How to Spot Billing Fraud, Waste & Errors (FWAE)
Author: Samantha Bridge, RN, MSN, MBA-HCM, IQCER
Date: May 6, 2025
When it comes to medical bills, most people assume what they’re charged is accurate. But the truth? Billing mistakes, inflated charges, and even outright fraud happen more often than you’d think. And you’re often the only one in a position to catch them.
This guide will help you understand the differences between billing fraud, waste, and errors (FWAE), how to spot them in your medical bills or Explanation of Benefits (EOB), and what you can do if you suspect something’s wrong.
What Is FWAE, and Why Should You Care?
- Fraud = intentional deception for financial gain (like billing for services never provided)
- Waste = inefficient or excessive use of services (like duplicate tests or unnecessary procedures)
- Errors = honest mistakes (like incorrect billing codes or dates)
All three can leave you holding the bill—or stuck appealing a denial. According to the National Health Care Anti-Fraud Association, fraud alone costs the U.S. tens of billions of dollars every year[1].
Billing Errors You Can Spot
- Duplicate charges for the same service
- Wrong date of service or location
- Incorrect insurance info (wrong plan ID, no coordination of benefits)
- Wrong provider name (especially with hospital-based care)
- Missed plan adjustments (e.g., failing to apply your deductible or network discount)
How to catch it: Request an itemized bill from the provider and compare it to your Explanation of Benefits (EOB). If something doesn’t match, it could be an error.
Upcoding and Bundling
What is Upcoding?
Upcoding is when a provider bills for a more complex (and more expensive) service than what was actually provided.
Example: You go in for a basic office visit (coded as 99213), but they bill for a high-complexity visit (coded as 99215).
What is Bundling?
Bundling is a billing rule that prevents providers from charging separately for services that are normally included as part of a single comprehensive service. These are called non-separately payable services, and bundling rules apply whether you're using insurance or paying cash.
Example: If you receive local anesthesia during a procedure that includes anesthesia as part of the standard package, your provider generally can’t bill you separately for that service.
Insurance Processing Errors
- Incorrect denial reasons (e.g., R3: Preventive Guidelines Not Met — means you didn’t meet age or frequency criteria for a preventive service)
- Wrong coordination of benefits
- Misapplication of deductible or out-of-pocket max
- Not reprocessing claims correctly after updates
Tip: If something seems off, call and ask for a supervisor—or better yet, send your request in writing so you have documentation. Ask for a claim reprocessing or escalated appeal.
Fraud & Waste from Providers
- Billing for services you never received
- Submitting claims under a doctor you didn’t see
- Charging for more units than were administered
- Performing unnecessary tests just to bill for them
How to Review Your Bill or EOB
- Request an itemized bill
- Compare it to your EOB from your insurance company
- Use wisely.health for expert consults.
- You can decipher the codes your insurance company uses to help understand. Below are some common codes you may see:
Common Claim Adjustment Reason Codes
| Code | Description |
|---|---|
| CO-45 | Charge exceeds fee schedule/maximum allowable amount |
| CO-97 | Procedure or service isn’t paid separately (bundled) |
| CO-16 | Claim lacks information or has incorrect info |
| CO-18 | Duplicate claim/service |
| CO-109 | Claim not covered because provider is out-of-network |
| PR-1 | Deductible amount |
| PR-2 | Coinsurance amount |
| PR-3 | Co-payment amount |
| PR-96 | Non-covered charges (e.g., not medically necessary) |
| OA-23 | Payment adjusted due to prior payment |
| CO-22 | Patient covered by another payer |
| CO-11 | Diagnosis inconsistent with procedure |
| CO-197 | Precertification or authorization not received |
| CO-B9 | Patient enrolled in hospice |
| CO-50 | Not deemed medically necessary |
Common (Provider) Remittance Advice Remark Codes (RARCs)
| Code | Description |
|---|---|
| N130 | Consult plan benefit documents for coverage info |
| N382 | Service not provided in accordance with plan requirements |
| M15 | Services/tests are not covered because they’re bundled into another procedure |
| MA130 | Claim has been forwarded to a recovery contractor |
| N290 | Missing referral or prior authorization |
| M51 | Missing/incomplete/invalid procedure code(s) |
| M144 | Pre-authorization required but not received |
| N10 | Service/procedure not covered under the plan |
| N386 | Decision based on a medical policy or guideline |
Codes That May Flag Fraud, Waste, or Abuse (FWA)
These codes may appear on your Explanation of Benefits (EOB) or your provider’s remittance notice. While they don’t automatically mean fraud occurred, they often flag unusual activity, documentation issues, or billing patterns that could trigger a review.
| Code | Description |
|---|---|
| CO-236 | Procedure/modifier not compatible with another service billed the same day. May suggest unbundling or error. |
| CO-236 + N519 | Possible upcoding or unbundling. May be reviewed for abuse. |
| CO-252 | Missing required documentation—used when more evidence is needed to support the claim. |
| CO-151 | Level of service billed not supported by documentation—frequently used in upcoding reviews. |
| CO-16 + M51 | Claim lacks information or includes invalid CPT code—may be flagged as suspicious or incomplete. |
| CO-97 + M15 | Service denied as bundled—when billed separately it can indicate possible waste or overbilling. |
| CO-B20 | Service already provided by another provider—can signal duplicate billing. |
| N428 | Service not covered when performed by this provider—used in credentialing and identity mismatch reviews. |
| MA15 | Claim denied due to provider being on prepayment or special fraud review. |
| MA130 | Claim has been referred to a Recovery Audit Contractor (RAC) or insurer’s fraud department. |
| N20 | Service not payable with submitted diagnosis—may suggest coding inconsistency. |
| M86 | Service denied as provider is excluded from participation—often used in confirmed fraud or exclusion cases. |
What to Do If You Spot a Problem
- Ask for an itemized bill and review every charge
- Call or write both provider and insurer
- Request a corrected claim if coded incorrectly
- File an appeal if your insurer denies coverage based on a mistake
- Report potential fraud to your insurer or HHS-OIG
FAQ – Billing Fraud, Waste & Errors
What’s the difference between fraud and an error?
Fraud is intentional; an error is usually accidental. But both can cost you money.
How do I know if I’ve been upcoded?
Check the CPT or HCPC code on your EOB and compare it to what service you received.
What is a CPT or HCPC code?
When you go to the doctor, they don’t just write down what happened—they use special number codes to tell your insurance exactly what was done. These are called:
– CPT codes: Numbers for medical services like checkups, X-rays, shots, or surgeries.
– HCPCS codes: Codes for extra stuff like medical equipment, ambulance rides, or medications.
It’s kind of like a receipt for your body. Each thing the doctor does has a code, and that’s what your insurance uses to decide how much to pay.
Can a provider charge more than insurance allows?
Only if out-of-network—and even then, balance billing is limited by law in some situations.
Can I appeal if my insurer made the mistake?
Yes. And you should. Mistakes happen all the time.
How does EZ Med Appeal help?
We guide you through the appeal process and generate customized letters based on your situation.
Bottom line?
You shouldn’t have to be a medical coder to read your bill. But if something looks off, start asking questions. We’ll help from there.