Common Medical Billing Errors and Fraudulent Practices

Medical billing errors and fraudulent practices can impact any medical practice’s revenue cycle. Such errors can be prevented by following best practices.

Key concerns that create chaos in the U.S. healthcare system are medical billing errors and fraudulent practices. Such errors not only impact a practice’s financial concerns, but also cause surprisingly large hospital bills for patients. These issues not only burden patients but also strain the relationship between healthcare providers and insurers.

According to Gitnux Market Data Report 2024, the U.S. healthcare system loses up to $935 million a week because of medical billing errors, and over 25% of all errors are due to typos. The report also highlights that hospital coding mistakes make up 63% of medical billing errors.

Most medical billing mistakes are preventable by following best practices. Providers mostly rely on professional medical coding companies to submit their claims with accurate codes.

Common Medical Billing Errors

Duplicate billing: Hospitals sometimes involuntarily charge patients twice for the same procedures, supplies, or medications. This can lead to significant overcharges and billing issues. Duplication also impacts patient trust and satisfaction. To avoid this concern, hospitals must implement strong billing review processes and use technology to recognize and correct duplicate charges promptly.

Duration of stay: Billing errors also arise regarding the length of a patient's hospital stay. Patients may be charged for days they were not actually present in the hospital, leading to extravagant bills. Incorrect billing for the duration of stay can also impact insurance reimbursements and revenue cycles for healthcare practices.

Room charges: Patients may be wrongly billed for the type of room they occupy during their stay. An example for the same is that those staying in shared rooms might be charged the rate for a private room, resulting in unnecessary expenses.

Time spent in the operating room (OR): Billing for operating room (OR) time could be wrong, with practices at times overcharging patients based on average procedure times rather than the actual time of the surgery.

Up coding: Up-coding is a serious error, where healthcare providers may carelessly bill for more expensive services or medications than that was actually provided. This is illegal and considered as healthcare fraud. It can also lead to claim denials, and huge fines.

Overlooked keystrokes: Simple typos or mistaken keystrokes, caused by staff entering billing details can also lead to overcharges and billing inconsistencies. For example, entering an incorrect procedure code (e.g. 94010 instead of 94011) could result in denied claims or improper reimbursement.

Cancelled services: Sometimes patients may get accidentally billed for the consultation, services or procedures that were cancelled or not provided. This can happen due to miscommunication or simple oversight. The billing department needs to ensure the service isn't mistakenly submitted to insurance companies.

Fraudulent Billing Practices

Fraudulent billing practices also result in financial losses for the government but also weaken trust in the healthcare industry. Two such practices include:

•    Unbundling: Certain hospitals engage in unbundling, where they bill for treatments separately instead of combining them into a single charge. This changes the cost of services and contributes to higher medical expenses.

•    Overcharging: Allegations suggest that some not-for-profit hospitals deliberately overcharge uninsured and underinsured patients while maintaining their tax-exempt status. This practice leads to inflated medical debt and unfair financial burden on vulnerable patients.

Key Tips to Address Fraudulent Billing Practices

•    Rigorous auditing
•    Transparent billing practices
•    Robust regulatory oversight 
•    Enhance transparency in billing practices
•    Implement measures to restrict drug prices
•    Apply cost reduction measures

By addressing medical billing errors and fraudulent practices, the U.S. healthcare system can provide affordable and reasonable care for all patients. Providers can rely on experienced medical billing and coding companies to prevent such errors and avoid reimbursement delays. Providers should look for a medical billing company with experience in their specific specialty, as coding regulations can vary.  Make sure they have a proven track record of high first-pass claim rates to avoid denials and delays.