Reed Abelson , Teddy Rosenbluth. NY Times 4/24/26: Battle of Hospital A.I. vs. Insurer A.I. Is Pushing Medical Costs Higher. Thanks to Seth Marcus for sharing this article.
An excerpt:
In the latest sign that artificial intelligence is fueling higher health care costs, a group of insurers released a report Thursday claiming that hospitals’ use of A.I. was responsible for nearly $1 billion in additional expenses over two years…
Using codes for various medical conditions, hospitals submitted claims for tens of thousands of patients that described their illnesses as more complex in 2024 and 2025 than in 2023. Despite the added conditions, there was no evidence that the patients had received different treatment from the hospitals, according to the analysis by the Blue Cross Blue Shield Association, which represents state Blue Cross plans.
Using A.I. tools, hospitals are collecting more information about their patients, and submitting bigger claims, the association said…
Just as providers are using sophisticated A.I. tools to say their patients are sicker, insurance companies have been accused of using the tools to delay or deny care. The companies have come under intense criticism for their use of A.I. when requiring prior approval of treatments and medicines…
But as more hospitals and doctors use A.I., costs will continue to rise. Benefit consultants and insurers cite it as one of the factors that could lead to double-digit increases next year. A recent survey of employers suggested that costs could go up as much as 11 percent next year for employers unless they cut back on benefits.
My take: By leveraging AI, doctors and hospitals are able to claim that patients have increased complexity to justify higher reimbursement codes. This shift has caught insurance companies flat-footed and increased hospital profitability. When the insurance companies negotiated the rates for each reimbursement code, historical data allowed them to predict the costs based on projected use of each code; these projections are way off now. Using AI to document complexity, these hospital coding changes can no longer be denied as “upcoding” by insurance companies.
Over the long term, I expect insurance companies to work on lower reimbursement for higher-complexity coding. Over the short term, the increase in hospital profits will result in higher insurance costs for patients and businesses.
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