The Surprising Shift in Hospital Billing: How AI is Driving Up Healthcare Costs
Are hospitals overbilling for complex care? A new analysis reveals a quiet but significant shift in hospital billing practices, which could have far-reaching implications for healthcare affordability. According to the study, hospitals are increasingly billing health plans for more complex care than they actually provide, and this trend is closely linked to the growing use of AI in patient documentation.
While automated coding can boost productivity, the analysis from Blue Health Intelligence (BHI) highlights a potential issue: newly billed diagnoses may not always reflect the actual care provided. The top 10% of hospitals in the study sample were responsible for the majority of the detected increases, with almost 60% of inpatient admissions coded as complex by the end of March 2025, up from 47% in April 2022.
The controversy lies in the coding intensity. Coding intensity contributed to approximately $22 million in additional spending on maternity care during the study period. Interestingly, admissions for postpartum anemia, a condition often treated with a transfusion, increased by more than 8 percentage points in hospitals with high coding intensity growth. However, there was virtually no change in transfusion claim rates in these hospitals, suggesting that the coding intensity may not always align with the actual care provided.
The American Hospital Association (AHA) acknowledges the shift. They note that the increasing complexity of inpatient admissions is partly due to less intense care being moved to outpatient and office settings. However, AHA's vice president of research strategy and policy communications, Aaron Wesolowski, emphasizes that the care provided in inpatient and outpatient settings is naturally higher acuity.
But is AI to blame? Health insurers have also faced scrutiny for using AI to evaluate claims submitted by hospitals and other healthcare providers. UnitedHealth Group and Cigna are currently facing lawsuits over their alleged use of algorithms to deny patients' medical claims. If this dynamic extends more broadly, it will further accelerate hospital spending and erode affordability for employers, families, and health plans, the analysis warns.
What does this mean for the future of healthcare? The controversy surrounding hospital billing practices and the role of AI in healthcare evaluation raises important questions. As the industry continues to embrace technology, how can we ensure that patient care remains at the forefront, and how can we strike a balance between efficiency and accuracy in healthcare billing?
