Artificial intelligence tools used by hospitals for billing may have contributed $942 million in additional healthcare spending for Blue Cross Blue Shield companies over two years, according to a new Blue Cross Blue Shield Association analysis. The insurer group found that hospitals increasingly classified patients as medically complex even when it could not identify a corresponding increase in treatment.
The share of inpatient cases billed as complex rose from about 37% in early 2023 to 40% by the end of 2025. BCBSA estimated that the change generated $942 million in additional payments during 2024 and 2025 compared with 2023 coding patterns.
Secondary Diagnoses Accounted for Most Added Costs
About 70% of the increase, or roughly $653 million, came from secondary diagnoses that moved patients into higher-severity and higher-reimbursement billing categories. BCBSA said these additional diagnoses can be identified when AI tools scan lab results, doctors’ notes and other medical records.
The association pointed to major bowel procedures as one example. Claims classified at the highest complexity level rose from 10.2% to 22.7%, while BCBSA said it found no equivalent increase in indicators of additional treatment.
Luke Chalker, BCBSA’s senior vice president of product and data science, said the findings suggest coding practices have changed faster than the care being delivered. The association said over 60% of hospital systems now use AI-enabled technology capable of assisting with medical coding and documentation.
Hospitals Dispute Claims That AI Is Inflating Bills
Hospital groups have challenged the argument that increased coding intensity primarily reflects AI-driven billing practices. The American Hospital Association says AI can improve coding accuracy and reduce administrative work, while factors such as an aging population and higher patient acuity can also lead to patients receiving additional diagnoses.
BCBSA has previously raised similar concerns. A March analysis examining maternity care found higher payments at hospitals showing patterns associated with AI-assisted coding, while the association argued that some of those additional diagnoses were not accompanied by corresponding treatment.
The findings add another point of disagreement between hospitals and insurers as both increasingly use AI in administrative work. Abridge founder Dr. Shiv Rao told TechCrunch that competing automated systems could create a future of agents challenging other agents, while also arguing that AI could ultimately reduce costs and friction.
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