TL;DR
- The often-cited "80% of medical bills contain errors" figure is real, but it counts every discrepancy including minor coding differences that do not affect the patient. It should not be confused with the overcharge rate.
- CMS's own 2024 figures put the Medicare Fee-for-Service improper payment rate at 7.66 percent, totaling $31.7 billion. Medicaid's 2024 rate was 5.09 percent, or $31.1 billion in federal funds.
- The average hospital bill over $10,000 contains roughly $1,300 in overcharges, based on third-party audits.
- Initial claim denial rates rose from 10.2 percent a few years ago to 11.8 percent in 2024.
- 83 percent of U.S. hospitals remain non-compliant with at least one major provision of the CMS price transparency rule, per KFF.
- Abundera's Q3 2026 report will publish aggregate error and appeal-success data from the platform's first full year of patient-side audits. This article pre-registers the methodology.
The problem with "80 percent"
The number gets cited in every consumer-advocacy article about medical billing. It comes from older surveys, often conducted by billing-audit vendors, that counted any discrepancy as an error. A diagnosis code that should have been 99213 but was billed as 99214. A line item with a typo. A date misformatted.
Most of those discrepancies do not change what the patient owes. They affect the provider's reimbursement but not the consumer's exposure. That is a legitimate thing to measure, but it is not what a patient means when they ask, "Was I overcharged?"
The more careful question is: what percentage of patient-facing bills contain an error that increases what the patient owes, and by how much?
That is a different number, and a harder one.
What the CMS improper payment reports say
The Centers for Medicare and Medicaid Services publishes improper payment rates each fiscal year. These are audited, reproducible, and carry a specific legal definition: a payment that should not have been made, or was made in the wrong amount, under a statutory, regulatory, contractual, or administrative requirement.
For FY 2024:
- Medicare Fee-for-Service: 7.66 percent improper payment rate. $31.70 billion.
- Medicare Advantage (Part C): 5.61 percent gross. $19.07 billion.
- Medicare Part D: 3.70 percent. $3.58 billion.
- Medicaid: 5.09 percent federal share. $31.10 billion.
Add it up and the federal government acknowledges roughly $85 billion in improper payments in a single fiscal year across core health programs. Not all of those are overcharges to patients. Many are documentation deficiencies that would not change the patient's bill. But the floor is defensible and the number is substantial.
What the patient-facing data shows
The numbers that matter to a consumer are different. A 2024 American Journal of Managed Care survey found that patient-reported billing disputes are common, appeals succeed more often than patients expect, and insurers use aggressive collection tactics that deter disputes even when the bill is wrong.
Third-party audits of individual bills, when they are performed, consistently find errors. The median hospital bill over $10,000 audited by a patient-advocacy firm contains around $1,300 in overcharges. That does not mean every $10,000 bill is wrong by $1,300. It means roughly half the bills audited are wrong by at least that much. The distribution is skewed by a small number of very large errors.
There is also the denial-rate story. Insurance companies denied 11.8 percent of initial claims in 2024, up from 10.2 percent a few years earlier. Most of those denials are reversible on appeal. Patients who appeal typically win more than half the time. Patients who do not appeal simply pay.
Most medical billing errors are not discovered because the patient paid the bill before anyone audited it.
Why the range of estimates is so wide
Three forces drive the spread.
First, what counts as an error. A provider-side coding review will count different things than a patient-side overcharge audit. A CMS improper-payment definition is different again. An academic study measuring out-of-pocket errors uses yet another definition.
Second, who performs the audit. Billing-audit vendors have commercial incentives to find errors. Hospital internal audits have incentives to find fewer. Academic studies sit somewhere in the middle. Each data source carries its own bias.
Third, which bills get audited at all. Most medical bills are paid without review. The bills that get audited are disproportionately large, disputed, or flagged by the patient as unusual. A 23 percent error rate measured from an audited sample does not mean 23 percent of all bills have errors. It means 23 percent of the small subset that got a second look did.
This is the measurement problem Abundera is built to close.
The price transparency context
In 2021, CMS required hospitals to publish machine-readable price data. The theory was that patients could shop. Five years later, the Kaiser Family Foundation reports that 83 percent of hospitals remain non-compliant with at least one major requirement of the rule. Many hospitals publish the files but with formatting and coding choices that make the data effectively unusable for consumer comparison.
This matters for billing-error detection because comparative data is how errors get found in the first place. If a hospital's chargemaster is unreadable, a patient cannot tell whether the $42,000 line item for "laboratory composite" is a bundled price or a typo.
Price transparency is a prerequisite for error detection at scale. It is not yet there.
What Abundera will measure
Abundera is a consumer-side audit platform. Users grant the system permission to ingest their medical bills, insurance Explanations of Benefits, and, where applicable, hospital chargemaster data. The system runs automated checks for common error patterns: duplicate line items, upcoding (billing a higher-cost procedure code than the documentation supports), unbundling (splitting a bundled procedure into separately-billed components), out-of-network pricing on supposedly in-network claims, and balance billing that violates state or federal surprise-billing law.
When the system flags a discrepancy, it drafts a dispute letter and, with the user's approval, sends it to the provider's billing office or the insurance company. Abundera tracks whether the appeal succeeds and by how much the final bill was reduced.
Every analysis is tied to an actual bill the user owes. Not a provider-side coding review, not a statistical estimate. Real dollars the user was asked to pay and the dollars they did not pay after the appeal.
Pre-registration: what we will publish in Q3 2026
In September 2026, Abundera Research will publish the first annual Billing Error Baseline. The report will contain the following metrics, broken out by hospital category (academic medical center, nonprofit community, for-profit system, specialty clinic), by payer type (commercial insurance, Medicare, Medicaid, self-pay), and by bill size bucket:
- Patient-facing error detection rate. The percentage of bills submitted to the platform in which Abundera's automated checks flagged at least one discrepancy.
- Appeal initiation rate. Of flagged bills, the percentage where the user authorized a dispute letter.
- Appeal success rate. Of disputes sent, the percentage where the provider or insurer reduced the bill.
- Median overcharge per flagged bill. In dollars.
- Median recovery per successful appeal. In dollars.
- Time to resolution. Median days from dispute sent to final bill adjustment.
We will publish the aggregate numbers, the methodology, and the sample-size caveats. We will not publish individual bills, providers, or identifying details about users. We will make the methodology available for external review before the report lands.
If the aggregate findings show the product is not helping in some category, we will publish that too. The editorial line is separate from the product. Abundera Research reports what the data says, not what the marketing team wants the data to say.
References
- Centers for Medicare and Medicaid Services, Medicare Fee-for-Service 2024 Improper Payments Report (cms.gov)
- Centers for Medicare and Medicaid Services, Medicaid and CHIP 2024 Improper Payments Report (cms.gov)
- U.S. Government Accountability Office, High-Risk Series: Medicare (gao.gov)
- American Journal of Managed Care, Survey Exposes Pervasive Billing Errors, Aggressive Tactics in US Health Insurance, 2024 (ajmc.com)
- Kaiser Family Foundation, Hospital Price Transparency Compliance Analysis, 2024 (kff.org)
- American Medical Association, AMA Recurring CPT Code Accuracy Findings (ama-assn.org)
Abundera Research is the editorial and research arm of Abundera, Inc. The Q3 2026 Billing Error Baseline report will be published under the same methodology described here. Press and data-access inquiries: research@abundera.ai.