AI-driven hospital claims add $942m to US healthcare costs — insurers

The growing use of artificial intelligence by hospitals to prepare insurance claims has added an estimated $942 million to healthcare spending over two years, according to an analysis by the Blue Cross Blue Shield Association.

The analysis found a sharp rise in patients being recorded as having complex medical conditions after hospitals began using AI tools in the claims process.

However, the association said the increase in medical coding was not matched by changes in the treatment patients received.

It described the trend as a “clear disconnect between coding and treatment”, arguing that there was no evidence that the more complex diagnoses translated into corresponding changes in patient care.

The findings have raised fresh concerns about the impact of AI on healthcare costs, with The New York Times reporting that the technology could be intensifying long-running disputes between hospitals and insurers over medical treatment and reimbursement.

Hospitals and insurers have traditionally disagreed over which treatments should be covered and how much healthcare providers should be paid. The growing use of AI by both sides, however, is adding another layer to those disputes.

AI systems can assist hospitals in documenting patient conditions and preparing claims, while insurers can also deploy technology to scrutinise claims and determine whether treatments and payments are justified.

Dr Shiv Rao, founder of AI healthcare startup Abridge, warned that unchecked competition between automated systems could create a system in which AI tools effectively challenge one another.

Rao said such a development could lead to “a horrible dystopic future nobody wants to live in”, characterised by “bots fighting bots, agents fighting agents”.

He, however, said AI could also have the opposite effect by reducing friction between healthcare providers and insurers and ultimately lowering costs.

Luke Chalker, senior vice president of the Blue Cross Blue Shield Association, described the current situation in stark terms, saying insurers were bearing the brunt of the growing use of AI in claims processing.

“It’s not a war. It’s a completely one-sided blood bath,” Chalker said.

The debate highlights a growing concern within the US healthcare system: whether AI will improve efficiency and reduce administrative costs or instead encourage more aggressive coding and claims scrutiny, pushing overall healthcare spending higher.