The Blue Cross Blue Shield Association said on September 24 that hospitals billed more stays as medically complex from 2023 to 2025. It estimates that this added $942 million in costs for Blue plans, with no matching change in care, and links the rise to AI coding tools. The hospital industry calls such claims unproven.
New to this? Read it in simple words
- Hospitals send bills to insurance companies, and sicker patients mean higher bills.
- A group of US insurers says hospitals now describe more patients as very sick.
- It links this to AI tools and says it cost its plans $942 million over two years.
- Hospitals say their patients really are older and sicker.
- Medical coding
- Turning a doctor’s notes into standard codes that decide how much a hospital is paid.
- Upcoding
- Billing care as more serious or complex than it really was.
- Premium
- The regular amount that people or employers pay for health insurance.
What the insurers found
The share of inpatient claims coded as medically complex rose from 37% at the start of 2023 to 40% by the end of 2025, according to the analysis.
The association estimates that this added $942 million in costs for Blue plans over two years. About 70%, or more than $650 million, came from secondary diagnoses, which are conditions listed next to the main reason for a stay.
After major bowel surgery, it found many more anemia diagnoses without a matching rise in blood transfusions. “If patients are truly sicker, we’d expect to see more treatment,” said Luke Chalker, a senior vice president at the association.
Figures from the insurers’ own analysis. Hospitals dispute the reading.
Where AI comes in
More than 60% of hospital systems now use AI coding tools, the association says. The tools can scan lab results and records, or listen to visits and draft notes, and they can flag extra diagnoses.
The association says the gap between diagnoses and treatment “suggests that AI is identifying more billable conditions, not sicker patients”. The analysis uses claims data rather than medical charts, and it is not peer reviewed.
An earlier study by the association, released in March, found a similar pattern for anemia after childbirth.
The hospitals’ side
The American Hospital Association calls such claims unsubstantiated. It says patients are older and have more chronic diseases, and that simpler care has moved out of hospitals.
It cites an analysis with Vizient that found the standard measure of how sick hospital patients are rose by about 5% from 2019 to 2024. It also accuses some insurers of cutting payments with automated rules that skip medical records.
Medical Daily notes that neither side has published patient-by-patient chart reviews that would settle the question.
Sources
Every fact in this story comes from the sources below. Open them to check our work.
- 1Primary source · September 24, 2026Analysis examines AI in hospital billing as spike in complex patients adds nearly $1 billion in extra costs Blue Cross Blue Shield Association
- 2
- 3Research · September 25, 2026Blue Cross Ties $942 Million in Added Hospital Costs to AI Coding, but Hospitals Say Patients Are Sicker Medical Daily
- 4Primary source · August 2026Fact Sheet: Artificial Intelligence and Coding Intensity American Hospital Association
We read the insurers’ announcement and the hospital association’s fact sheet, then compared reports by TechCrunch and Medical Daily. The analysis uses claims data, not medical charts, and it comes from an insurer group with a stake in lower hospital payments.