Any time you visit a doctor for an appointment or undergo a medical procedure, the healthcare clinic or office you visit must bill your insurer for payment. This is a process known as healthcare billing and coding, which entails the use of codes to identify different procedures and treatments.
Some clinics intentionally use codes that are incorrect to charge insurers more, which is considered healthcare billing fraud. Billing fraud typically takes place in one of three ways, as explained here.
Most medical procedures are only performed once at any given time, but healthcare clinics can inflate costs and increase their bottom line by double billing. In this case, the office would send duplicate bills for the same patient and procedure in order to double the payment received. Double billing can often occur due to error, in which case the biller would be obligated to contact the insurance company to rectify the issue.
Many medical procedures that involve multiple steps are bundled when coding, which results in a lower cost. For example, a person receiving treatment for a broken leg will undergo multiple therapeutic steps, such as resetting the bone, being fitted with the cast, etc. Some billers use codes for each individual step instead of using the bundled code, which can increase costs. While technically correct, unbundling is still considered an illegal practice.
Medical providers can also swap out correct codes for similar but more expensive ones. Testing procedures that were relatively simple may be trumped up by providing codes for comprehensive tests that are more expensive to administer. Codes for a standard exam may also be ignored in favor of codes typically used for extensive visits, which entail a higher cost.