{"id":15957,"date":"2026-10-07T06:55:26","date_gmt":"2026-10-07T06:55:26","guid":{"rendered":"https:\/\/medical-article.com\/?p=15957"},"modified":"2026-10-07T06:55:26","modified_gmt":"2026-10-07T06:55:26","slug":"healthcare-is-fighting-the-wrong-ai-war","status":"publish","type":"post","link":"https:\/\/medical-article.com\/?p=15957","title":{"rendered":"Healthcare Is Fighting the Wrong AI War"},"content":{"rendered":"
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By KIM BELLARD<\/p>\n

The Blue Cross Blue Shield Association is crying wolf about AI. Its new analysis<\/a> claims that \u201chospital systems are increasingly billing patient hospital stays as more medically complex,\u201d and that these upcodings cost BCBS plans almost $1b from 2023 to 2025. That\u2019s just claims from hospital systems, just to BCBS plans, so the total number could be much higher.<\/p>\n

Well, you might say, a billion here, a billion there \u2013 that\u2019s just healthcare these days. Everything is going up. But BCBSA is less sanguine; it thinks the coding is part of a strategy, and it thinks AI is driving that strategy.<\/p>\n

\u201cIf patients are truly sicker, we\u2019d expect to see more treatment,\u201d said Luke Chalker, BCBSA\u2019s senior vice president of product and data science. \u201cFor example, we\u2019re seeing significantly more anemia diagnoses at these hospitals without a corresponding increase in transfusions. The disconnect between diagnoses and treatment suggests that AI is identifying more billable conditions, not sicker patients.\u201d<\/p>\n

The analysis indicated that most (70%) of the increased costs came from secondary diagnoses that shifted payment into higher reimbursement categories, so the hypothesis is plausible.<\/p>\n

The American Hospital Association, of course, is having none of it. An August 2026 \u201dfact sheet\u201d<\/a> on AI and coding intensity called claims of AI driving coding intensity \u201cunsubstantiated,\u201d citing numerous factors that drive coding intensity. It blamed insurers for having AI-supported \u201cdowncoding programs,\u201d the purpose of which are \u201cto arbitrarily and inappropriately reduce provider reimbursement for medically necessary care that has already been delivered.\u201d<\/p>\n

AHA also snarkily but accurately noted how many Medicare Advantage plans have been caught upcoding members to boost their <\/em>Medicare payments, so it depends on where one is sitting.<\/p>\n

It\u2019s also worth noting that this year the Trump Administration rolled out a Medicare program \u2014 Wasteful and Inappropriate Service Reduction (WISeR<\/a>) \u2013 to use AI to help identify \u201cfraud, waste and abuse\u201d \u2013 a.k.a., deny claims. It has not<\/a>, to say the least, gone well.<\/p>\n

Both sides are using AI, to each other\u2019s detriment. Which is to say, our detriment.<\/p>\n

<\/span><\/p>\n

The BCBSA press release notes that more than 60% of hospital systems are using AI technologies, and, indeed, the 2026 Oliver Wyman Healthcare RCM Survey<\/a> found that 63% of health systems are using AI in their revenue cycle management. But it\u2019s not quite the smoking gun BCBSA would have us believe. Oliver Wyman found that \u201croughly 20% to 40% of organizations we surveyed report broad or enterprise-wide use of AI-enabled tools,\u201d but this included ambient listening (33% in broad use or enterprise-wide standard), clinical decision support (38%), clinical document integrity (41%), electronic prior authorization (41%), and coding\/billing automation (43%).<\/p>\n

On the other hand, Oliver Wyman also found 70 to 90% of decision makers expected to increase AI-related RCM spending over the next three years, and you have to wonder why that number isn\u2019t 100%.<\/p>\n

To BCBSA\u2019s point, the report did find that health systems \u201care seeing meaningful gains with targeted uses of AI improving how clinical complexity is captured, with some studies showing accuracy hit 90% or higher in specific clinical domains,\u201d with the result that \u201creimbursement levels are increasing, contributing to measurable shifts in cost-of-care trends.\u201d<\/p>\n

Accordingly, the report suggested \u201cpayers need to accelerate investments in analytics, payment integrity capabilities, auditing and validation.\u201d Which will drive greater investments from health systems, and so on.<\/p>\n

And, in case you were wondering, it is not just health systems and payors using AI. The American Medical Association\u2019s \u201c2026 Physician Survey on Augmented Intelligence<\/a>\u201d found that more than 80% of physicians are using AI professionally, double what was reported in 2023. Like health systems, they\u2019re using it for lots of reasons, but \u201cdiagnostic accuracy\u201d is listed as one of the greatest expected advantages. Whether \u201caccuracy\u201d means more precision or upcoding depends on which side of the ledger one is on.<\/p>\n

Yep, we\u2019re in an AI war about healthcare claims, although Mr. Chalker says<\/a>: \u201cIt\u2019s not a war. It\u2019s a completely one-sided blood bath.\u201d<\/p>\n

In a New York Times<\/em> article<\/a> on the BCBSA report, Reed Abelson and Teddy Rosenbluth quote Dr. Shiv Rao, CEO and founder of healthcare AI firm Abridge<\/a>: \u201cThat\u2019s the danger, where it\u2019s bots fighting bots, agents fighting agents, a horrible dystopic future nobody wants to live in.\u201d They also cited a recent panel with leaders from Cigna and Emory Health, during which Dr. Joon S. Lee, the chief executive of Emory Healthcare, said: \u201cMy nightmare is that we have bots on Emory Healthcare\u2019s side, bots on Cigna\u2019s side that keep talking to each other. A whole data center could be occupied just doing that.\u201d<\/p>\n

It should be everyone\u2019s nightmare. Bots on bots doesn\u2019t make patients better. Bots on bots doesn\u2019t make healthcare more affordable. Bots on bots just exacerbate the problems we already have in healthcare.<\/p>\n

Ms. Abelson and Ms. Rosenbluth point to a Health Affairs<\/em> article earlier this year by Dr. David Brailer, a former Obama official who helped oversee the adaption of electronic health records (EHRs). Its title \u2014 Why AI Will Accelerate Health Care Inflation<\/em><\/a> \u2013 <\/strong>is daunting. EHRs, he points out, led to higher hospital payments, and we should expect the same with AI. \u201cThe extraction economy of American health care does not resist useful technology,\u201d he said. \u201cIt recruits it. AI is being recruited the same way, and AI\u2019s scale and speed is different from anything electronic records achieved.\u201d<\/p>\n

\u00a0In other words, if we\u2019re not very careful and very thoughtful, AI will make all the things we hate about our healthcare system much worse, much faster. And we don\u2019t have much track record in being very cautious or very thoughtful.<\/p>\n

At Health Datapalooza, Amy Gleason, the Administrator of the U.S. DOGE Service, had a great quote: \u201cWe have normalized the absurd in healthcare.\u201d I couldn\u2019t agree more. If AI serves to further normalize what everyone agrees are the absurdities of our healthcare system, then maybe it is time for AI to get rid of us.<\/p>\n

I\u2019ve long argued that all of our problems in healthcare stem from the fact that we don\u2019t really know what \u201cquality\u201d is for health care. Because of that, we also don\u2019t really know who is providing it, or who is not, either intentionally or unintentionally. Focusing AI on that would benefit both those who provide care and those who pay for it, not to mention those who receive it.<\/p>\n

Yes, AI should help us make our healthcare system more efficient, reducing the ridiculous administrative tasks we have allowed to accumulate, but if that just results in \u201cbots on bots\u201d fighting over diagnosis codes, we\u2019ll have wasted our best chance to actually fix our healthcare system.<\/p>\n

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented\u00a0<\/em>Tincture.io<\/em><\/a>, and now regular THCB contributor<\/em><\/p>","protected":false},"excerpt":{"rendered":"

By KIM BELLARD The Blue Cross Blue Shield Association is crying wolf about AI. Its new analysis claims that \u201chospital systems are increasingly billing patient hospital stays as more medically complex,\u201d and that these upcodings cost BCBS plans almost $1b from 2023 to 2025. That\u2019s just claims from hospital systems, just to BCBS plans, so…<\/p>\n","protected":false},"author":0,"featured_media":15956,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-15957","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/15957"}],"collection":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15957"}],"version-history":[{"count":0,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/15957\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/media\/15956"}],"wp:attachment":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}