A Blue Cross Blue Shield Association study reveals that healthcare providers' use of AI billing tools added $942 million in healthcare costs over two years. Insurers argue that hospitals are using AI to document more complex secondary conditions to secure higher payments without actually delivering more treatment. Conversely, AI billing vendors defend the technology, asserting that it simply helps hospitals recover legitimate costs they are owed under the current fee-for-service system.
Blue Cross Blue Shield cost findings
- ▪An analysis by the Blue Cross Blue Shield Association released on September 24, 2026, found that healthcare providers' use of artificial intelligence billing tools added $942 million in healthcare costs over a two-year period.
- ▪The Blue Cross Blue Shield Association study found that billing for secondary conditions stemming from separate illnesses drove up costs by $653 million for Blue Cross Blue Shield companies between 2024 and 2025.
- ▪Hospitals received an average of nearly $12,000 more per case by adding secondary diagnoses to patient claims, according to the Blue Cross Blue Shield Association.
Changes in hospital billing complexity
- ▪The Blue Cross Blue Shield Association reported that hospitals used artificial intelligence to scan patient records and use ambient scribes to identify and bill for more complex secondary conditions.
- ▪For patients undergoing major bowel surgeries, documented secondary conditions like partial intestinal blockages and body acid overload increased by 55% and 33%, respectively, between Q1 2023 and Q4 2025.
- ▪The Blue Cross Blue Shield Association reported that hospitals submitted claims describing patient illnesses as more complex in 2024 and 2025 than in 2023, without a corresponding increase in actual medical treatment.
Insurers' concerns over billing
- ▪Health insurers are concerned that artificial intelligence billing tools are enabling upcoding to garner more reimbursement.
- ▪Health insurers, including Centene, stated that the use of artificial intelligence tools by health systems has led to aggressive or inappropriate reimbursement payments.
Industry defense of AI billing
- ▪Codametrix CEO Hamid Tabatabaie and Solventum executive Dr. Travis Bias argued that artificial intelligence billing tools are simply capturing legitimate, complete clinical data that providers previously missed under existing rules.
- ▪Codametrix and Solventum stated they have integrated strict coding compliance guidelines and guardrails into their artificial intelligence systems to prevent inaccurate or fraudulent coding.
Predictions on AI billing impact
- ▪Abridge founder Dr. Shiv Rao stated that while artificial intelligence could lead to a dystopian scenario of automated systems fighting, it might also reduce billing tensions and cut costs.
- ▪Health technology executive Dr. David Brailer predicted in the journal Health Affairs that artificial intelligence tools will lower the cost of billing disputes but ultimately increase overall healthcare spending.
- ▪PwC analysts attribute a projected 9% increase in health insurers' medical costs for 2027 to the adoption of artificial intelligence-backed billing tools.
Systemic healthcare incentives and solutions
- ▪Under the dominant fee-for-service healthcare system, providers are incentivized to maximize revenue by increasing service volume and documented complexity, while payers are incentivized to limit care to reduce costs.
- ▪Solventum deputy chief medical officer Dr. Travis Bias stated that transitioning to value-based care models, which reimburse based on patient outcomes rather than volume, could resolve artificial intelligence-driven billing cost challenges.
Debatable claims
- ▪AI billing tools do more harm than good to the healthcare system
- ▪Healthcare systems should transition to value-based care to resolve AI-driven billing cost challenges
- ▪Hospitals are justified in using AI to bill for secondary conditions that do not receive active treatment
- ▪AI billing tools simply capture legitimate clinical data that providers previously missed
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