Bill Review Errors Costing Adjusters Billions

Medical bill review plays a critical role in preventing unnecessary costs and ensuring accurate claim outcomes. However, when the bill review process overlooks errors, even small discrepancies like inflated fees or mismatched charges can slip through undetected. While many of these issues are accidental, the financial impact can be significant over time.  

Bill review is designed to promote cost containment, regulatory compliance, and billing accuracy. It ensures providers are reimbursed appropriately, patients aren’t overbilled, and insurers aren’t paying for services that were coded incorrectly or never delivered. In some cases, patterns of errors that surface during bill review may also help uncover potential fraud.  

Why Accuracy in Bill Review Matters

Medical billing is the financial translation of care provided, so it has strict regulations to ensure fair and accurate reimbursement. But when a bill includes errors, whether it’s an accidental coding mistake, mismatched documentation, or inflated charges, it doesn’t just increase costs. It can also compromise compliance and make it harder to detect potential fraud.  

Even a seemingly minor issue like upcoding, which is when a service is billed at a higher level than what was provided, can lead to significant overpayment. According to the U.S. Department of Health and Human Services, billing and coding mistakes contribute billions annually in improper payments across Medicare, Medicaid, and private insurance.  

Accurate medical bill review helps prevent that. It ensures compliance with fee schedules, verifies medical necessity, and keeps claims defensible. Most errors are unintentional, but when left unchecked, they can cause bills to stack up.   

Common Medical Bill Review Errors

There are plenty of billing errors that can sneak past the bill review process. Most of them aren’t tied to intentional fraud, they’re honest mistakes, oversights, or documentation gaps that lead to unnecessary overpayment and compliance risks.

Coding Errors

This includes incorrect or mismatched CPT, HCPCS, or ICD-10 codes for diagnosis or treatment. Even small errors, like coding for a more complex procedure than was actually performed, can lead to significant overpayment. These issues often stem from documentation that doesn’t match billing, miscommunication between providers and coders, or lack of training in coding updates.  

According to the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG), Medicare regularly overpays due to miscoded claims, especially in inpatient and surgical settings.  

Duplicate Charges

Being charged twice for the same service, supply, or medication is more common than you’d think, especially when multiple departments are involved in patient care. Without system-level checks or human review, these charges can get paid without question.  

The Coalition Against Insurance Fraud notes that duplicate billing is one of the most frequent and costly sources of accidental overpayment. 

Unbundling of Services

Some procedures are supposed to be billed as a single, bundled service. When providers unbundle and bill each component separately, it inflates reimbursement. This can happen by mistake, but when it happens frequently or with expensive procedures, it raises red flags.  

Inaccurate Surgical Duration Billing

In surgical billing, time is money. Hospitals often bill down to the minute, and errors in recording or coding surgical durations can lead to inflated costs. This is especially relevant in Workers’ Compensation and other systems where surgical time affects reimbursement rates.  

Wrong Room Charges

Billing for a private room when the patient was in a shared space is another issue that can be overlooked. It may sound minor, but across thousands of claims, the costs add up, especially for longer inpatient stays.  

Charges Without Pre-Authorization

Some treatments, medications, and diagnostic procedures require pre-approval by the insurer. If services are rendered without that authorization and then billed anyway, they create reimbursement issues. In some cases, these charges are paid in error unless the bill review process flags them. 

The Centers for Medicare & Medicaid Services (CMS) emphasize the importance of pre-authorization protocols to prevent inappropriate billing, especially for high-cost services like durable medical equipment (DME), imaging, and surgery.  

Unwarranted Charges

Sometimes services that were ordered but subsequently canceled still make it onto the bill. In other cases, supplies or medications may be billed even if the patient never received them. These are usually the result of system or documentation errors.  

Bill Review Red Flags

Most billing issues aren’t the result of fraud—they’re honest mistakes that stem from human error, misinterpretation of coding rules, or incomplete documentation. However, when certain patterns keep showing up in medical bill review, it’s worth taking a closer look.  

These red flags don’t automatically signal fraud, but they can lead to significant overpayment and compliance exposure. 

Repeated High-Cost Charges Without Medical Justification

Services like advanced imaging, DME, and surgery shouldn’t appear on every claim unless the clinical need is clearly documented. CMS audits have consistently flagged these services as areas prone to overbilling. 

The HHS-OIG reported that from 2018-2020, Medicare improperly paid $5.3 billion for orthotic braces that lacked documentation of medical necessity.

Frequent Use of Modifiers Without Documentation

Modifiers are often necessary, but when used excessively, they may signal a problem. The CMS has specifically warned against improper modifier usage, especially those that unbundle procedures or bypass billing edits without clinical justification.  

Treatment That Doesn’t Match Injury or Diagnosis

Misaligned billing, such as physical therapy for a non-orthopedic injury, is often a sign of coding confusion or insufficient documentation. If repeated across claims, it may also reflect inappropriate billing patterns.  

Sudden Changes in a Provider’s Billing Volume or Scope

A sharp spike in billing activity from a single provider, especially across unrelated claims, may be a sign of an internal process issue, aggressive upcoding, or misuse of in-house dispensing and treatment tools. While not always deliberate, these trends can quickly drive up claim costs.  

Excessive Units of Medication or Injections

When the same medication or injection is billed repeatedly without corresponding clinical notes, pain scale assessments, or ongoing treatment plans, it’s a red flag. CMS and state workers’ compensation boards have issued repeated guidance about verifying pharmaceutical necessity and tracking refill patterns to avoid overpayment. 

Why These Bill Review Patterns Matter

These billing trends don’t always point to fraud — in fact, most don’t. But they do create friction in the claims process and lead to avoidable costs when they slip past bill review. 

According to the Coalition Against Insurance Fraud, the most effective programs don’t rely solely on technology to catch issues. Rather, they pair automation with expert human oversight. 

Modern medical bill review systems use AI and anomaly detection to spot billing outliers in real time, but the real value comes when experienced reviewers, like nurses, coders, and investigators, dig into the documentation and ask, “Does this make sense clinically?” 

It’s that combination of data and discernment that protects claims from escalating due to: 

• Repeated overpayments  

• Compliance risks  

• Wasted reserve dollars  

Ultimately, these patterns are about more than just catching bad behavior. They help ensure that billing stays accurate, treatment stays appropriate, and your claims stay defensible, no matter how complex the medical side gets. 

Curious about bill review? Talk to us today.

Check out our sources:

Centers for Medicare & Medicaid Services. Program Integrity and Fraud Prevention. www.cms.gov/About-CMS/Agency-Information/PI.

Coalition Against Insurance Fraud. The Challenge of Insurance Fraud: A Strategic Framework for Prevention & Enforcement. www.insurancefraud.org.

United States Department of Justice. Health Care Fraud. www.justice.gov/criminal-fraud/health-care-fraud.

U.S. Department of Health and Human Services, Office of Inspector General. Improper Payments. oig.hhs.gov/reports-and-publications/improper-payments.