5 Common Hospital Billing Errors (And How to Spot Them)
These five billing errors appear on millions of medical bills every year. Here is what to look for and how much they could be costing you.
Medical billing errors are not rare exceptions — they are the norm. Research from organizations including the American Medical Association and Medical Billing Advocates of America consistently finds that 60-80% of medical bills contain at least one error. The average billing error is approximately $1,300, but complex cases can involve errors totaling tens of thousands of dollars.
The following five error types account for the vast majority of billing mistakes. Understanding them is the first step toward protecting yourself.
1. Upcoding
Charged for a more expensive service than what was performed
Upcoding is one of the most prevalent and costly billing errors in healthcare. It occurs when a healthcare provider bills for a higher-level, more expensive service than what was actually provided. The most common form involves Emergency Room visit levels.
ER visits are categorized into 5 levels (CPT codes 99281-99285), from minor (Level 1) to critical (Level 5). Each level costs significantly more. A Level 3 ER visit might cost $800, while a Level 5 can cost $3,000 or more. If you went to the ER for something straightforward — a minor laceration, a mild allergic reaction, or a simple fracture — and your bill shows a Level 4 or Level 5 code, you may be a victim of upcoding.
How to spot it:
Look for CPT codes starting with 9928X on your itemized bill. Compare the level against the complexity of your visit. If you were in and out in under an hour for a simple issue, a Level 4 or 5 code is suspicious.
Typical savings:
Downgrading from Level 5 to Level 3 can save $1,000-$2,500.
2. Unbundling
Procedures billed separately that should be combined
Unbundling happens when a hospital bills multiple separate procedure codes for services that should be covered under a single, bundled code. Federal billing rules maintain thousands of code pairs that cannot be billed separately because one procedure is considered part of the other.
For example, if you had blood drawn and tested, the blood draw and the laboratory analysis should often be billed as one bundled code. Splitting them into two separate charges inflates your bill. Another common example: a surgical procedure that includes the initial incision, the repair, and the closure should be billed under one code, not three.
How to spot it:
Look for multiple charges on the same date of service that seem related. If you had one procedure but see 3-4 separate line items for what appears to be the same event, unbundling may be involved.
Typical savings:
Rebundling procedures typically saves $300-$1,500 per instance.
3. Duplicate Charges
The same service billed more than once
Duplicate charges are the simplest billing error to understand and one of the most common. They occur when the same procedure code appears multiple times on the same date of service for the same amount. This is usually a data entry error — someone in the billing department entered the charge twice, or the electronic system glitched.
While it sounds like a small mistake, duplicates can add hundreds or thousands of dollars to your bill. If a $500 lab panel appears twice, that is $500 extra. If a $2,000 imaging study appears twice, that is $2,000 extra. These errors are often hidden in bills with dozens of line items where the duplication is not immediately obvious.
How to spot it:
Sort your itemized bill by date and then by procedure code. Any exact duplicate — same code, same date, same amount — is almost certainly an error. Some legitimate duplicates exist (bilateral procedures), but they should have a modifier code.
Typical savings:
Removing a duplicate charge saves the full amount of the duplicated line item, typically $200-$2,000.
4. Pharmacy Markup
Medications charged far above market price
Hospital pharmacy markups are perhaps the most egregious form of billing excess. Hospitals routinely charge 10x to 100x the retail price for common medications. A single Tylenol tablet that costs pennies at a pharmacy can appear as a $25-$50 charge on a hospital bill. An IV bag of saline solution that costs $1 to produce is regularly billed at $100-$300.
National drug pricing databases track what pharmacies actually pay for medications. When a hospital charges $150 for a medication that costs $3 at wholesale, that is a 5,000% markup. While hospitals argue that their overhead justifies higher prices, markups of this magnitude are difficult to defend.
How to spot it:
Look for any medication charges on your bill, especially common items like acetaminophen, ibuprofen, saline, or antibiotics. Search any pharmacy price comparison website to see what the medication actually costs.
Typical savings:
Challenging pharmacy markups can save $50-$500 per medication, and bills with multiple medications can see savings of $1,000+.
5. Balance Billing
Charged more than your insurance allows
Balance billing occurs when a healthcare provider bills you for the difference between their charge and the amount your insurance company has agreed to pay. For in-network providers, this is almost always prohibited. If your insurance has a contracted rate of $500 for a procedure but the hospital charged $800, the hospital cannot bill you for the $300 difference — that is the insurance company's problem, not yours.
The No Surprises Act, effective since January 2022, provides additional protections against surprise balance billing for emergency services and certain non-emergency services at in-network facilities. Many states have their own balance billing protections that may be even stronger than federal law.
How to spot it:
Compare your Explanation of Benefits (EOB) from your insurance company against your hospital bill. The amount you owe should match the "patient responsibility" on the EOB. If the hospital is charging more, that is balance billing.
Typical savings:
Correcting balance billing errors can save $300-$5,000+ depending on the procedure.
Protect Yourself
The best defense against billing errors is to always request an itemized bill, compare it against your EOB, and question any charge that looks incorrect. But this process takes time and expertise that most people do not have. That is exactly why we built BillRazor — to handle the entire process for you.