The Surprising Shift in Hospital Billing: How AI is Driving Up Healthcare Costs
Are hospitals overbilling for care? A new analysis suggests that the answer is yes, and it's all thanks to the increasing use of AI in healthcare.
The analysis, conducted by Blue Health Intelligence (BHI), an independent licensee of Blue Cross Blue Shield (BCBS), reveals a concerning trend in hospital billing practices. According to the study, hospitals are increasingly billing health plans for more complex care than they actually provide, leading to a significant increase in healthcare spending.
The Coding Intensity Conundrum
The study found that the top 10% of hospitals in the sample drove most of the increases in complex care billing. By the end of March 2025, almost 60% of inpatient admissions that could be coded as complex were done so at these facilities, up from about 47% in April 2022. This trend is particularly concerning, as it suggests that hospitals are billing for more complex care than they are actually providing.
An Example of Overbilling
For instance, the study found that coding intensity contributed to about $22 million in additional spending on maternity care over the study period. Admissions for postpartum anemia following sudden blood loss grew more than 8 percentage points among hospitals with high coding intensity growth. However, there was virtually no change in transfusion claim rates in the hospitals with the largest increases in postpartum anemia claims, suggesting that the additional spending may not be justified.
The Role of AI in Hospital Billing
The study also noted that the increasing complexity of inpatient admissions is partly due to the shift of less intense care to outpatient and office settings. However, the use of AI in hospital billing is also a significant factor. While automated coding can boost productivity, it also raises concerns about overbilling. As Aaron Wesolowski, AHA's vice president of research strategy and policy communications, noted, "This is a positive development for patients, but an impact of this shift is that the care that is still provided in inpatient and outpatient settings is naturally higher acuity."
The Controversy Over AI in Healthcare
The use of AI in healthcare is not without controversy. Health insurers have come under fire for using AI to evaluate claims submitted by hospitals and other health providers. UnitedHealth Group and Cigna are both facing lawsuits over their alleged use of algorithms to deny patients' medical claims. As the analysis concludes, "If this dynamic extends more broadly, it will further accelerate hospital spending and erode affordability for employers, families, and health plans."
What do you think?
Are hospitals overbilling for care? Do you think the use of AI in healthcare is justified? Share your thoughts in the comments below!
