On the External References palette, make sure all references are displayed by switching the Missing toggle off.
In the File References pane, right-click the drawing reference that you want to bind and choose Bind.
In the Bind Xrefs/DGN Underlays dialog box, select one of the following options:
Bind - Named object definitions in the external reference being converted into a block definition are added to the current drawing with a prefix of
referencename$n$, where
n is a number starting at 0.
Insert - Named object definitions in the external reference being converted into a block definition are merged into the current drawing without adding prefixes.
Click OK to close the dialog box.
The external reference is converted to a block definition and a block reference is inserted in place of the external reference.