Which practice is identified as an inflated billing scheme where a lower-cost item is billed as a higher-cost one?

The correct answer is associated with the practice known as upcoding, which involves billing a lower-cost item as if it were a higher-cost item. This scheme typically occurs in healthcare and billing environments where providers intentionally use a more expensive code for billing purposes to inflate the reimbursement they receive. This deceptive practice results in higher costs for insurance companies and can adversely affect patients, who may be unaware that they are paying more than what they should have for services rendered.

In the context of the other practices, unbundling refers to the separation of procedures or services that should be billed together to inflate costs, while undercharging involves billing for services at a rate lower than appropriate. Replacement fraud typically pertains to the fraudulent replacement of goods or products, not necessarily in a billing context but rather in the context of misrepresenting what is being provided. Understanding these distinctions helps in identifying and preventing various forms of financial fraud.