AI in Healthcare fuels billing war as insurers and hospitals deploy competing algorithms

US insurers and hospitals turn to new AI for age-old battle over charges vs payments

March 12 (Reuters) - Artificial intelligence is being deployed on both sides of the tug-of-war between U.S. healthcare systems that want to be paid more for medical procedures and insurers who want proof the services were necessary, and experts are having a hard time predicting a winner. Centene (CNC.N), opens new tab, an insurer focused on the Medicaid program for low-income people, recently raised the issue, saying hospitals were aggressively or even improperly using revenue software to trigger reimbursement. "There have been some of these pockets where folks coming into the emergency department with a fever, all of a sudden all have sepsis," Centene CEO Sarah London said at a September investor conference, referring to a life-threatening condition that triggers a host of medical interventions. A Blue Cross Blue Shield analysis of its commercial hospital claims found that roughly $663 million in inpatient spending and at least $1.67 billion in outpatient spending may be tied to more aggressive, AI-enabled coding practices nationwide. "We are seeing more AI tools used at different points in the care and billing process, and when those tools operate independently, they can unintentionally lead to friction," said Razia Hashmi, vice president of clinical affairs at ⁠Blue Cross Blue Shield Association. AIM TO DRIVE DOWN COSTS In recent months, some health insurers have increased reliance on AI to help catch treatments and bills they say are unwarranted, even as hospitals use AI tools to document those medical services with codes that boost reimbursement, a review of company statements and interviews with a dozen experts and analysts found. The U.S. spends more on healthcare than any other nation at about 18% of its gross domestic product. Both sides hope AI will drive down costs. Consultancy firm McKinsey estimates that for every $10 billion in revenue, AI could save insurers $970 million through claims management, medical prior authorization requests and by guiding clinical care. AI tools are already leading to hospital care savings and they could amount to as much as $900 billion by 2050, Morgan Stanley said in a September research note. "The idea of (AI) bot versus bot is intrinsically a situation where no one's going to win," said Christina Silcox, research director of digital health at Duke-Margolis Institute for Health Policy. COMPANIES PLAN SAVINGS Several analysts, including TD Cowen's Ryan Langston and Whit Mayo of Leerink Partners, said insurers and hospitals could save money by using AI, but they did not provide estimates. Companies are also using AI widely for administrative tasks. So far, hospitals have spent more, according to Menlo Ventures, an early-stage venture capital firm that invests ⁠in AI and healthcare technology. Healthcare AI spending reached $1.4 billion in 2025, nearly triple 2024 levels, Menlo said, based on its survey of 700 industry executives. Of that, health systems accounted for roughly $1 billion, or 75% of that total, and outpatient providers shelled out another $280 million, while payers contributed about $50 million. UnitedHealth Group (UNH.N), opens new tab has said AI could save it nearly $1 billion in 2026. The company said it hopes to invest nearly $1.5 billion in AI this year and at least as much in 2027. Its UnitedHealthcare insurance unit has primarily focused its AI spending on the consumer experience, including guiding patients to higher quality care, executives have said. Smaller rival Humana (HUM.N), opens new tab recently estimated its AI investments will generate more than $100 million in savings over a ⁠few years. The company declined to comment on specifics. A spokesperson for CVS Health (CVS.N), opens new tab said its Aetna health insurance business is investing in AI that can help improve clinical care and that it was partnering with providers to ensure patients get appropriate care. Cigna (CI.N), opens new tab and Elevance (ELV.N), opens new tab did not respond to questions about AI strategy between hospitals and payers. THE AI BATTLE OVER PAYMENT While insurers say hospital coding and billing practices are contributing to rising medical costs and squeezing profit margins, hospitals say they need ⁠AI to fight back against insurers. HCA Healthcare (HCA.N), opens new tab, the largest publicly traded U.S. hospital chain, said in January it expects about $400 million in 2026 cost savings from AI initiatives. The company has been using AI to automate revenue management and for doctors' clinical paperwork. It did not respond to a request for comment. HCA Chief Financial Officer Michael Marks had previously described its use of AI tools as a response "to the growing denial and underpayment ⁠activities from the payers." AI tools are helping to accurately represent medical services rendered, allowing more precise reimbursement from payers, said Providence, a chain of 51 hospitals located across seven states, including California and Texas. Providence Chief Health Information Officer Maulin Shah said both sides will need to adapt to the changes artificial intelligence is already causing. "It's going to require adjustments in the relationship between the payers and the providers to understand this new reality," Shah said. "Unfortunately, what we're seeing is AI fighting AI." Reporting by Sneha S K and Sriparna Roy in Bengaluru; Editing by Mrinalika Roy, Caroline Humer and Bill Berkrot Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Healthcare & Pharmaceuticals * Health * Commercial Strategy * Health Insurance * Healthcare Providers Sriparna Roy Thomson Reuters Sriparna reports on pharmaceutical companies and healthcare in the United States. She has a master's degree in English literature and post graduate diploma in broadcast journalism.

Healthcare's Billing Wars Are Becoming an AI vs AI Contest | PYMNTS.com

The numbers on both sides reflect the amount at play. UnitedHealth Group projects AI could save it nearly $1 billion in 2026, while HCA Healthcare expects roughly $400 million in AI-driven cost savings, partly from automating revenue management, according to Reuters. On the other side of that ledger, Blue Cross Blue Shield has released an analysis suggesting that AI-enabled coding practices may be responsible for more than $2 billion in additional claims spending nationwide. Hospitals are turning to AI to automate clinical documentation and medical coding, the process of translating care into standardized billing codes submitted to insurers. These tools use ambient listening technology to capture clinical interactions in real time, then analyze physician notes and lab reports to automatically assign billing codes, a workflow that proponents say reduces paperwork and physician burnout. But the Blue Cross Blue Shield Association analysis of de-identified claims data found patterns that raise questions about accuracy. Researchers tracked a sharp rise in diagnoses of acute posthemorrhagic anemia at hospitals that had publicly disclosed AI adoption. In many of these cases, patients coded with the condition never received blood transfusions, a treatment typically associated with it. That diagnosis spike alone added $22 million to maternity admission costs in one year. Looking across all facilities, the analysis attributed about $663 million in inpatient spending and at least $1.67 billion in outpatient spending to AI-powered coding practices. Federal data shows 7 in 10 U.S. hospitals used predictive AI in 2024, with AI use for billing jumping 25% year over year, according to U.S. News and World Report. As hospitals automate revenue capture, insurers are deploying AI to audit claims and deny coverage at scale. The share of provider claims denied more than 10% of the time has risen from 30% three years ago to 41% today, according to Experian. Insurers on Affordable Care Act marketplaces denied nearly 1 in 5 in-network claims in 2023, up from 17% in 2021, according to KFF. UnitedHealth Group has faced scrutiny from federal lawmakers over its use of algorithms to deny care to seniors enrolled in Medicare Advantage, according to industry news site Stat. Humana and other insurers face lawsuits and regulatory investigations over similar practices, said Revenue Cycle Coding Strategies. The industry argues AI improves efficiency and reduces costs by processing high volumes of claims data that would otherwise require extensive manual review. Patients are beginning to arm themselves with AI tools as well, according to North Carolina Health News. Startups, including Sheer Health and the nonprofit Counterforce Health, have built tools that help patients analyze denial letters, cross-reference their insurance policies and draft appeals. Historically, fewer than 1% of denied claims are appealed, and patients lose more than half of those appeals. Consumer AI tools are designed to shift that math, though Carmel Shachar, assistant clinical professor of law and the faculty director of the Health Law and Policy Clinic at Harvard Law School, warned that it can be difficult for a layperson to understand when AI is doing good work and when it is hallucinating or giving something that isn't quite accurate, according to North Carolina Health News. The speed of AI deployment on both sides of the healthcare billing divide is outpacing regulatory frameworks. The site said more than a dozen states passed laws regulating AI in healthcare in 2025, with Arizona, Maryland, Nebraska and Texas among those banning AI as the sole decision-maker in prior authorization denials. Broader federal standards have not kept pace. The concern for regulators is not simply that AI speeds up billing disputes. It is that automated systems on both sides risk optimizing for financial outcomes rather than clinical accuracy, with patients caught between competing algorithms.

AI Deployed by Both Hospitals and Insurers in Payment War | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. One one side, Reuters reported Thursday (March 12), are healthcare systems turning to AI to be paid more for medical procedures. On the other are insurance companies using the technology to find evidence these procedures were needed. The issue was raised recently by Centene, an insurer focused on Medicaid patients who said hospitals were aggressively -- and perhaps improperly -- employing AI revenue software to get reimbursements. "There have been some of these pockets where folks coming into the emergency department with a fever, all of a sudden all have sepsis," Centene CEO Sarah London said at a September investor conference, referring to a life-threatening condition requiring an array of interventions. Reuters also cited a Blue Cross Blue Shield analysis of its commercial hospital claims showing that around $663 million in inpatient spending and at least $1.67 billion in spending on outpatients in the U.S. could be tied to more aggressive, AI-enabled coding practices. Hospitals, meanwhile, say they need AI to push back against insurance companies. The report cited the example of HCA Healthcare, which said in January that it expects to save around $400 million this year thanks to AI programs. HCA Chief Financial Officer Michael Marks had previously described the company's AI use as a response "to the growing denial and underpayment activities from the payers." Maulin Shah, the company's chief health information officer, told Reuters both sides will need to adapt to the changes already underway due to AI. "It's going to require adjustments in the relationship between the payers and the providers to understand this new reality," Shah said. "Unfortunately, what we're seeing is AI fighting AI." PYMNTS explored the growing role of AI in the medical field last month in a conversation with Marschall Runge, former dean and CEO of the Michigan Medicine health system. While he has been surprised at how fast the adoption of AI has happened, Runge told PYMNTS CEO Karen Webster that he rejects the notion that AI must be error-free before it can deserve a place within clinical settings. "We can't require something that's just unachievable," he said. Even when practiced by careful, experienced doctors, medicine still produces errors. To seek perfection from AI before it can be deployed isn't a true safety standard, he argued. Instead, Runge called for the structure of certification and other guardrails. "I think anything that we're doing medically with AI ought to have to be certified and have guardrails," he told Webster.

US insurers and hospitals turn to new AI for age-old battle over charges vs payments

March 12 (Reuters) - Artificial intelligence is being deployed on both sides of the tug-of-war between U.S. healthcare systems that want to be paid more for medical procedures and insurers who want proof the services were necessary, and experts are having a hard time predicting a winner. Centene, an insurer focused on the Medicaid program for low-income people, recently raised the issue, saying hospitals were aggressively or even improperly using revenue software to trigger reimbursement. "There have been some of these pockets where folks coming into the emergency department with a fever, all of a sudden all have sepsis," Centene CEO Sarah London said at a September investor conference, referring to a life-threatening condition that triggers a host of medical interventions. A Blue Cross Blue Shield analysis of its commercial hospital claims found that roughly $663 million in inpatient spending and at least $1.67 billion in outpatient spending may be tied to more aggressive, AI-enabled coding practices nationwide. "We are seeing more AI tools used at different points in the care and billing process, and when those tools operate independently, they can unintentionally lead to friction," said Razia Hashmi, vice president of clinical affairs at Blue Cross Blue Shield Association. AIM TO DRIVE DOWN COSTS In recent months, some health insurers have increased reliance on AI to help catch treatments and bills they say are unwarranted, even as hospitals use AI tools to document those medical services with codes that boost reimbursement, a review of company statements and interviews with a dozen experts and analysts found. The U.S. spends more on healthcare than any other nation at about 18% of its gross domestic product. Both sides hope AI will drive down costs. Consultancy firm McKinsey estimates that for every $10 billion in revenue, AI could save insurers $970 million through claims management, medical prior authorization requests and by guiding clinical care. AI tools are already leading to hospital care savings and they could amount to as much as $900 billion by 2050, Morgan Stanley said in a September research note. "The idea of (AI) bot versus bot is intrinsically a situation where no one's going to win," said Christina Silcox, research director of digital health at Duke-Margolis Institute for Health Policy. COMPANIES PLAN SAVINGS Several analysts, including TD Cowen's Ryan Langston and Whit Mayo of Leerink Partners, said insurers and hospitals could save money by using AI, but they did not provide estimates. Companies are also using AI widely for administrative tasks. So far, hospitals have spent more, according to Menlo Ventures, an early-stage venture capital firm that invests in AI and healthcare technology. Healthcare AI spending reached $1.4 billion in 2025, nearly triple 2024 levels, Menlo said, based on its survey of 700 industry executives. Of that, health systems accounted for roughly $1 billion, or 75% of that total, and outpatient providers shelled out another $280 million, while payers contributed about $50 million. UnitedHealth Group has said AI could save it nearly $1 billion in 2026. The company said it hopes to invest nearly $1.5 billion in AI this year and at least as much in 2027. Its UnitedHealthcare insurance unit has primarily focused its AI spending on the consumer experience, including guiding patients to higher quality care, executives have said. Smaller rival Humana recently estimated its AI investments will generate more than $100 million in savings over a few years. The company declined to comment on specifics. A spokesperson for CVS Health said its Aetna health insurance business is investing in AI that can help improve clinical care and that it was partnering with providers to ensure patients get appropriate care. Cigna and Elevance did not respond to questions about AI strategy between hospitals and payers. THE AI BATTLE OVER PAYMENT While insurers say hospital coding and billing practices are contributing to rising medical costs and squeezing profit margins, hospitals say they need AI to fight back against insurers. HCA Healthcare, the largest publicly traded U.S. hospital chain, said in January it expects about $400 million in 2026 cost savings from AI initiatives. The company has been using AI to automate revenue management and for doctors' clinical paperwork. It did not respond to a request for comment. HCA Chief Financial Officer Michael Marks had previously described its use of AI tools as a response "to the growing denial and underpayment activities from the payers." AI tools are helping to accurately represent medical services rendered, allowing more precise reimbursement from payers, said Providence, a chain of 51 hospitals located across seven states, including California and Texas. Providence Chief Health Information Officer Maulin Shah said both sides will need to adapt to the changes artificial intelligence is already causing. "It's going to require adjustments in the relationship between the payers and the providers to understand this new reality," Shah said. "Unfortunately, what we're seeing is AI fighting AI." (Reporting by Sneha S K and Sriparna Roy in Bengaluru; Editing by Mrinalika Roy, Caroline Humer and Bill Berkrot) By Sriparna Roy and Sneha S K