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Hospital Billing Fraud: How to Spot & React to Illegal Hospital Billing Practices

What Is Hospital Billing Fraud?

Here’s How Hospital Billing Fraud Happens, What It Looks Like & How to Assert Your Rights If It Happens to You

Hospital billing fraud can happen anywhere, even after getting subpar, decent, or the best of care. In fact, from emergency rooms to operating rooms, intensive care units, and beyond, illegal hospital billing practices can take many forms. They can also come out of nowhere, bringing jaw-dropping medical bills and serious questions about your rights.

If you know how hospital billing fraud works and how to recognize it, you can take action to protect yourself and hold hospitals accountable for their illegal and fraudulent billing practices.

What Is Hospital Billing Fraud?

To understand hospital billing fraud, it’s important to know the system and processes that hospitals use to bill patients. Specifically, hospitals (and other health care providers) use billing codes, known as Current Procedural Terminology (CPT) codes, to represent medical services.

CPT codes are:

  • Maintained by the American Medical Association (AMA): Each CPT code is a 5-digit number that’s categorized by the type of service provided. For instance, anesthesia services are all within the same range of CPT code numbers, typically coded between 00100 to 01999 or 99100 to 99140. 
  • Used to simplify the claims process: CPT codes create a sort of universal “language” for describing medical services on bills sent to patients, insurance companies, and others. The idea is to streamline the billing and payment process while minimizing errors for optimal accuracy.

Many hospitals and others are careful to use the proper CPT codes and operate totally aboveboard with their billing. Unfortunately, not all of them are so careful.

Whenever that leads to hospitals intentionally manipulating medical bills to collect more money, the result is hospital billing fraud.

5 Types of Hospital Billing Fraud

Hospital billing fraud isn’t always obvious. That’s because it can take several forms, some of which require a more informed eye to detect. Consequently, it’s typically in your best interests to look over any hospital bill you get and keep an eye out for these common forms of hospital billing fraud.

1. Phantom Billing

This means billing for services that were never provided, and it’s the single most common type of hospital billing fraud, according to reports from the Government Accountability Office (GAO).

In fact, 43% of fraudulent medical billing cases involve phantom billing. In many cases, that means that hospitals are billing for items like diagnostic tests, treatments, and medications that were NEVER administered to patients. It can even mean billing for surgeries or hospital stays that never happened.

2. Double Billing

This type of hospital billing fraud can occur either when:

  • A service or item provided to a patient is listed on a bill multiple times (and more times than the patient received that service or item) to inflate the bill. 
  • The same bill is submitted to the payor multiple times to collect multiple payments for a single bill.

3. Billing for Unnecessary Services

About 1 in 4 instances of hospital and medical billing fraud involving billing for services that were not medically necessary, according to the GAO. That makes this the second most common form of hospital billing fraud.

4. Upcoding

With upcoding, hospitals code the services rendered as more complex treatments or more extensive procedures than they actually administered. This can also involve extending the duration of care to upcode bills. The motivation here is usually to apply higher billing or reimbursement rates and, in turn, inflate bills to collect more money.

5. Unbundling

Some medical treatments and procedures are billed as a bundle, covering the different steps or elements of care at a single cost. When hospitals unbundle these services, they’ll charge patients for each part of a procedure, with line items for every component, to hike up the price and try to get more reimbursement than they’re entitled to.

Notably, regulators report that:

  • More than 2 in 3 cases of hospital billing fraud involve two or more schemes.
  • About 61% of medical billing fraud cases have 2 to 4 billing schemes at play.
  • About 7% include at least 5 types of hospital billing fraud.

5 Signs of Hospital Billing Fraud

Patients, insurance companies, and even government healthcare programs (like Medicare and Medicaid) can be the targets of hospital billing fraud. To stay on guard and know when it’s time to fight back, be aware of these signs of hospital billing fraud:

  1. Excessive charges: Does the bill seem high for the medical services you received? If so, you may want to compare rates by making a couple of phone calls to other local hospitals and asking what they charge for the same services. 
  2. Complicated bills: Are you seeing a lot of line items and separate charges? Does the billing seem overly complex or elaborate, especially considering the services you received? If so, unbundled billing may be at play, and you may want to look up some of the CPT codes to get a better eye on what exactly you’re being billed for. 
  3. Duplicates: Are you getting double vision when you look at your hospital bills because the same item or service is listed several times? Have you received the same bill from the hospital more than once? If so, you could be dealing with double billing. 
  4. Billing for unknown or unprovided services: Are you getting bills for canceled appointments, care you didn’t receive, or hospital stays that didn’t happen? If so, you’re not alone, and you could be dealing with “phantom bills.” 
  5. Vague bills: Are your hospital bills really general, lacking enough details to explain what the charges are for? This could be another tactic used, with inaccurate CPT codes that overstate the services provided. In this case, you could be seeing red flags of upcoding or even billing for services not provided.

Keep in mind that these aren’t the only red flags of hospital billing fraud and illegal medical billing schemes. That’s why it’s essential to review medical bills before paying them — and to second guess and take a second look at any suspect charges you see.

What to Do When You Suspect Hospital Billing Fraud

If you think that you or a loved one has been the target of illegal hospital billing schemes:

  1. Carefully look over your bill for any anomalies, inconsistencies, or fishy details. 
  2. Use  this resource from regulators to look up CPT codes and double-check anything in the bill. 
  3. Contact the hospital billing department to ask for clarification and get more answers about your bill and what they’re asking you to pay. 
  4. Keep every bill, medical record, email, and document you’ve received from the hospital. 
  5. Report any suspected fraud to your health insurance provider. 
  6. Consult a hospital billing fraud lawyer to find out more about your rights and legal options for moving forward.