Health care costs in the United States are rising as hospitals and insurers increasingly employ artificial intelligence (A.I.) technologies in billing and claims processes. A recent analysis by the Blue Cross Blue Shield Association found that hospitals’ use of A.I. contributed to nearly $1 billion in additional expenses over a two-year span, from 2024 to 2025. The association, representing state Blue Cross plans, reported that hospitals used A.I. to submit claims portraying patients as having more complex conditions without corresponding evidence of different treatments, resulting in higher reimbursements.
Hospitals have adopted A.I. tools to collect more detailed patient information, allowing them to code conditions with greater specificity. By adding secondary diagnoses like anemia or low sodium, hospitals secured average payments around $12,000 higher per case. Luke Chalker, a senior vice president at the Blue Cross Blue Shield Association, described the situation as “a completely one-sided blood bath,” emphasizing that insurance plans are the main victims of this trend. Though insurers use A.I. to detect inappropriate billing, they do not typically employ the technology to process claims directly.
Providers, however, argue that A.I. enhances their ability to document care accurately. Dave Mazurkiewicz, chief financial officer of McLaren Health Care in Michigan, said the technology helps physicians better capture the severity of a patient’s condition, thereby justifying appropriate payments. McLaren’s use of an A.I. system has increased its monthly revenue by about $1 million. Supporters of the technology contend that it also has the potential to reduce administrative costs by automating claim reviews, potentially freeing up resources in the health care system.
Despite these benefits, A.I. has intensified disputes over billing. Insurance companies face criticism for using the tools to impose prior authorization requirements and delay or deny care. A recent Medicare pilot program employing A.I. to assess treatment coverage has drawn scrutiny from lawmakers concerned about patient access. These technologies have contributed to higher volumes of claims appeals, with some experts noting that A.I. systems can seamlessly integrate treatments from different periods to justify expensive procedures, complicating reviews and disputes.
Caroline Pearson, executive director of the Peterson Health Technology Institute, acknowledged that both hospitals and insurers engage in extended claims battles because digital tools make these “extra rounds” relatively inexpensive. This dynamic is expected to contribute to ongoing increases in health care costs. Employers and benefit consultants forecast double-digit growth in insurance expenses in the coming year, with some employer surveys projecting rises around 11 percent unless benefits are reduced.
Some analysts see A.I.’s growing role as an impetus for broader reform. Harvard health economist David Cutler suggested that the technology might pressure the reimbursement system toward simplicity and focus on paying for services that demonstrably improve patient outcomes. Meanwhile, health system leaders have expressed concern about a future in which automated systems on both sides engage in endless claim disputes, a scenario described by Emory Healthcare CEO Joon S. Lee as a “nightmare” involving “bots fighting bots.”
As the integration of A.I. deepens across the health care sector, its impact on costs, care access, and administrative efficiency remains a contentious and evolving issue among providers, insurers, policymakers, and patients alike.