Insurers say hospital AI coding added $942 million in costs

Hospitals’ use of AI tools to prepare insurance claims was associated with an estimated $942 million in additional healthcare spending over two years, according to an analysis by the Blue Cross Blue Shield Association (BCBSA), which represents health insurers.

The association says it found a sharp rise in patients being recorded as having complex conditions. But it also reported a gap between those medical codes and the treatment patients received, with “no evidence of corresponding change in care delivered.” The figures point to a dispute over whether more detailed or complex coding reflects patients’ needs—or is increasing what insurers pay.

The analysis is the insurers’ account of the issue. The source report does not give details on how the $942 million estimate was calculated, so it is not possible to assess its methods from the information provided.

AI is entering a longstanding dispute

Hospitals and insurers have long argued over which treatments should be covered and how much they should cost. The New York Times described the BCBSA analysis as a new sign that AI may be adding to those tensions. The report also says AI is being used on both sides, though it does not specify which insurer tools or actions contributed to the dispute.

Dr. Shiv Rao, founder of healthcare AI company Abridge, warned that the technology could lead to “bots fighting bots, agents fighting agents.” He also said it could instead ease tensions and lower costs. The difference may depend on how the tools are used: automating paperwork could help, while systems that intensify claim disputes could add work and expense.

BCBSA senior vice president Luke Chalker rejected describing the situation as a battle, saying insurers were on the losing side. His comment reflects the association’s position; the analysis does not settle whether AI-driven coding is causing the spending increase or how much of it is justified.