Analysis examines AI in hospital billing as spike in complex patients adds nearly $1 billion in extra costs

Analysis of BCBS claims data finds that as more hospitals implement AI coding tools, more patients are coded as medically complex, yet care delivered remains largely unchanged.

Key Findings:

• A sharp increase in patients being documented as having complex conditions appears to have added an estimated $942 million in healthcare spending for BCBS companies between 2023 and 2025, driving higher premiums and out-of-pocket costs for families, employers and taxpayers.
• There is a clear disconnect between coding and treatment — our research shows that coding for care has changed, but there is no evidence of corresponding change in care delivered.
• Patients often fell into a higher-cost billing category after a secondary diagnosis, a condition identified in addition to the patient's primary reason for receiving care. This secondary diagnosis may be derived from single laboratory values, making it particularly well-suited for detection by AI tools. Approximately 70% of the additional costs, more than $650 million, were tied to secondary diagnoses.
• This growth in complex coding comes as more than 60% of hospital systems began using AI coding tools, which can document patient visits, analyze lab reports and doctors’ notes.

CHICAGO — New analysis from the Blue Cross Blue Shield Association (BCBSA) finds that hospital systems are increasingly billing patient hospital stays as more medically complex, driving nearly $1 billion in additional healthcare costs in just two years. There is a clear disconnect between coding and treatment — our research shows that coding for care has changed, but there is no evidence of corresponding change in care delivered.

The study raises concerns that widely adopted AI coding tools are contributing to higher healthcare spending, which ultimately puts pressure on premiums and out-of-pocket expenses for families, employers and taxpayers.

More than 60% of hospital systems are now using AI-enabled technologies that can scan lab results and electronic records to identify secondary diagnoses, which could move a patient into a higher-severity, higher-reimbursement billing category. For the analysis, researchers looked at secondary diagnoses like anemia following major bowel surgery.

“If patients are truly sicker, we'd expect to see more treatment,” said Luke Chalker, BCBSA’s senior vice president of product and data science. “For example, we're seeing significantly more anemia diagnoses at these hospitals without a corresponding increase in transfusions. The disconnect between diagnoses and treatment suggests that AI is identifying more billable conditions, not sicker patients.”

Researchers found secondary diagnoses that shifted claims into a higher-reimbursement category accounted for 70% — roughly $650 million — of the increased costs for Blue Cross and Blue Shield (BCBS) companies from 2023 to 2025.

The analysis was built from de-identified claims data from BCBS companies whose coverage of one in three Americans gives insights into every ZIP code in the country.

“We know families are frustrated by the rising cost of healthcare, and we are committed to tackling the root causes of these higher prices,” said David Merritt, BCBSA’s senior vice president of external affairs. “As families face higher healthcare costs, this research underscores the urgent need to better understand these AI tools and the role they may play in exacerbating the affordability crisis.”

Why it matters:

The findings build on BCBSA’s earlier research showing that AI-enabled billing tools may contribute to higher healthcare costs by identifying additional diagnoses that can increase reimbursements for hospitals. This latest analysis looks at another surgical category (major bowel procedures) and finds consistent results.