The Blue Cross Blue Shield Association (BCBSA) reported that AI-driven medical coding tools in US hospitals led to an additional $942 million in insurance costs between 2023 and 2025. The software analyzes patient records to identify secondary diagnoses, which often elevates the complexity category of hospital stays and increases billing amounts.
Data from BCBSA indicates that the share of hospitalizations classified as medically complex rose from approximately 37% to 40% during this period. Secondary diagnoses accounted for about 70% of the total cost increase, with over 55,000 cases resulting in $653 million in additional payments to hospitals despite no documented changes in patient care.
The American Hospital Association (AHA) disputes these findings, attributing the rise in complexity to an aging population and the migration of simpler cases to outpatient settings. The AHA cites Vizient data showing a 5% increase in patient complexity indices from 2019 to 2024, arguing that AI merely improves the accuracy of documentation for existing conditions.
Both sides are increasingly utilizing automation, with hospitals using AI for billing and insurers using it to audit claims. Mehmet Oz, head of the Centers for Medicare and Medicaid Services, acknowledged that AI is expected to drive up medical costs in the short term by increasing the efficiency of existing billing systems.
