How Inaccurate Medical Billing Impacts Patients and Clinics

What’s the true impact of a medical billing error? On the surface, it might seem like an administrative hassle, something that needs to be fixed. However, a pattern of inaccurate medical billing presents serious financial, legal, and clinical consequences for patients and providers, especially when the same mistakes occur repeatedly.

In this article, we’ll discuss the ramifications of medical billing errors, including the impacts on practice performance, patient trust, and patient rights, as well as the potential for fraud investigations. We’ll also take a close look at one of the leading contributors to billing errors: inaccurate coding. Finally, we’ll offer practical tips for avoiding mistakes such as accidental upcoding.

Up to 80% of all medical bills contain errors, according to industry statistics. These range from innocent typos that result in denied claims to more serious offenses that can trigger audits and fraud investigations. Even more concerning, a history of hospital or clinic billing errors can raise compliance red flags with payers and regulators.

The financial impact of these medical coding errors extends far beyond individual claims. Healthcare organizations face delayed payments, increased administrative costs, and potential legal consequences that can significantly affect their bottom line and reputation.

Inaccurate coding, including both under-coding and upcoding, is a primary cause of billing errors. But how exactly can these healthcare billing mistakes impact your practice or hospital? The potential consequences are significant:

• Loss of revenue due to under-coding
• Legal actions due to upcoding (over-coding)
• Denied or delayed payments that disrupt cash flow
• Increased risk of payer and regulator audits
• Potential loss of payer contracts
• Damaged reputation within the healthcare community

These impacts can create a cascade of operational challenges that affect your ability to provide quality patient care and maintain financial stability.

Perhaps the most important question to consider is how inaccurate coding and billing affects patients. Overcharging can result in severe financial hardship, possibly even leading to the loss of insurance coverage. But beyond the financial impact, billing errors can also erode patient trust and damage the provider-patient relationship.

Ultimately, medical billing errors infringe on patient rights: the right to receive high-quality care at a reasonable cost to patients and their insurers. This points to the paramount importance of accurate billing, of course, but also the need for billing transparency and clear communication.

Regulators and payers have stepped up their efforts to detect and put a stop to fraudulent medical billing. In its 2025 National Health Care Fraud Takedown, the U.S. Justice Department levied criminal charges against 324 defendants, including 94 doctors, nurse practitioners, pharmacists and other licensed medical professionals across the United States. The defendants allegedly participated in healthcare fraud schemes involving more than $14.6 billion in intended loss.

With many fraud investigations, officials are zeroing in on repeated inaccuracies or patterns of wrongdoing such as upcoding. Not every mistake or oversight is fraud, of course, but legal consequences remain a very real possibility. Preventive efforts must involve rigorous oversight, including regular compliance reviews and internal audits.

Most coding mistakes, including upcoding, are unintentional and do not involve premeditated attempts to defraud. To avoid the scrutiny of regulators and payers, the challenge becomes, how can you avoid accidentally upcoding and other coding errors? At a high level, any coding improvement initiative should include:

• Ongoing staff training and certification
• Regular coding audits
• Use of billing software with upcoding alerts
• Close collaboration between providers and coders

Efforts to boost coding and billing accuracy require a strong commitment from your hospital or clinic. Considering what’s at stake for your organization and your patients, your time and effort will be well rewarded.

From code assignment to claim submission, inaccuracies can creep into the process if you’re not vigilant every step of the way. Following are some best practices that can help ensure the highest level of coding and billing accuracy:

• Educating staff on compliant coding practices and current regulations
• Using only certified medical coders with up-to-date credentials
• Regular auditing and tracking of denial reasons to identify patterns
• Clearly communicating billing issues with patients in understandable terms
• Encouraging providers to see coding and billing as part of patient care, not just paperwork
• Implementing technology solutions that flag potential errors before submission
• Establishing clear documentation standards for all clinical encounters

Most importantly, remember that accurate billing extends beyond increasing your clean claims rate. It’s about building trust with patients, maintaining compliance with payers and regulators, and ensuring financial stability over the long term.

TruBridge offers a comprehensive set of Medical Coding Solutions that are HFMA Peer Reviewed and tailored to the needs of rural and community providers. These services are highly flexible, available as full or partial outsourcing with interim and fulltime options. Other advantages include the exclusive use of experienced certified coders, a guaranteed 95% accuracy rate to reduce claim denials, and fast turnaround times that help accelerate cash flow.

If audits and claims analysis reveal a pattern of significant errors, you may want to consider our help with a medical coding cleanup project. Following a collaborative needs analysis, TruBridge and the client define the scope of the cleanup. Then the cleanup itself commences, focusing first on the areas of highest risk or opportunity, to rectify incorrect and outdated codes, address gaps in coding processes, and perform quality checks of corrective actions.

Contact us today to learn how our comprehensive medical coding solutions can help reduce claim denials, accelerate cash flow, and build stronger patient relationships through accurate, transparent billing practices.