So Many Ways to Code and Bill Healthcare Services Improperly


ClaimDOC’s comprehensive line-by-line review of claims uncovers errors that basic claim repricing and auto-adjudication does not catch, leading to greater savings for medical plans and plan members. Our audit team analyzes all types of healthcare claims for a variety of potential concerns, including excessive usual and customary charges, duplication of claims, incorrect coding, unbundling of services, and many others. Our claims review is not intended to impact care decisions or medical practice.

In this Audit Spotlight, we focus on coding and billing errors ClaimDOC’s medical auditors identify on claims reported/billed by hospitals. 

As healthcare costs continue to climb an upward slope, an escalated need exists for closer analysis of healthcare claims to identify improper medical coding and billing errors, egregious charges and associated improper claim payments.

Everyone agrees revenue cycle management (RCM) is a complex process to manage financial operations related to billing and revenue collection for provided healthcare services. The process begins with appointment scheduling, patient registration, charge capture, coding of services provided, data entry, billing claims and accounts receivable follow-up. Due to the multiple components, errors easily occur.

The goal of reducing medical coding/billing errors must be a component of a provider’s ongoing internal compliance plan. If medical providers are not routinely performing risk assessments of their internal coding and billing processes/procedures, it can cause a host of problems. Some providers perform in-house coding/billing functions while others elect to outsource their coding/billing to an outside billing company. 

Common Areas of Improper Coding and Billing

There are overtly false claims that impose phantom charges (i.e., for services never rendered), bills for services not clinically indicated, unbundled charges for a group of services that are standardly billed together, incorrect CPT/HCPCS/ICD-10-CM/ICD-10 PCS code assignment, incorrect use or lack of using modifiers, using an incorrect bill type, use of incorrect claim form for the type of service(s) provided, billing duplicate charges, billing excessive quantities of itemizable charges and several others. Upcoding is another type of improper billing practice that happens when the complexity of services rendered is exaggerated. One might ask, do healthcare providers really have robust, effective and ongoing internal compliance activities in place to analyze their billing and claims data connected to their names for which they are legally responsible?

Examples of Hospital Billing Errors — Reporting/Billing Professional Services on the Hospital/Facility Claim

Claim Example 1

A hospital/facility in Illinois billed an emergency room visit, laboratory tests, imaging and IV medications for one date of service. On the same claim, the hospital incorrectly reported billed duplicate laboratory test codes and related charges under Revenue Code 971, a code for professional services. In this scenario, there is no “professional component” applicable for the reported clinical laboratory test codes. The hospital/facility billed twice for the same laboratory tests codes that should be billed only once by the hospital/facility, the entity that performed the clinical laboratory tests.

Hospital Outpatient Bill — Total Billed Charges: $11,904.32

*Incorrect charges billed by hospital on the claim for professional services: $98

Traditional Network Plan Pricing: $5,269.56

ClaimDOC Pricing: $1,305.12 (89% discount)

Claim Example 2

A hospital/facility in Massachusetts billed an emergency room visit, laboratory tests and infusion of IV medication for one date of service on a UB-04 claim/electronic equivalent. On the same claim, the hospital incorrectly reported and billed an emergency room visit (99284) with Revenue Code 981, a code for professional services on the same date of service. Professional services are typically separately reportable and billed on a different type of claim, a CMS-1500 claim/electronic equivalent from the hospital/facility claim billing for an emergency room visit and/or other services. An exception to this billing guideline for CAHs is referenced above.

Hospital Outpatient Bill — Total Billed Charges: $2,276.06

*Incorrect charge billed by hospital on the claim: $530

Traditional Network Plan Pricing: $1,205.43 

ClaimDOC Pricing: $1,005.49 (56% discount)


The above claim examples highlight specific types of frequent and improper hospital/facility billing of physician/practitioner (professional) services. Whether actual identified savings are small, medium or large, all savings that can be identified to help reduce healthcare costs and assist with proper reimbursement are golden.

ClaimDOC’s audit team analyzes the entirety of submitted claims for coding/billing errors to medical appropriateness and egregious charges This approach identifies significantly more errors than can be caught merely using an automated claims processing system. Everyone in the industry — including ClaimDOC — uses claim scrubbers and have automated claim edits. That is a start. The real magic happens in ClaimDOC’s next step, using auditors’ eyes to analyze outpatient and inpatient hospital claims and associated inpatient itemized bills to uncover improper coding/billing to capture healthcare savings.

While varying numbers are published, it is a given that medical bills contain frequent billing errors and egregious charges which leads to abuse, waste and fraud. As healthcare costs continue to rise, so too is the need to reduce overspending resulting from avoidable billing errors and improper claims reimbursement.

The bottom line — healthcare providers must be accountable to have an effective and ongoing internal compliance plan in place to monitor the accuracy of their coding and billing of services, and provide feedback and ongoing training as part of their RCM. Minimizing risks and filing correct claims are essential aspects of accurate reimbursement to providers.

The HHS Office of Inspector General website offers numerous helpful resources to assist healthcare providers to comply with relevant federal healthcare laws and regulations. The OIG’s compliance documents include special fraud alerts, advisory bulletins, podcasts, videos, brochures and papers providing guidance on compliance with federal healthcare program standards. OIG also issues advisory opinions, which cover the application of the federal anti-kickback statute and OIG’s other fraud and abuse authorities to the requesting party’s existing or proposed business arrangement. It’s good information for anyone in the healthcare environment to review and adhere to.

When an individual receives a healthcare bill that appears questionable/inappropriate, an inquiry to the provider and/or health plan should be made to obtain an explanation of the services and corresponding charges.

Our goal at ClaimDOC is to use benchmark charges and costs nationally to negotiate fair and ethical payments. Our high-quality and expert review of claims identifies and prevents improper medical claim payments and maximizes long-term cost savings opportunities. Employers turn to us seeking to establish fair reimbursement rates for their plans, allowing them to save money and provide richer benefits to their employees — a win-win for everyone.