The Basics of Bundled Claims


How to figure what should and shouldn't be bundled

Carolina Urgent and Family Care lost $5,000 in one quarter when it started doing stroke screening cultures. Why? Payers bundled the handling fees.

And it isn't the first practice to find itself unexpectedly facing a pile of denials instead of a pile of cash.

As you're probably aware, claims are "bundled" when a payer refuses to pay for two separate services a practice has billed. Instead, it groups, or bundles, the two charges and pays only one, smaller fee. That makes for frustrated physicians and administrators -- especially because knowing what should and shouldn't be bundled can seem so daunting.

To be sure, understanding and anticipating bundling edits is "a big pain," says Rene Montgomery, administrator for the Lancaster, S.C.-based group.

Luckily, there are ways to figure out in advance what will be bundled, at least for Medicare. As Greg Schnitzer, vice president of compliance for CodeRyte, puts it, "It's like 'The X Files': The truth is out there." Here's where to look.

Get the manual

The first resource is the "Correct Coding Initiative (CCI) Edits Manual." Practices have to purchase a copy since it is considered proprietary information, but this is easy to do. Visit the publisher, National Technical Information Service at or call (800) 363-2068. A year's worth of printed issues (published quarterly) costs $300, and they are also available on searchable CD-ROM for $260.

The CCI manual contains two general categories of Medicare edits: component and mutually exclusive.

Component edits describe pairs of codes Medicare considers subsets of one another. That is, if you submit a claim with one CPT code in the pair, you can't also submit the second code because Medicare considers that procedure clinically part of the first procedure.

An example makes it easier to understand. Imagine an abdominal surgery. As part of the procedure, the surgeon may have to cut through some lesions. In Medicare's view, getting through the lesions is not a separate service; it's just part of the surgery.

Often component edits make clinical sense, but not always. "Component codes sometimes do not make sense at all," says Barbara Cobuzzi, president and CEO of Cash Flow Solutions in Lakewood, N.J., and a board member of the American Academy of Professional Coders. "It's because [Medicare] made a decision for monetary reasons. They want to make one thing a component of the other because they want to save money."

Physicians can't rely on logic to predict component edits. They have to buy the CCI manual to understand what is expected. On the other hand, mutually exclusive edits usually do make logical sense, according to Cobuzzi.

Mutually exclusive code pairs represent "services that cannot reasonably be done in the same session," explains Linda Heller, director of professional products at CodeCorrect in Yakima, Wash. "One example is when one code describes a male procedure and the other describes a female [procedure]. That's the best
example of mutually exclusive; you just can't do those two things on the same day on the same patient."

Other examples? "You have a code for excising one to 10 lesions and another for excising more than 10 lesions. You can't use both," says Schnitzer. Or, Cobuzzi adds, " ... a below the knee amputation with debridement of the foot."

Clearly, in many cases, a practice would be unable to justify coding mutually exclusive -- or comprehensive -- code pairs. Yet there are some times when that actually is the right way to code. Say, for example, that a particularly deft physician debrides a patient's left foot just before amputating the right one. Or, a physician could excise a lesion from a patient's left arm but decide to abrade a similar lesion on his back.  In that case, the physician would report both codes, but add modifier -59 to the code with the lower value.

Modifier -59, according to the American Medical Association's CPT manual, is "used to identify procedures/services that are not normally reported together, but are appropriate under the circumstances. This may represent a different session or patient encounter, different surgery or procedure, separate incision/excision, separate lesion, or separate injury."

"Mutually exclusive does allow for reporting that code pair if the definition of modifier -59 is met," notes Heller. "You can override that mutually exclusive edit, just like you can the comprehensive with the use of a modifier."

But don't automatically add the modifier just for the sake of getting paid for both services. "One of the things I hear and read about is people seeing a bundling edit so they automatically add the modifier. You want to be careful about that. The documentation really needs to support that these are two distinct procedural services," Heller adds.

Another common billing error? Reporting a bundled code pair only with the most valuable code in the pair. The CCI manual publishes bundled codes in two columns. If you use the CPT code that is listed in Column One, you shouldn't use the code in Column Two. But that doesn't mean you can just pick which of the two codes to use. Medicare expects you to use the code in Column One -- even when it pays less, advises Cobuzzi. Column Two is simply there to show how the codes are bundled; the actual code billed if you have provided both services should be from Column One. 

Uncovering status codes

If your practice is adhering to the bundling edits published in the CCI manual but is still getting denials from Medicare, you need to turn to the status codes. These are included in the Medicare Physician Fee Schedule each year (visit the Tools section of for a copy of this year's schedule).
When setting up its payment system, Medicare decided to include reimbursement for some services in its reimbursement for others.

For example, there is a CPT code for "physician phone consultation," but Medicare won't actually reimburse for it. That's because Medicare believes it already pays for the time physicians spend on the phone with patients when it reimburses for a surgery or an office visit.

How is a physician to know that? A big "B," for bundled, appears next to the CPT code in the Physician Fee Schedule.

Commercial payer mysteries

"Medicare's pretty clear-cut," Montgomery admits. "They tell you what they're going to do and what they can't do, and that's good. At least you know, but I don't know where [private payers] come up with their rules."

Indeed, while the CCI manual and Physician Fee Schedule can help a lot with getting paid what you're owed by Medicare, private payers make up their own rules -- rules they aren't always willing to make clear to physicians. That makes for lots of denied claims -- and legal risk for the physician.

"The OIG [Office of Inspector General] in its compliance plan says, 'You, the physician, may not unbundle, and you shall go to jail if you unbundle,'" Cobuzzi complains. "But how can you not unbundle when you are submitting to a private payer ... if you do not know what the unbundling rules are? I can't read their minds." She suggests that practices include a phrase in their own compliance manuals promising to follow Medicare's rules but explaining they are unable to get other rules in writing.

If you get lots of claims denied by a private payer on bundling grounds, it is possible to appeal, but your success depends on "how fair the payer wants to be," says Cobuzzi. "The people you appeal to can say, 'It is our contention that these codes are bundled.' ... It's an arbitrary decision they are making, not a clinical decision."

She suggests appealing payer-specific denials with a letter including:

  • Medicare's bundling rules;
  • clinical indications from your specialty society;
  • descriptions of anatomy or drawings showing that the areas under discussion are separate; and
  • descriptions of CPT codes from the American Medical Association.

"If you are consistently getting a denial, contact your specialty society and state medical association. They collect these things, and when they have a whole bunch of them, they go to the state insurance commissioner," says Cobuzzi.

"Understand [the payer's] rationale and appeal on that basis," Heller suggests.

Unfortunately, while payer-specific edits are a curse for many practices, a little detective work can help you anticipate and understand bundling by Medicare.

Pamela L. Moore, PhD, senior editor for Physicians Practice, can be reached at

This article originally appeared in the September 2003 issue of Physicians Practice.


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