Hospitals push back against claims of using AI to drive up costs

After a widely publicized report from insurers accusing health systems of using AI to improperly bill claims and drive up costs, hospitals are pushing back.

The American Hospital Association says such arguments aren’t backed by evidence. The AHA is responding to a Blue Cross Blue Shield Association report that garnered widespread media attention.

The report made the case that hospitals’ use of AI in medical coding ultimately resulted in an additional $942 million in cost over two years for Blue plans. The report also points to a rise in complex claims, spurring higher costs.

In response, the hospital association says the insurers’ report doesn’t offer context as to whether the clinical diagnoses were or were not backed by sound medical guidance.

“BCBSA’s analysis insinuates conclusions about AI-enabled coding without reviewing the underlying medical records to determine whether reported diagnoses were clinically supported,” the hospital association says.

“It also does not appear to identify which claims involved AI tools rather than traditional documentation and coding processes,” the AHA adds. “Nor does it fully account for changes in patient morbidity and the continued migration of lower-acuity care away from inpatient settings.”

What insurers are saying

The BCBSA report pointed to hospitals' increased usage of AI-powered revenue cycle management solutions that are leading to higher claims.

The Blues’ report points to more complex cases being submitted, with the percentage of complex cases rising from 37% in 2023 to 40% in late 2025. The insurers note that in one area, major bowel procedures, there was a rise in complex claims and a decline in simpler claims, even though treatment plans didn’t reflect any changes.

“Systematic use of AI-enabled RCM tools by healthcare systems may be linked to over $650 million in excess hospital reimbursement related to coding complexity optimization alone,” the BCBSA report says. “This represents incremental hospital reimbursement from complexity growth for inpatient stays, independent of utilization or case mix changes. Critically, this growth hasn’t stopped, nor is it limited to inpatient care.”

The BCBSA says it examined more than 55,000 complex cases and found that hospitals were routinely adding secondary diagnoses, leading to claims calling for higher reimbursements, even though there wasn’t an indication of increased care for those patients.

What hospitals say

The American Hospital Association points out that Americans are living longer and often are dealing with more chronic conditions, so it’s not altogether surprising to see an increase in complex claims.

The AHA also notes that if complex claims don’t include added treatments, then it doesn’t necessarily suggest that the claim is inaccurate.

“A comorbidity can affect clinical decision-making, monitoring, nursing resources, medication management, prognosis and risk without necessarily resulting in a transfusion, surgery or other easily identifiable service,” the AHA says. “Ultimately, the appropriate test for whether a patient has been correctly coded is not whether reimbursement increased; it is whether the patient’s medical record supports the diagnosis.”

Hospitals also say that proper diagnosis, including documenting added complexity in cases, is essential to providing care.

“As providers adopt technologies that help clinicians document patient conditions more completely, the key question remains whether diagnoses are clinically supported, not whether they increase measured complexity,” the AHA says. “BCBSA’s analysis raises concerns about coding trends, but it does not demonstrate that hospitals are coding patients inaccurately or that AI tools are driving inappropriate spending.”

The growing role of AI

Both hospitals and insurers are increasingly using AI in their operations to streamline billing processes, a trend that’s only likely to accelerate.

Physicians have been worried that insurers are going to be using AI to reject more claims submitted for authorization. Three out of five doctors (61%) said they are worried that insurers are going to use AI to increase denials of pre-approval for treatment, according to a 2025 survey by the American Medical Association.

Bruce A. Scott, MD, then-president of the American Medical Association, said at the time, “Using AI-enabled tools to automatically deny more and more needed care is not the reform of prior authorization physicians and patients are calling for.”

A 2023 Stat investigation revealed how UnitedHealth Group was using an AI algorithm to deny care, and the series was named as a finalist for a Pulitzer Prize in investigative reporting.

A Trilliant Health report released earlier this year also found that six health systems using AI were submitting claims with more complexity and higher costs. The report also found that more complex coding isn’t likely to reflect fraudulent activity, but suggested that as health systems use more AI documentation tools with patient visits, providers are capturing activity or conditions that should be reflected in coding.

Undoubtedly, health systems and insurers are likely to face more scrutiny in their use of AI in handling claims.