Healthcare AI Is Moving Into Billing and Body Scans, and the Costs Are Getting Harder to Trace

AI is now embedded in the parts of US healthcare that decide what hospitals bill, what insurers pay and which claims get denied. On 1 October, CNBC reported that Blue Cross Blue Shield Association put the cost of hospitals' AI-assisted coding at close to $1 billion, or $942 million, across its health plans between 2023 and 2025.

BCBSA said much of that increase came from secondary diagnoses that pushed patients into higher-paying reimbursement categories. These were the kind of diagnoses that "may be derived from single laboratory values, making it particularly well suited for detection by AI tools." The insurer's analysis noted that the growth in what it calls complex coding arrived during a period when 60% of hospital systems began using AI coding tools. It also stated there is "a clear disconnect between coding and treatment."

Roughly 70%, or $653 million, of the billing BCBSA identified was tied to additional diagnoses that came with no change in care, Luke Chalker, the association's senior vice president of product and data science, told CNBC. Chalker did not attribute the whole increase to AI. "While multiple factors contribute to coding intensity, the findings suggest AI-enabled coding and documentation tools are playing a role," he said.

His warning to consumers was direct: more complex coding can raise reimbursement without more care, and "those costs can eventually show up in the form of higher premiums and out-of-pocket costs." That sits against the latest forecast from benefits consulting firm Marsh, cited by CNBC, which expects the cost per employee for health coverage to rise 8.2% on average in 2027, the highest increase since 2003.

The hospital lobby pushes back

The American Hospital Association disputed the framing. "Patients today are older and more clinically complex," a spokesperson told CNBC, adding that AI tools help providers "appropriately capture their patients' conditions to aid in care planning." The AHA said the BCBSA analysis "lacks the context needed to meaningfully assess how these tools impact healthcare quality, patient access, or spending." It also turned the criticism back on insurers, calling it "particularly troubling to see insurers raising concerns about provider coding while continuing to rely on automated downcoding and denial practices."

Chalker said Blue Cross Blue Shield companies use AI in claims review too, but that "any clinical denial is always reviewed by a qualified human clinician." Christopher Whaley, a health economist at Brown University who studies hospital coding, told CNBC that AI appears to be "accelerating, and in some sense making it easier to capture, the existing and underlying billing incentives that are in the system." He said the added diagnoses are not automatically wrong. "In many cases, the diagnoses are legitimate and weren't captured," he said, though some conditions "clinically just don't really matter and don't influence the patient's care" while still triggering a billing code. Whaley's worry is what he called an "administrative arms race" between hospitals and insurers, fought with tools that are "both very expensive" and "have nothing to do with providing appropriate care to patients."

Preventive scanning arrives in the US

The same week, a different corner of digital health got attention. TechCrunch's Equity podcast on 30 September examined Neko Health, the body-scanning startup co-founded by Spotify's Daniel Ek, which raised $700 million and has now come to America. The episode noted that Midjourney is building its own body scanner and that Function Health has also raised significant capital for a preventive-health platform, with investor Farooq Abbasi of Preface Ventures discussing what would have to happen for scanning to become part of the broader healthcare system.

Political risk hangs over the sector as well. STAT reported on 1 October that the midterm elections are setting up unusually significant changes on the Senate finance and health committees, with five or more of the finance panel's 14 Republicans set to leave. STAT's report is partly behind a paywall, so the full list of departing members is not visible in the article text.

For a wider view, Rest of World published an interview on 24 September with physician and consultant Ruby Wang, author of the forthcoming book China Cure. Wang argued that in the US and UK technology is "always an add-on in the health system," while in China digital rails are treated as normal infrastructure. She also said China's share of global drug out-licensing deals could reach 60% this year, with caveats: China is strongest in oncology, less mature in immunology, and weak at commercialising its own drugs.

Back in the US billing system, the disagreement between BCBSA and the AHA remains unresolved, and neither side has published a full accounting of how much of the $942 million is attributable to AI rather than to coding practice or patient complexity.