it for you. And the last thing you expect them to do, when you order a number six, is to “unbundle” it and charge you separately for the burger, soda, and fries in order to charge you a little more. Yet this is what healthcare providers—hospitals in particular—do to unsuspecting patients. The result, however, is not a little more. In healthcare, it can be a lot more.

Good businesses empower their employees to help customers get the best price on their goods and services. But then again, good businesses don’t generally give people titles like, “Revenue Enhancement Specialist.” (seriously—that’s the title on a letter I received from a hospital).

In healthcare, unbundling, sometimes called “fragmentation,” is used as a revenue optimization strategy. For example, you might be charged for five different blood tests, each having their own CPT code, when there was another CPT code that could have been used for a “liver panel” at a lower cost. CPT stands for Common Procedural Terminology. CPT is the system of medical coding used by healthcare providers.

While intentionally unbundling codes can be used to maximize revenue from self-paying patients and private insurance patients, it goes by another name when billing Medicare: fraud. There are ways around that even with Medicare. But unbundling and “up-coding” (using the coding system as a weapon, carefully choosing codes to minimize the likelihood of procedures being bundled) most often affects privately insured and uninsured patients. 

This is one of the many of examples of our government’s conflict of interest in healthcare. It writes rules to protect itself, while not extending those same protections to the rest of us. And in the process, it creates systems that confuse us, which provides the industry with ever-better weapons to use against us. 

Efforts are underway to change that by making it a condition of payment or participation in federal programs to extend the same protections to us that are enjoyed by government payers. But don’t kid yourself. The special interests are hard at work, sowing confusion, to minimize anything that might impact the bottom line. And, the system is so complex that these schemes still cost government payers a lot, too, even though many providers are being taken to task for fraud every year.

What about insurers? Well, insurance carriers only protect patients or employers when it’s in their best interest. With insurance carriers, if we are not going to hit our increasingly high deductibles this year, it’s not worth much to them to invest in correcting our fragmented bills. It doesn’t save them anything and, when still within your deductible limits, it doesn’t save your employer anything, either. So why fight the higher cost calculations just for us, the patients? 

While I think they have a duty to protect us, acting in the best interest of the patients and employers they represent is not a duty that insurance carriers accept is theirs. They will tell you that they legally have no such duty. That’s something that needs to be changed, and it needs to be tested in the courts.

And when they are bumping against medical loss ratio limits (see Weapons of Mass Corruption, Part II), allowing unbundling helps drive payouts up, thereby maximizing profits.

Most patients and employers are oblivious to the practice of unbundling. At best, they might be able to go online and find an estimated price for a specific CPT code. There is nothing that will tell a patient that the CPT codes on their bill should have been bundled into a single, different code. They’d need to be a medical coding expert for that. By creating a system that requires such expertise, we have enabled unbundling abuse.

The complex nature of medical coding itself is an enabler to all kinds of corruption. Each year, hundreds—sometimes thousands—of codes are added to the system, along with “modifiers,” just to make things a little more complex. 

To protect itself against malicious unbundling, CMS (Centers for Medicare and Medicaid Services) launched a program known as the “Correct Coding Initiative.” Unfortunately, the benefits of this program, again, are strictly for CMS. The Correct Coding Initiative does not extend to the private sector. 

“In the absence of justice, what is sovereignty but organized robbery?” -Saint Augustine


The result of unbundling is, often times, that when billing patients at chargemaster prices (see Weapons of Mass Corruption, Part I), not only are the charges inflated by 10x, 20x or more than Medicare or an in-network insurance carrier would be charged, the unbundling results in even more obscene overcharging.

The bottom line: there is tremendous waste, fraud, and abuse in healthcare that is facilitated by complexity and price obfuscation. Anyone that doubts that serious price transparency will bring healthcare costs down hasn’t woken up to how they, and/or their employer, are being scammed every day.

Also telling: you’ll notice that no one is writing about why the corruption I write about is wrong or inaccurate. Instead, they’re scheming about how to defeat us through negative advertising in the fall. A marketing firm has already been hired. The ads are being conceptualized. The challenge they’re facing is what to tell you that would get you (if you live in Colorado) to vote against this measure. Here are the ideas they’re working with, from what I hear:

  1. It will stifle competition and drive costs up.
  2. Insurance carriers will pull out of the state.
  3. It’s a violation of their constitutional rights.
  4. It’s more bureaucracy and more cost for doctors, which will in turn cause your prices to go up.

Oh, and on the last item—they’re torn. That’s doing a smear campaign on me. The risk, or so I hear, is that it could somehow raise my profile instead of squashing me. So they’re not sure yet if they want to go with that strategy. 

So, on top of the games and scams they play with us, they are prepared to lie to us, too. Ask yourself, is that a healthcare system we can #trust? Are these companies we can #trust? I don’t think so. And the only thing that’s going to cure this very sickly beast is to shine a bright light on it. All of it. And in Colorado, that means passing Initiative #146 to set an example for the rest of the country.

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