AI in Healthcare Billing May Be Driving Up U.S. Costs by Nearly $1 Billion, Report Finds

Hospitals and health insurance companies' use of AI may be driving Americans' healthcare costs up by nearly a billion dollars, according to a new report.

The Blue Cross Blue Shield Association, which represents Blue Cross insurance plans, released a report on Thursday that found that codes used for billing were more complex in 2024 and 2025 than they were in 2023, even when there was no evidence suggesting the patients were receiving different treatments from their hospitals.

The association claims that hospitals, using AI tools, are collecting more information about their patients and submitting bigger claims, which eventually rolls back onto the patient, according to The New York Times.

Costs for Blue Cross companies increased by $653 million between 2024 and 2025, according to the report.

When AI tools add more conditions to patients' claims — noting conditions like low sodium or anemia — it can drive the cost of a treatment up. Hospitals were paid, on average, nearly $12,000 more per case because of the way AI tools are sending codes.

The report highlights an example in individuals undergoing bowel surgery. Billing codes that include secondary conditions like partial blockages in the intestines or an increase in acid increased by 55 percent and 33 percent, respectively, between the first quarter of 2023 and the fourth quarter of 2025.

While insurers are pointing the finger at hospitals for driving up costs, hospitals in turn are pointing the finger at insurers for using AI to reject their patients' claims.

“All the insurers are using A.I. to scan our charts to look for claims to deny. For the same reason, we’re looking at the same charts today,” Dave Mazurkiewicz, the chief financial officer for McLaren Health Care in Michigan, told The New York Times.

He told the paper that AI tools can help doctors better record their patients’ conditions and make suggestions for procuring higher payments from insurance companies.

In theory, the use of AI should streamline the process of billing and payouts and produce more accurate results, with the ideal result of lowering healthcare costs for patients — but some doctors fear the battle of the bots will do the opposite.

“That’s the danger,” Dr. Shiv Rao, who founded AI patient care records company Abridge, told the paper, “where it’s bots fighting bots, agents fighting agents, a horrible dystopian future nobody wants to live in.”

Some of the experts who spoke to The New York Times described a tug of war between bots that prioritize the profits of the companies using them over the overall health and well-being of the patients who will ultimately be impacted by their decisions.

Luke Chalker, who represents Blue Cross, has pushed back on that notion, though, describing the struggle as "not a war" but a "completely one-sided bloodbath."

He said that Blue Cross does not use AI to process claims, but does use it to guard against what he calls inappropriate billing.

Basys.ai, owned by Amber Nigam, provides advisement to private insurers and the Medicare program on how to review and flag potential abuses of the billing system.

He told the paper that there are other versions of AI that are "optimizing for revenue," adding that he is "really, really concerned about what I'm seeing right now."