“If patients are truly sicker, we’d expect to see more treatment.” So said Luke Chalker, a senior vice president at the Blue Cross Blue Shield Association, explaining why his group thinks hospital AI is adding about $942 million to what its member insurers pay.
The association’s analysis covers 2023 to 2025 and was released on a Thursday. It points to a sharp rise in hospital stays documented as medically complex. Its claim is that AI coding software is finding more billable conditions, not more sick patients. These are the insurers’ own figures and their reading of them. Hospitals have not been heard from in the coverage.
The anemia test
The study used claims data from insurers that together cover one in three Americans, and looked at major bowel surgery. Anemia diagnoses rose significantly at these hospitals. Blood transfusions did not. “The disconnect between diagnoses and treatment suggests that AI is identifying more billable conditions, not sicker patients,” Chalker said.
Most of the added cost came from secondary diagnoses, conditions recorded alongside the main reason for a stay. They made up about 70% of the increase, roughly $650 million. Such a diagnosis can lift a stay into a higher-paying tier, and the association says a single lab reading can be enough to support one. That makes them easy for software to find.
By the association’s count, more than 60% of hospital systems now use AI that searches lab results and electronic records for these diagnoses. Providers also pick up extra conditions through ambient scribes, tools that listen in on visits and write the doctor’s notes.
A fight between machines
The New York Times has reported that AI on both sides appears to be deepening the old dispute between hospitals and insurers over bills. Centene and other insurers have complained that health systems’ AI tools produce aggressive or improper billing. Chalker called the fight “a completely one-sided blood bath” that insurers are losing. Shiv Rao, founder of the AI startup Abridge, warned of “bots fighting bots,” though he said AI might also ease tensions and cut costs.
The association says the trend ultimately puts pressure on premiums and out-of-pocket expenses for families, employers and taxpayers. David Merritt, its senior vice president of external affairs, said the findings underscore the need to understand these tools better.
The encouraging part is that the debate is now measurable, with specific procedures and diagnoses to check. Patients puzzled by a bill can ask for an itemized explanation and talk to their doctor about what was recorded. Consult your doctor for medical advice.
Sources
- Major US insurers link hospitals' AI billing tools to nearly $1 billion in extra costs
- ‘Raises concerns’: Hospitals use A.I. to inflate medical bills by nearly $1 BILLION!
