Medical Billing Errors in the US 2026 | Overcharges, Claim Denials, Coding Problems & Key Facts

In fiscal 2025, the Centers for Medicare & Medicaid Services estimated $95.5 billion in improper payments across Medicare, Medicaid, and CHIP, including a 6.55% error rate ($28.83 billion) in traditional Medicare. On the insurer side, ACA marketplace plans denied 19% of in-network claims in 2024, about 85 million claims, and consumers appealed fewer than 1% of them.

Medical Billing Errors in America 2026 – Introduction

Medical billing errors in the US are easy to describe and hard to measure. A wrong code, a duplicate charge, a missing record, or a denied claim can all be called a billing error, and each has a different rate. You will often see the claim that 80% of medical bills contain mistakes. This report found no national audit that supports it. The numbers below come from federal data, insurer disclosures filed with CMS, court-tested dispute records, and named surveys, and each table says what the figure actually measures.

The picture is mixed. Medicare’s traditional program improved in 2025, with its error rate falling from 7.66% to 6.55%. Medicare Advantage and Medicaid got worse. Insurers deny roughly one in five marketplace claims, and almost nobody appeals. A federal arbitration system built to handle surprise bills now processes millions of cases a year. All figures reflect the latest data available on October 12, 2026.

Interesting Facts about Medical Billing Errors in the US

IMPROPER PAYMENTS BY PROGRAM, FISCAL 2025 ($ BILLIONS)
MEDICAID                  ████████████████████████████████████████  37.39
MEDICARE FEE-FOR-SERVICE  ██████████████████████████████            28.83
MEDICARE ADVANTAGE (C)    ████████████████████████                  23.67
MEDICARE PART D           ████                                       4.23
CHIP                      █                                          1.37

An improper payment is not the same as a billing error that hurts a patient, and CMS says so. The category covers overpayments, underpayments, and payments where records were missing, so a perfectly proper service can count if the paperwork is absent. CMS says Medicaid’s documentation shortfalls are generally not a sign of fraud. The $95.5 billion total is our sum of the five CMS program estimates, and it shows the scale of payment-accuracy problems, not the amount patients were overcharged.

Insurer denials measure something else: claims that a plan declined to pay. The 19% marketplace rate means insurers refused about one claim in five, but the data does not say how many denials were correct. Insurers do not report which services were denied, and about 36% of denial reasons were listed only as “other.” The two systems, government payment review and insurer denials, rarely line up, so read each figure with its source.

Medicare and Medicaid Billing Error Rates in 2026

IMPROPER PAYMENT RATE BY PROGRAM, FY2025 (%)
CHIP                      ████████████████████████████████████████  7.05
MEDICAID                  ██████████████████████████████████        6.12
MEDICARE FFS              █████████████████████████████████████     6.55
MEDICARE ADVANTAGE (C)    ██████████████████████████████████        6.09
MEDICARE PART D           ██████████████████████                    4.00

Data Source: Centers for Medicare & Medicaid Services, Fiscal Year 2025 Improper Payments Fact Sheet, January 15, 2026

Traditional Medicare is the success story. Its rate fell 1.11 points to 6.55%, and it has stayed under the 10% federal compliance threshold for nine straight years. The other programs moved the wrong way. The Medicare Advantage rate rose to 6.09%, and CMS attributes most of that to plans that did not submit documentation supporting the diagnoses they billed. Medicaid rose to 6.12% and CHIP to 7.05%, and CMS says part of the change may reflect the unwinding of pandemic-era flexibilities.

Medicaid and CHIP figures come from three review cycles covering about 17 states each year, so they move more slowly and with more uncertainty than the Medicare number. Part D improper payments grew to $4.23 billion. Documentation drives the results: 77.17% of Medicaid improper payments and 56.07% of CHIP improper payments came from insufficient documentation. That is a record-keeping failure, and CMS says it is generally not a sign of fraud or abuse.

Medicare Coding Errors and Documentation Problems in 2026

CAUSES OF MEDICARE FFS IMPROPER PAYMENTS, FY2025 (% OF IMPROPER PAYMENTS)
INSUFFICIENT DOCUMENTATION   ████████████████████████████████████████  51.5
MEDICAL NECESSITY            ██████████████                            17.8
INCORRECT CODING             ████████                                  10.8
ALL OTHER*                   ███████████████                           19.9
*Our subtraction: no documentation and other error types

Data Source: CMS Comprehensive Error Rate Testing program, 2025 Medicare Fee-for-Service Supplemental Improper Payment Data, as summarized by AAPC and the American Health Care Association

Coding errors are a minority of Medicare’s problem. Incorrect coding accounts for 10.8% of improper payments, well behind insufficient documentation at 51.5% and medical necessity at 17.8%. The most common documentation failures are missing support for medical necessity, missing records for the billed date of service, and missing orders. CMS reviews a stratified sample of roughly 37,500 to 50,000 claims a year and sorts errors into five categories: no documentation, insufficient documentation, medical necessity, incorrect coding, and other.

That means the biggest fix is paperwork, not coding accuracy. Skilled nursing facilities show it: their improper payment rate fell from 17.2% to 11.8%, or $4.3 billion, after more attention to documentation. Some services still show coding as the main problem. In one list of high-error services, incorrect coding drove 65% of the improper payments in a category with a 5.3% error rate. Providers and auditors read these categories closely, since CMS also uses them to target reviews.

Claim Denial Rates by Insurer in 2026

IN-NETWORK CLAIM DENIAL RATES, 2024 (%)
OSCAR HEALTH           ████████████████████████████████████████  25
MOLINA HEALTHCARE      ████████████████████████████████          22
CIGNA                  ██████████████████████████████            21
UNITEDHEALTH GROUP     ███████████████████████████               19
NATIONAL AVERAGE       ███████████████████████████               19

Data Source: KFF analysis of CMS Transparency in Coverage public use files, 2024 plan year

The national figure hides wide gaps. In 2024, Oscar Health denied 25% of in-network claims, up from 17% in 2023, while Molina denied 22%, Cigna 21%, and UnitedHealth Group 19%. Across the largest insurers the range ran from 13% to 35%. Only 3% of reporting insurers denied 30% or more of claims, down sharply from 17% in 2023. The denial rate has held near one in five for years, with a low of 14% in 2018.

Why claims get denied is mostly unclear. The biggest single reason, at 36%, is “other,” and 25% are administrative. Only 5% cite medical necessity, and 9% cite missing prior authorization or referral. The data covers only HealthCare.gov plans, about 16 million of the 21.3 million people in ACA marketplace plans in 2024, and it counts post-service denials, not denied prior-authorization requests. Rates by metal level run from 17% for gold plans to 22% for catastrophic plans.

Claim Appeals and Overturn Rates in 2026

DENIED IN-NETWORK CLAIMS VS APPEALS (HEALTHCARE.GOV)
2024 DENIED (MILLIONS)    ████████████████████████████████████████  85
2023 DENIED (MILLIONS)    ████████████████████████████████████████  86
2024 APPEALED (THOUSANDS) ▏                                        263
2023 APPEALED (THOUSANDS) ▏                                        377

Data Source: KFF analysis of CMS Transparency in Coverage data, 2023 and 2024 plan years

Consumers filed at least 262,982 appeals on roughly 85 million denied in-network claims in 2024, an appeal rate below 1%, and that was lower than the 376,508 appeals filed in 2023. When people did appeal, insurers kept their original decision about 66% of the time, so about one in three appeals produced a reversal at least in part. The reversal share is a rough reading: the data counts appeals, and it does not follow each claim to its final payment.

Where you live matters. In 2023, the highest state average denial rate was 34% in Alabama and the lowest was 6% in South Dakota. The same federal transparency files show the marketplace as the country’s largest public window into denial behavior. Our ACA Affordable Care Act Statistics in US report covers enrollment, premiums, and subsidy changes that determine how many people depend on these plans.

Patient Bills, Overcharges, and Disputes in 2026

INSURED ADULTS: BILLING PROBLEMS AND DISPUTES (COMMONWEALTH FUND SURVEY, n=7,873)
BILLED FOR A SERVICE THEY THOUGHT WAS COVERED   ██████████████████████████████  45%
DISPUTED BUT SAW BALANCE REDUCED OR REMOVED     ██████████████████████████      "more than a third"
WON SOME OR ALL DENIED SERVICES ON APPEAL       ███████████████████████████    "about half"

Data Source: Commonwealth Fund survey of insured adults, as reported by CBS News; CMS No Surprises Act medical bill rights guidance

Forty-five percent of insured adults in the Commonwealth Fund survey said they were billed for a service they thought their insurance should cover. Fewer than half of those who reported a billing error or coverage denial challenged it, mostly because they did not know they could. The challenges often worked: more than a third of people who disputed a bill had their balance reduced or eliminated, and about half of those who fought a denial won approval of some or all of the services. The coverage reviewed does not state the survey year, so check the Commonwealth Fund for its latest edition.

The federal government also gives uninsured and self-pay patients a way to contest a bill. Providers must give a good faith estimate when care is scheduled at least three business days ahead, and patients can dispute a bill that is at least $400 more than the estimate. These figures measure patient experience, not the share of bills that are wrong. For a look at what hospital charges actually run, see our Average Hospital Bill Statistics in US report.

No Surprises Act Billing Disputes in 2026

NO SURPRISES ACT PAYMENT DISPUTES (MILLIONS)
FIRST HALF 2025    █████████████████████████████  1.2
SECOND HALF 2025   ███████████████████████████████████  1.4
FULL YEAR 2025     ██████████████████████████████████████████████████████  2.6

Data Source: CMS federal IDR public use files, as reported by Healthcare Dive; Georgetown University Center on Health Insurance Reforms; Becker’s Payer Issues

The No Surprises Act protects patients from most out-of-network surprise bills, and it sends payment fights between providers and insurers to arbitration. That system grew far beyond plan. The government expected about 20,000 disputes a year, and providers and facilities initiated about 2.6 million in 2025, a 77% jump from 2024. Providers prevailed in about 85% of determinations, and awards reached nearly $15 billion according to a Wall Street Journal analysis of federal data. Insurers say a small group of repeat filers drives volume, and three groups accounted for about 38% of disputes in the second half of 2025.

The disputes mostly do not land on patients, but they affect premiums. Insurers cite the process among the factors raising costs. CMS finalized a rule in spring 2026 aimed at cutting ineligible disputes and standardizing communication. Both sides have criticized the process: payers say it favors providers, and providers say plans underpay. About 20% of first-half 2025 disputes were ineligible, which shows how much of the volume is procedural. Patients stay protected from the balance either way.

Medical Billing Errors and Medical Debt in 2026

MEDICAL DEBT IN THE US (KFF AND CFPB ESTIMATES)
TOTAL MEDICAL DEBT ($ BILLIONS)             ████████████████████████████████████████  220
MEDICAL DEBT ON CREDIT REPORTS ($ BILLIONS) ██████████                                 49
ADULTS OWING OVER $1,000 (MILLIONS)         ███                                        14
ADULTS OWING OVER $10,000 (MILLIONS)        █                                           3

Data Source: KFF analysis of federal survey data; KFF Health News; Consumer Financial Protection Bureau; US District Court, Eastern District of Texas

Billing errors and denials feed medical debt, though no federal source splits the debt by cause. KFF estimates Americans owe at least $220 billion. About 14 million people owe more than $1,000, and about 3 million owe more than $10,000. A broader KFF Health News investigation found more than 100 million people, 41% of adults, carry some health care debt. These figures include debt from correct bills as well, so they set the stakes and do not count errors.

The credit-reporting rules changed in 2025. The CFPB finalized a rule in January 2025 that would have removed about $49 billion of medical debt from the credit reports of about 15 million people. A federal court in Texas vacated it on July 11, 2025, and it never took effect. The three credit bureaus keep voluntary limits, and 15 states bar medical debt from credit reports. Our Medical Debt Statistics in US report covers who carries the debt and how large balances run.

Frequently Asked Questions

What percentage of medical bills contain errors?

No federal agency publishes a national rate. The claim that 80% of bills contain errors appears widely online, but this report found no national audit behind it. Reliable measures cover specific things: 6.55% of Medicare fee-for-service payments were improper in fiscal 2025, and insurers denied 19% of marketplace in-network claims in 2024.

What is the Medicare improper payment rate in 2026?

CMS reported a fiscal 2025 improper payment rate of 6.55%, or $28.83 billion, for Medicare fee-for-service, down from 7.66%. The Medicare Advantage rate was 6.09% and Part D was 4.00%.

Do improper payments mean fraud?

No. CMS says improper payments include overpayments, underpayments, and payments lacking documentation, and that insufficient documentation is generally not a sign of fraud or abuse. Documentation gaps drove 77.17% of Medicaid improper payments.

How common are claim denials?

On HealthCare.gov plans, insurers denied 19% of in-network claims in 2024, about 85 million, and 37% of out-of-network claims. The range among the largest insurers was 13% to 35%.

How many denied claims get appealed?

Fewer than 1%. Consumers appealed at least 262,982 of about 85 million denied in-network claims in 2024, and insurers upheld the denial about 66% of the time.

What are the most common Medicare billing errors?

Insufficient documentation causes 51.5% of improper payments, medical necessity errors 17.8%, and incorrect coding 10.8%, according to CMS review data for fiscal 2025.

Can I dispute a medical bill?

Yes. Insured patients can appeal denials and ask providers to correct errors, and in the Commonwealth Fund survey more than a third who disputed a bill saw it reduced or eliminated. Uninsured and self-pay patients can dispute a bill that is at least $400 above the good faith estimate.

How many No Surprises Act disputes are there?

Providers and insurers initiated about 2.6 million payment disputes in 2025, up 77% from 2024. Providers prevailed in about 85% of determinations.

Does medical debt still appear on credit reports in 2026?

Some does. The federal rule that would have banned it was vacated on July 11, 2025. The credit bureaus limit certain medical debt voluntarily, and 15 states ban it outright.

Disclaimer: This research report is compiled from publicly available sources. While reasonable efforts have been made to ensure accuracy, no representation or warranty, express or implied, is given as to the completeness or reliability of the information. We accept no liability for any errors, omissions, losses, or damages of any kind arising from the use of this report.

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