Outpatient Bills Keep Rising as 'Upcoding' Becomes the Norm

Patients are increasingly being charged alarming rates for outpatient visits at emergency departments, urgent care centers, and physician offices—regardless of how serious their condition is.

A new study from The Compass by Trilliant Health points to a rise in the use of higher-level evaluation and management (E/M) codes, driven more by financial incentives than actual medical need.

Outpatient visits—including urgent care, emergency rooms and doctor’s offices—are billed using standardized E/M codes that range from Level 1 (least complex) to Level 5 (most complex).

These codes are meant to reflect the time, decision-making and services involved in a patient visit.

A report found that upcoding—when providers report a higher-level code than is justified—led to $14.6 billion in extra payments that year alone.

However, when providers report a higher-level code than is justified—a practice called “upcoding”—it can lead to inflated costs for Medicare, Medicaid and private insurers.

Alli Oakes, executive director of research at Trilliant Health, shared that upcoding is a “prime example” of healthcare waste—where visits are billed at increasing levels of intensity without clinical justification.

“More simply, it’s the idea that people, employers, and government programs are being overcharged for their visit,” Oakes said.

Alli Oakes

A 2021 federal report found a sharp rise in hospitals billing at the highest severity levels, with nearly half of Medicare inpatient spending in 2019 going toward these claims.

Another analysis estimated upcoding led to $14.6 billion in extra payments that year alone.

While upcoding in hospitals is well documented, less is known about how often it happens in outpatient care, according to researchers at Trilliant Health.

To investigate upcoding in the outpatient setting, researchers looked at national insurance claims data from 2018 to 2023, focusing on emergency departments, urgent care centers and primary care physician offices.

The team looked at E/M billing codes: CPT codes 99281–99285 for emergency department visits, 99202–99205 for new urgent care patients and 99211–99215 for established patients in physician offices.

Each visit was also categorized by diagnosis to observe trends in billing across different types of medical conditions.

Results revealed that from 2018 to 2023, the use of E/M codes gradually increased across all outpatient settings. In emergency departments, code 99284 rose from 32.5% to 39.6%. In urgent care, use of code 99204 increased from 34.0% to 40.6%, while lower-level codes declined. In physician offices, code 99214 jumped from 38.5% to 45.0%.

“The largest increase occurred for the second most intense billing code.” She said, “The shift in coding intensity in the emergency department by diagnosis was most telling.”

Oakes shared the example of the share of visits for rashes that were billed with high-acuity codes increasing by 19.7 percentage points.

“The idea that rashes could become so much more clinically complex in a five-year period defies basic logic,” she added

Even for relatively low-risk diagnoses, including skin rashes, coughs and nausea, billing intensity increased—suggesting the trend is not being driven primarily by sicker patients.

“The only clinical reason that could explain such a phenomenon was if everyone’s patients were somehow suddenly sicker,” Oakes said. “On balance, that just doesn’t seem like a plausible explanation. I think this becomes especially clear when you look at the results by diagnosis.”

For patients, the financial risks can be steep, especially for those with high-deductible plans or paying out-of-pocket.

“When providers use a higher-complexity billing code, it costs more money,” Oakes said. “If a patient hasn’t met their deductible, they are on the hook for that bill. Upcoding eventually impacts all of us through higher overall healthcare spending and higher insurance premiums.”

Oakes said she believes the findings highlight the need for stronger accountability in billing practices.

“Transparency is important to improving our healthcare system,” she said. “Insurers can track this and should question providers who show a pattern of upcoding. Most importantly, patients shouldn’t be caught in the middle with a denied claim.”

The study’s data—drawn from Trilliant’s national all-payer claims database—highlights a broad and growing disconnect between how outpatient care is documented and what patients actually experience.