Imagine you go to the hospital for a standard procedure and later you receive an exorbitantly high medical bill. Turns out that you have been charged for a service you didn’t even receive. Many of us may have found ourselves in a similar predicament because the truth is, medical billing errors occur more than 80% of the time!

With healthcare costs already sky-high across the U.S. as compared to the rest of the world, medical billing errors are just the icing on the cake that may make healthcare unaffordable and inaccessible. It may cause patients to lose thousands of dollars annually leading them to trust their healthcare providers less.

Having said that, one of the biggest reasons why errors occur is because the medical billing system is quite complex. Hospitals, clinics, and medical facilities are high-stress and fast-paced environments, and that increases the probability of such billing errors. A useful option that many healthcare providers choose is to outsource medical billing altogether.

Outsourced medical coding and billing services allow doctors and their staff to provide optimum patient care without administrative distractions.

Here’s everything you need to know about medical billing errors.

How frequently do medical billing errors occur?

According to the latest studies, four out of five medical bills contain some kind of error. Some cases may be fraudulent; others are simply a result of confusion in a highly intricate process involving too many people without proper coordination. Multiple people represent multiple organizations in the healthcare process, increasing the chances of error along every step.

Moreover, about 50% of all Medicare claims contain errors. For those on Medicare, that’s not a promising statistic to hear. Patients are billed erroneously half the time when the entire purpose of Medicare was to relieve retired citizens from health insurance woes.

But why is Medicare prone to such a high error rate? That is because they only review 0.5 – 5 % of their claims to ensure accuracy. In contrast, private organizations review 100% of them. Sadly, this means the vast majority of Medicare claims are paid without review.

What are the most common medical billing errors?

Before addressing medical billing errors, it’s essential to get familiar with the most common types of errors encountered in medical billing procedures. Medical billing errors mostly revolve around typos or incorrect data entry.

But as mentioned earlier, even a small error can make the difference between whether a payment is made or not. Occasional errors can be overlooked at times, but a pattern indicates there is a deeper cause.


Upcoding occurs when patients are billed for more services than they received. Providers may inflate the diagnosis from a condition that is moderate to severe, requiring more expensive treatment. It also happens when a patient is charged for procedures that were not even performed.

Upcoding is frequent when the billing staff provides incorrect codes, or the doctor does not give complete and precise information. While upcoding errors are primarily due to overwork and understaffing, they can easily be mistaken for wrongful or duplicate billing. Such accusations put the practice at risk and increase the chances of incurring penalties along with time wasted in repairing the damage.

Invalid codes

Medical codes are updated yearly. Hence it is the billing staff’s responsibility to keep track of them. But in some cases, procedure and diagnosis codes may be input incorrectly as the update may delete the usual ones. Thus, it is essential to have a list of all the updated codes to prevent further issues.

Missing information

Omissions are a significant factor in denied claims. Billing staff often overlook seemingly insignificant but essential fields such as names, sex, addresses, birth dates, insurance information, etc. Missing or incorrect patient data causes delays and results in denied claims. Sometimes the staff may also enter the information in the wrong patient record, causing further delay and complications.


Specific billing codes are designed for a group of procedures often performed together. Unbundling is billing each of these services under individual codes, leading to higher profits for the practice. It may be an intentional or an unintentional error, but unbundling is illegal and holds severe consequences.

Incorrect Procedure Codes

A straightforward typo or pressing the wrong key can result in a completely different procedure coded into the system. It may also happen if the document contains the incorrect code before it reaches the billing department.

Incorrect Billing

Incorrect billing occurs if a practice bills a patient for services they did not provide or if the service was scheduled but later canceled. These errors are due to incorrect patient or provider information.

While it may seem like a simple error to make, it can have far-reaching consequences for practices. Incorrect billing results in more revenue documented than generated, resulting in extra hours for staff to remedy the issue. Such errors can be labeled as fraudulent and risk fines. And lastly, it impacts the reputation and credibility of the practice.

Outsource medical billing to effectively counter billing errors

It is reported that medical billing errors account for $68 billion in lost healthcare spending. So, how can we address this issue? The best option is to outsource medical billing. While it seems daunting to hand over such an integral financial component to a third party, it has numerous advantages.

A dedicated team is at your service to code and bill your procedures through outsourced medical coding services. The staff has professional expertise in this field, hence are better equipped to deal with medical billing than the in-house staff. Such services also give space to the in-house staff to prioritize patient care.

Moreover, outsourced medical billing services’ sole responsibility is to look after this issue. Thus, they have ample time to process billings, diligently preventing costly errors. They are also updated to new regulations that may impact practices and billing procedures.

Along with outsourced billing services, practices and patients can also take individual steps to reduce the frequency of errors. Some are mentioned below.

For practices:

  • Ensure patient data is entered correctly. This includes being meticulous with small details like birthdates, middle names, etc.
  • Adopt electronic health record (EHR) systems. There are fewer chances of error in electronic systems as the patient information needs to be entered only once.
  • Staff training. Workshops and seminars for staff to keep them updated on changing trends and policies prove to be highly beneficial.

For patients:

  • Make sure you receive an itemized statement or bill from the healthcare provider for verification.
  • Double-check the bill explaining benefits (EOB) from your insurer for services the provider billed for, what the insurer paid, and what you are being charged.

See Also: Billing And Coding For Pulmonary Procedures

The final word

Medical billing errors are unfortunately common, resulting in wasted money and time. But outsourced medical coding and billing services are an effective way to counter such errors.

Outsourced medical billing boosts a practice’s productivity; their staff has more tools and training to sift through the data than any in-house staff. The practice no longer has to worry about codes, regulations, and administrative issues. They can engage with customers and their concerns. This engagement increases customer satisfaction and offers a more personalized experience for each patient.

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