Overbilling

Overbilling is the practice of charging a payer more than the amount due for goods or services. It can occur in a variety of sectors, including healthcare, construction, professional services, and utilities. Overbilling may result from errors, misunderstandings, or deliberate fraud, and it is typically contrasted with underbilling or legitimate retrospective pricing adjustments that are properly documented.

Common forms include upcoding (billing for a more expensive service than provided), double billing (charging twice for the same item), phantom billing (billing for services not performed), padding or inflating line items, and unbundling (itemizing charges that should be billed as a single package). In healthcare, these practices are often pursued to increase reimbursements or patient charges. In other industries, similar schemes may involve bill padding or duplicate charges.

Causes range from administrative error and software glitches to intentional manipulation. Weak internal controls, inadequate review processes, and incentives based on revenue targets can increase the risk of overbilling.

Consequences include financial losses for payers, regulatory sanctions, civil or criminal penalties, and reputational damage to the billed entity. Payers and regulators may conduct audits, seek restitution, and impose interest or fines for improper charges.

Prevention relies on strong billing controls and governance. Measures include standardized coding practices, regular audits, verification against contracts and delivery records, segregation of duties, documented approval workflows, and accessible whistleblower channels. When overbilling is detected, prompt refunds or chargebacks and corrective action plans are typically required.