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A new analysis from the Blue Cross Blue Shield Association (shared by The New York Times) found that hospitals’ use of AI-assisted coding was associated with nearly $1 billion in additional expenses over two years. The analysis found that hospitals submitted claims describing tens of thousands of patients as having more complex illnesses in 2024 and 2025 than in 2023, without evidence that the patients received different treatment. The analysis found that adding secondary diagnoses, such as anaemia or low sodium, resulted in hospitals receiving an average of nearly $12,000 more per case. At McLaren Health Care in Michigan, AI has helped doctors better document patients’ conditions. He said McLaren’s revenue increased by about $1 million a month after adopting the technology. Insurers are also using AI to review claims and determine whether treatments and medicines should be covered.
The findings add another layer to the long-running dispute between hospitals, doctors, and insurers over medical billing. According to the Blue Cross Blue Shield analysis, hospitals are using AI tools to collect and organise more information about patients before submitting claims. The tools can identify additional conditions that may make a patient’s case appear more complex. “Coding is changing because of this technology,” said Luke Chalker, a senior vice president at the association. Chief financial officer Dave Mazurkiewicz said the system can suggest documenting a condition’s severity or flag information that could affect whether a test is billable. For the same reason, we’re looking at the same charts today,” Mazurkiewicz said. Caroline Pearson, executive director of the Peterson Health Technology Institute, said hospitals and insurers may be willing to use AI to pursue additional claims and appeals because the technology makes those efforts relatively inexpensive. “Both sides are willing to go these extra rounds ‘because it’s cheap,’” she said. Some health care experts have warned that wider use of AI could increase spending rather than reduce it. Dr David Brailer, a health technology executive and former government official, said AI could make existing medical-billing incentives more efficient without changing them. “I don’t think there is anything intrinsically different in AI that will escape the market forces,” he said. Dr Shiv Rao, founder of AI documentation company Abridge, warned that the technology could ultimately lead to automated systems competing against each other. “That’s the danger,” he said, “where it’s bots fighting bots, agents fighting agents, a horrible dystopic future nobody wants to live in.” Not everyone expects AI to increase spending. Health economist David M Cutler said automation could reduce the number of people needed to process claims and handle other administrative tasks. “That frees up a huge share of cost,” Cutler said. He also argued that the technology could put pressure on insurers and hospitals to simplify how medical services are reimbursed. “It is going to put a ton of pressure on the reimbursement system to be better,” he said.
Artificial intelligence (AI) is increasingly being used by American hospitals and medical insurers. The technology is being used to handle medical records, coding and insurance claims. However, a report claims that using AI may also be adding to health care costs in the US. That has created concerns about automated systems being used on both sides of the billing process. “All the insurers are using AI to scan our charts to look for claims to deny. You use AI every day. Now get your AI Quotient. Take the AIQ test.